Rebates & Tax Incentives: Residential Renewable Energy Tax Credit

The Residential Renewable Energy Tax Credit allows taxpayers to claim a credit of 30% of qualified expenses for a system serving a housing unit within the United States. The housing unit must be owned and used as a resident by the taxpayer, and expenses include labor costs for on-site preparation, assembly or system installation, and for piping or wiring to connect a system to the home. Maximum allowable credits vary by technology, but solar energy appears to reap the highest reward–in 2017, the average EnergySage Solar Marketplace shopper saved over $5,000 as a result of this tax credit.

 

Below, we have included the relevant tax credit information for eligible systems installed or placed in service by 12/31/2019 and before 1/1/2021–when the tax credit is set to expire.

 

  • Solar-electric—30% for systems placed in service by 12/31/2019; 26% for systems placed in service after 12/31/2019 and before 1/1/2021.

 

  • Solar water-heating—30% for systems placed in service by 12/31/2019; 26% for systems placed in service after 12/31/2019 and before 1/1/2021. The tax credit does not apply to solar water-heating for swimming pools or hot tubs.

 

  • Fuel cell—30% for systems placed in service by 12/31/2019; 26% for systems placed in service after 12/31/2019 and before 1/1/2021. The maximum credit is $500 per half kilowatt.

 

  • Small wind-energy—30% for systems placed in service by 12/31/2019; 26% for systems placed in service after 12/31/2019 and before 1/1/2021. The home served by the system does not have to be the taxpayer’s principal residence.

 

  • Geothermal heat pumps—30% for systems placed in service by 12/31/2019; 26% for systems placed in service after 12/31/2019 and before 1/1/2021. The pump must meet federal Energy Star criteria, and the home served does not have to be the taxpayer’s principal residence.

 

The Residential Renewable Energy Tax Credit is set to expire in 2021. Note that the Bipartisan Budget Act of 2018, signed in February 2018, reinstated the tax credit for fuel cells, small wind, and geothermal heat pumps. The tax credit for all technologies now includes a gradual step down in credit value. However, tax credits for non-business energy property are now available, retroactive, for purchases made through December 31, 2017.