Are There Any Energy Tax Credits For Home Solar Energy Use?

The Database of State Incentives for Renewables & Energy is a major source of information for homeowners considering the installation of a home solar power system.

The site brings together data and contact information from federal, state and local governments as well as from utility companies on incentives, rebates, and policies.

The "blanket" incentive all homeowners can utilize to offset the cost of their home solar array is a 30% personal federal tax credit. This benefit is applicable to:

- solar water heat,

- photovoltaic arrays,

- fuel cells,

- geothermal heat pumps,

- and "other" solar technologies.

As amended by the American Recovery and Reinvestment Act of 2009, the maximum incentives by type are:

- Solar-electric systems before 1/1/2009: $2,000

- Solar-electric systems after 12/31/2008: no maximum

- Solar water heaters before 1/1/2009: $2,000

- Solar water heaters after 12/31/2008: no maximum

- Wind turbines placed in service in 2008: $4,000

- Wind turbines after 12/31/2008: no maximum

- Geothermal heat pumps placed in service in 2008: $2,000

- Geothermal heat pumps after 12/31/2008: no maximum

- Fuel cells: $500 per 0.5 kW

According to, "Solar water heating property must be certified by SRCC [Solar Rating and Certification Corporation] or by comparable entity endorsed by the state in which the system is installed. At least half the energy used to heat the dwelling's water must be from solar. Geothermal heat pumps must meet federal Energy Star requirements. Fuel cells must have electricity-only generation efficiency greater than 30%."

(The SRCC is an independent, third-party certification program established in 1980 solely to develop and to implement certification programs and national rating standards for solar energy products.)

Use IRS Form 5695 & Instructions: Residential Energy Credits and refer to for more information on federal tax credits for consumer energy efficiency.

The value of this 30% federal credit is significant when applied to real-world estimates. A 6.45 kW roof-mounted array covering 645 sq ft of space with an estimated cost of $51,638.23 falls to $35,146.76 when the tax credit is applied -- a savings of $16,491.47, just under a third of the original projected cost.

(These figures were calculated for an area where the solar system was not subject to either sales or property taxes.)

The federal tax benefit and projected energy savings for the home cut the break-even point for that system from more than 25 years to 19.77 years.

When the federal credit is paired with local and regional incentives, homeowners will see further reductions to their total costs and the length of time required to recoup their investment.

Home solar energy systems can pay for themselves, but it takes years, making any kind of rebate or incentive more than worth the effort required to process the paperwork.

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