30% Federal Tax Credit Until 2016

• Homeowners: IRS Form 5695 (.pdf)
• Business Customers: IRS Form 3468 (.pdf)

Homeowners

Beginning in 2009, the Federal Investment Tax Credit (ITC) for Residential (individual tax filers) is 30% of the qualified system costs.

Information about the residential ITC can be found in Sec. 25D of the Internal Revenue Code (IRC) and is claimed using IRS form 5695.

See the IRS Website for a more detailed explanation.

The residential ITC will expire at the end of 2016 if not extended. Federal taxability of state, local, or utility rebates affect the ITC system cost basis.

Business Customers

The Federal Investment Tax Credit (ITC) for Business owned systems (IRS Schedule C business tax filers) is 30% of net system cost with no cap for systems that are 'placed in service' by the end of 2016 (IRC Sec. 48).

See: IRS website - Advanced Energy Credit for Manufacturers (IRC 48C)

After 2016, if not extended, the tax credit will revert to the previous permanent level of 10%.

The tax credit is earned over 5 years in equal 20% increments. If the property becomes ineligible for the ITC (is disposed of or sold by the taxpayer, taken out of service, or taken outside of the U.S.), IRC Sec. 50(a)(1) stipulates that the taxpayer must repay the unearned portion via the recapture mechanism.