Is the 30% federal solar tax credit refundable?

No, it is non-refundable. It can reduce your tax liability to zero, but the IRS will not refund any excess. However, unused credit carries forward to future tax years, all the way through 2034.

Can I claim the federal solar tax credit on a leased system?

No. With a solar lease or PPA, the leasing company owns the panels and claims the credit. The credit only applies to systems you purchase outright (cash or loan).

Does battery storage qualify for the 30% credit?

Yes. Standalone batteries of at least 3 kWh installed in 2023 or later qualify, even without new solar panels. This was a major change under the Inflation Reduction Act.

When does the 30% federal solar tax credit expire?

The 30% rate runs through December 31, 2032. It drops to 26% in 2033, 22% in 2034, then expires unless extended.

Federal Solar Tax Credit in 2026: How the 30% Credit Actually Works

The 30% federal solar tax credit (officially the Residential Clean Energy Credit, IRS Form 5695) is the single biggest lever in your solar payback math. It cuts your net cost by roughly $9,000 on a typical $30,000 system. Here's exactly how it works in 2026.

What you get

You get a non-refundable federal tax credit equal to 30% of qualified expenditures for a solar electric system installed at your residence. There is no cap — a $50,000 system gets a $15,000 credit; a $20,000 system gets a $6,000 credit.

What qualifies

Solar panels and inverters. The PV system itself.
Mounting and racking. All structural hardware.
Wiring, conduit, and electrical work. Including main panel upgrades that are required for the solar install.
Battery storage. Standalone batteries with at least 3 kWh capacity, even if not paired with new solar (this is the big 2023 expansion that's still in effect).
Permitting, inspection, and labor. All install costs are eligible.
Sales tax on the system.

What does NOT qualify

Roof repairs or roof replacement unrelated to the solar mount (a new roof you'd have done anyway is not eligible).
Extended warranties or service contracts.
Systems on a property you rent out and don't live in (those use the commercial ITC instead).

The "non-refundable" detail that trips up first-time filers

"Non-refundable" means the credit can reduce your tax liability to zero, but the IRS won't write you a check for the leftover amount. However, unused credit rolls forward — you can carry the unused portion to next year, and the year after, until 2034.

Worked example. You install a $30,000 system and qualify for a $9,000 credit. Your federal tax liability for the year is $5,500. You apply $5,500 of credit (zeroing out your tax owed) and roll the remaining $3,500 to next year, where you can apply it against that year's liability.

How to claim it

Save every invoice and receipt — you'll attach the totals to IRS Form 5695.
The credit applies in the tax year the system is placed in service (passed final inspection and connected to the grid), not the year you signed the contract.
File Form 5695 with your federal return. Most major tax software walks you through it under "energy credits."
Keep documentation for at least 3 years in case of audit.

What about state credits?

State credits stack on top of the federal credit. New York, Hawaii, Massachusetts, South Carolina, and several others offer additional 10–35% state-level credits. See state-by-state credits here.

What about the credit phaseout?

The credit is 30% through the end of 2032, then drops to 26% in 2033 and 22% in 2034 before expiring. If you're considering solar, there's no urgency on the federal side until 2033 — but your local utility's net metering rules can change every year, so timing usually hinges on those.

Common mistakes

Forgetting the battery credit. A $15,000 battery added later still qualifies for $4,500 back.
Claiming the credit on financed systems incorrectly. If you took a solar loan, the credit is yours to keep — you can apply it to the loan balance to reduce the principal, but the credit itself is independent of how you paid.
Claiming on a lease. If you leased your panels (TPO/PPA), the leasing company owns them and claims the credit, not you. Cash purchase or financed purchase only.