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The Federal Solar Tax Credit

Your solar system will qualify for the federal solar tax credit in Nevada. There are no other rebates or incentives currently available in Nevada. The NV Energy rebate expired on 6-5-2019. The smaller rural utilities have also ended their solar rebate programs.

The Federal Solar Tax Credit

The Federal solar tax credit will help you pay for your solar system. You can use this federal tax credit if you owe federal income taxes, even if you usually get a refund.

Get your hard-earned money back!

This is the largest, non-income limited tax credit you can get.
It is 30% of the cost of your system. On a $20,000 system, $6,000 of your hard-earned dollars go right back into YOUR POCKET!

It’s not a tax deduction. Tax credits reduce how much you owe in taxes DOLLAR FOR DOLLAR, not how much money you pay taxes on. That usually means a MUCH BIGGER refund at tax time!
You can carry over unused solar tax credits to future tax years, so the balance will roll over to the next tax year even if you cannot use the entire solar tax credit in the first year.

If you lease the system, the federal solar tax credit goes to the system owner – not you! Whoever owns those panels gets the solar tax credit, so before you lease, consider carefully what you are giving up.

So what exactly does the solar tax credit do?

Many people mistakenly think you get a check in the mail for 30% of the purchase cost of your solar system. Nope. That would be a rebate. There are no rebates available for solar in Nevada. Does that mean you take 30% of the install cost and remove that from your earned income when filing your Federal income taxes? Nope. That would be a tax deduction, not a tax credit. A tax deduction reduces the amount of income you pay taxes on. It’s valuable, but tax credits are FAR more valuable.


Here’s an example of a tax deduction. If you make $100,000 (gross income), you get to deduct $12,400 (standard deduction for a single taxpayer); you are only taxed on $87,600 of income (taxable income). If your tax bracket was 15%, your total tax liability would be reduced from $15,000 on the entire $100,000 income to $13,140 on a reduced taxable income of $87,600. That tax deduction saved you $1,860 on your tax bill. Nice.. but you still owe $13,140 in taxes.


Tax credits, on the other hand, reduce the amount you pay in federal income taxes. They are FAR more valuable because they reduce your tax bill. You pay $1 less in federal income taxes for every $1 in your solar tax credit.


Let’s say you had a total federal tax withholding for the year of $15,000, and you owed $10,000 in federal income taxes for the year. Your solar tax credit is $8,500.


If you had no solar tax credit: $10,000 owed – $15,000 paid = $5,000 refund


With the solar tax credit: $10,000 owed – $8,500 tax credit = $1,500 owed – $15,000 paid = $13,500 REFUND !!!!!!!


As long as you have US federal income tax liability and own your home, you can use the federal solar tax credit against your income taxes – no matter what the source of your taxable income is (W-2 wages, 1099 income, interest, dividends, etc.) The solar tax credit does not reduce other kinds of taxes such as self-employment tax or property taxes. It only reduces your federal income tax liability.


Some folks get especially confused and think they can’t use the solar tax credit if they already get a tax refund. Good News! Even if you usually get a federal income tax refund, the federal solar tax credit will still work for you. You’ll likely get a much larger refund the year you go solar because you’ll owe a lot less in taxes thanks to the solar tax credit – just like the example above. As long as you owed taxes, to begin with, the solar tax credit could benefit you. You can even stack it up with other tax credits like the child tax credit or dependent care credit.


What if you usually owe taxes at the end of the year? The federal solar tax credit can help you, too! If you owe less money in taxes to begin with because of the solar tax credit, you could get a refund this year! Even getting $5 back would be better than saying a lot of nasty words while you write a $5,000 check to the IRS, right?


The only folks who can’t use the federal solar tax credit are those with no US taxable income and thus no tax liability, such as a person on 100% Disability or whose only income is from Social Security or those who do not own their home.


ALWAYS SEEK PROFESSIONAL TAX ADVICE BEFORE YOU MAKE A DECISION ON SOLAR! Taxes and tax credits are complicated things. These simplified examples are meant to help you understand how the solar tax credit works in a general way. We are NOT tax planners, tax accountants, or CPAs. Now, that you have a general idea of how the solar tax credit works, discuss how the credit would benefit you with your tax professional before making any decisions regarding the solar tax credit and how it might benefit you