Solar tax credits greatly reduce the amount of income tax you owe after you install a photovoltaic system. Offered at both the federal and state levels, these financial incentives can significantly cut costs of adopting solar energy.
Now that photovoltaic power has reached historically low prices, some states have stopped offering a solar tax credit. Utah homeowners are fortunate, however, because our state’s solar investment tax credit (ITC) is still in place.
Utah offers a credit for the purchase and installation of any residential photovoltaic system. As long as the system supplies energy for a single-family home, condominium, apartment or other dwelling that serves as a home for someone, it qualifies for the Utah solar ITC.
The solar ITC in Utah isn’t limited to one photovoltaic system, either. You can claim the state credit for more than one system, as long as each one is installed on a residential unit that you own or use.
So, the big question is — how much can you save with the Utah solar ITC?
For each qualifying system, you can claim up to 25 percent of the costs, with a maximum claim of $2,000 per residential unit.
Absolutely! In fact, you should claim both the state and federal solar ITC. The federal tax credit offers 30 percent back on residential installations, so together, these can reduce the cost of your photovoltaic system by 50 percent or more.
When applying, be sure to calculate these credits on your net system cost after subtracting any rebates, grants and installer and utility bonuses. Otherwise, Uncle Sam could see your photovoltaic system as a profit-making venture, in which case you could end up owing income taxes on the incentive amounts.
Let's say you install a residential photovoltaic system at a cost of $20,000. Utah’s solar ITC is for 25 percent of that, but you can only claim up to $2,000. What happens if you only owe $1,500 in taxes?
While the remaining $500 won’t be issued to you as a refund check, you can carry it over to the next year. You can do this for up to four taxable years. Our state’s solar-friendly statutes allow most homeowners to claim the full benefit of the Utah solar tax credit.
Of course, we aren’t CPAs, so we strongly recommend consulting with a tax professional. If, however, you simply need help filling out the forms, let Intermountain Wind & Solar help. We can tell you more about all of the financial incentives available for Utah photovoltaic power systems. Give us a call today to find out how much you can save with the federal and state solar tax credit.
Utah’s residential solar tax credit applies to PV systems installed by licensed contractors on owner-occupied homes. The credit equals 25% of equipment and labor costs, capped at $1,600 per system and $250 for solar water heating. Eligible systems must be grid-tied or off-grid arrays installed after January 1, 2010.
Utah residents claim the credit by filing Form TC-40SC along with their TC-40 individual return before the April 15 deadline. Record total system costs under “Residential Renewable Energy,” and attach purchase invoices, installation contracts, and proof of completion. Intermountain Wind & Solar handles all permit and tax paperwork in-house.
Utah allows stacking its 25% solar credit with the federal Investment Tax Credit (ITC). Homeowners can reduce system costs by up to 55% total—25% state plus 30% federal—based on 2022 ITC rates. For a $20,000 system, that equates to $11,000 off before any additional rebates or incentives.
Battery backups qualify when they’re charged exclusively by an eligible Utah-certified PV system. The battery’s cost is included in the total system cost for the 25% state credit, up to $1,600 per system. Intermountain Wind & Solar offers integrated solar-plus-storage installs under one permit package.
Utah’s 25% residential solar tax credit has been in effect since 2010 and currently has no sunset date. Systems energized through 2024 qualify under the full cap. Intermountain Wind & Solar schedules installations and secures permits to meet all utility interconnection deadlines.
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