Section 48 of the Internal Revenue Code provides a federal Investment Tax Credit (ITC) equal to 30% of qualified solar energy property installation costs through December 31, 2032, with no upper limit on credit amount. This credit applies to residential and commercial solar photovoltaic systems, solar water heating, and battery storage, directly reducing federal income tax liability.
Eligible Technologies and Specifications
Section 48 ITC covers photovoltaic systems, solar thermal systems, battery storage units, and inverters. The credit requires systems to be installed in the United States on properties owned by the taxpayer. Commercial properties can claim the credit against corporate income taxes, while residential installations claim it on personal returns. The credit percentage remains at 30% through 2032, then decreases to 26% in 2033 and 22% in 2034 under current law.
Commercial and Residential Applications
Commercial solar installations benefit significantly from the unlimited credit, with large projects potentially claiming hundreds of thousands of dollars. The credit is nonrefundable for individuals but can carry back one year and forward indefinitely. Homeowners typically claim credits on Form 3468 or Form 5695. The combination of Section 48 ITC with Section 25C credits and state incentives makes solar plus efficient HVAC upgrades financially attractive for integrated energy efficiency projects.