How to Claim Your Solar Tax Credit: Everything You Need to Know About Solar Tax Incentives in Delaware

How to Claim Your Solar Tax Credit: Everything You Need to Know About Solar Tax Incentives in Delaware

With tax season in full swing, all of us are diligently reviewing their financial landscapes, searching for opportunities to maximize savings and minimize liabilities. In this bustling atmosphere, the topic of solar tax credits and incentives emerges as a beacon of relevance and opportunity. As taxpayers navigate through the intricate maze of deductions and credits, understanding the nuances of solar incentives becomes not only financially prudent but also an avenue for embracing sustainability and contributing to a greener future. 

Whether you got solar installed last year or you are preparing for the potential to get solar in this current tax cycle, this article will help you better understand the incentives you may be presented with and how to make the most of your solar investment!

Please note: Solar tax incentives only apply for those that own their system. While leasing your home solar system has its own benefits, individuals that chose to lease their solar system would not qualify for these tax credits and financial incentives.

Federal Clean Energy Tax Credit

At the federal level, the solar tax credit- officially named the residential clean energy tax credit- is an Investment Tax Credit (ITC) that serves as a cornerstone for encouraging solar adoption. This credit allows taxpayers to deduct a percentage of the cost of installing a solar energy system from their federal taxes. Intuit Turbotax explains how the tax credit works, very simply:

“When you purchase solar equipment for your home and have tax liability, you generally can claim a solar tax credit to lower your tax bill. The Residential Clean Energy Credit is non-refundable meaning that it can offset your income tax liability dollar-for-dollar, but any excess credit won’t be refunded. If the credit exceeds your tax liability for the year, you can ‘roll over’ the unused portion to future years so long as the credit remains in effect.” 

In 2024, the Federal solar tax credit amount is 30%. Costs that would be covered include equipment costs, solar powered storage equipment, and some qualifying installation and labor costs.

To claim the solar tax credit when you file a tax return, you’ll have to fill out IRS Form 5695. You’ll need some general information about your tax situation, which you can find from your other tax documents. You’ll also have to supply details about the cost of your solar project as well as a certification from the equipment manufacturer that the products qualify for the credit.

State & Local Solar Incentives

In addition to federal incentives, many states offer their own incentives to promote solar energy adoption. These incentives vary widely but may include rebates, grants, or performance-based incentives. Some states offer property tax exemptions or sales tax exemptions on solar equipment, further reducing the overall cost of installation. It’s essential for prospective solar customers to research the incentives available in their state to maximize savings. 

While Delaware, unfortunately, doesn’t offer a statewide tax credit, multiple utility companies in Delaware offer rebates for their customers.

  • Delmarva Power offers the best deal. Customers who make the switch can access the Green Energy Grant Program. You receive $700 per kilowatt (kW) installed. The per kW amount is lower than some other providers but comes with a higher ceiling. For large systems, you can get up to $6,000 in total. 
  • DEMEC is great for smaller systems due to a higher per kW rebate amount but a lower ceiling. DEMEC customers can receive $1,000 per kW up to $3,500. 
  • Lastly, customers of Delaware Electric Cooperative can get $500 per kW up to a maximum of $2,500. These rebates help make your system installation costs more affordable.

For more information on the Delaware local incentives, visit our page on Solar Incentives in Delaware! If you’re ready to take the next step toward energy savings, contact our local experts in the New Castle County, DE area!

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