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Do Solar Generators Qualify for Tax Credits?

One of the major benefits of solar systems is the tax benefits you get from using them. While this won’t often change the price upfront, it does provide you with an option to not have to pay taxes at the end of the year. 

While most people know that parts of solar systems like solar panels count, did you know that a solar generator can count as well? 

Who Can Benefit From Solar Generators?

A solar power system isn’t for everyone. If you’ve never thought about getting any kind of generator before, then you might not want to get a solar system. 

However, if you have used generators before or feel like you need a generator for power backup, then it is worth looking at getting a solar energy system instead. 

If you live in an area that gets lots of sun throughout the year and want a solar generator so that you have power whenever and wherever you need it, a solar generator has several benefits over traditional ones. 

Is It Worth Getting a Solar Generator?

Now that you’ve decided you want a generator, you have to decide if one with solar panels is what you want. 

Nature’s Generator Gold System

There are a lot of benefits to getting solar generators. While they can be initially more expensive, the lack of upkeep and the fact that there is no need to purchase fuel means that, in the long run, they are often cheaper. 

If cared for correctly, you can easily get a solar generator to last 10 years when used every day, and longer if you only use it occasionally. 

Additionally, you may qualify for local and federal government tax credits. Since the United States has a goal to rely more on renewable energy by 2030, they are offering incentives and rebate programs to help entice people to use more green energy. 

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Federal Solar Tax Credit: What Is It?

The federal solar tax credit is a discount or refund that you get on your taxes. It is based on the amount you spent on your system. 

The tax credit was renewed in August 2022. Now, any systems installed between 2022 and 2032 are eligible for a tax credit worth 30% of the installation and equipment. In 2033, it will be 26% and 22% in 2034. 

There is no maximum cap that can be claimed, so if you have the money to pay for costs up-front, you can look at being tax-free or even saving money from your taxes at the end of the year. 

While this is a great value, it isn’t necessarily the only one. Each state has its own discounts, tax breaks, and rebates, so look at your local government level as well to determine the maximum benefits. 

It is often called an investment tax credit (ITC) but it is important to note that this isn’t the same ITC that businesses and large groups get. 

Can I Apply for This Credit?

The federal government has a few specific ground rules for being a successful applicant for this tax return. They are:

  • Your system had to have been installed between the beginning of 2017 and the end of 2034
  • The system must be at a residence you own in the United States
  • You own the systems, no leasing or paying a solar company
  • The system is new or being used for the first time
  • You purchased an off-site community solar project

The government also offers an example of which expenses are included in the tax credit:

  • PV panels and PV cells
  • Labor costs for preparation and permits
  • Wiring, inverters, mounting equipment
  • Batteries and other energy storage systems that are more than 3kWh
  • Sales tax

Why Does a Solar Generator Count?

Some solar generators count because they can be used directly in a residence and be installed. These solar generators act as an electricity backup if the grid goes down, or some other serious issue happens. 

The homeowner or homeowners usually have to pay the initial cost for these types of products. However, at the end of the year, they are eligible for a tax refund, so it does have an advantage, though there is still a large initial investment. 

The government doesn’t determine specific parts of a solar system or renewable energy system that are eligible for tax rebates. So long as the system is installed and first used within their timelines, it is acceptable. 

Do I Need a Specific Type of Generator?

Yes, you would need a specific type of generator to count. Simple solar generators that you don’t have to install and can take anywhere don’t often apply for the federal tax credit. This is because the tax credit is usually based on the installation. 

Since you aren’t installing these systems, and the wiring and individual parts are all contained in a mobile case, the tax credit isn’t applicable. 

However, if you get a solar generator that you do install, whether in your home or an RV, you are eligible for the incentive and possible rebates. 

How Do I Get the Credit?

To get the credit, you will fill out IRS Form 5695 and turn it in with the rest of your tax form. It is your job to calculate the credit on part 1 of the form. Then you will enter the rest into your 1040 form. 

It is important to note that you won’t get money back on your tax return. However, if you owe money, it will cover up to the amount you owe. If you don’t use all of your tax credits this year, then they will roll over to next year.