Disclaimer: While we are one of South Carolina’s top solar installation companies, we are not tax experts. Our suggestions on this page about filing for your solar tax credit are exactly that – suggestions. Because individual situations may vary, please consult a tax professional before filing for your solar tax credit.

Tax time is here, and depending on your paycheck it could be a rewarding time, or a time of frustration. For South Carolina home and business owners who installed solar panels last year, a special solar tax credit is available.

How to claim the tax credits for solar panel installations

The US federal government offers a tax credit to both home and business owners who install solar power systems. The Residential Renewable Energy Tax Credit is a federal tax credit worth 30% of the total system cost including installation.

As a credit, you take the amount directly off your tax payment, rather than as a deduction from your taxable income. A tax credit is more valuable than a tax deduction because a tax credit reduces the tax you pay dollar-for-dollar whereas a tax deduction simply lowers your taxable income.

You can claim the 30% solar tax credit for your primary residence, and for either an existing structure or new construction (new home).

To claim the federal solar tax credit, you must file IRS Form 5695 as part of your tax return; you calculate the value of the solar tax credit on the form, and then enter the result on Form 1040.

If you end up with a bigger credit than you have income tax due, the excess amount may be carried forward to the succeeding taxable year (2017).

25% South Carolina Tax Credit For Solar Energy Systems

The state of South Carolina offers an additional tax credit for home and business owners who go solar, worth 25% of the total cost including installation.

To claim the South Carolina tax credit for solar, you must file Form SC1040TC as part of your state tax return. The corresponding code is 038 SOLAR ENERGY OR SMALL HYDROPOWER SYSTEM CREDIT: For installing a solar energy system or small hydropower system in a South Carolina facility (TC-38). Make sure to include this amount and this form with your 2016 Individual Income Tax Return Form SC1040.

The maximum incentive for the SC state tax credit is $3,500, or 50% of taxpayer’s tax liability for that taxable year, whichever is less. This credit has no expiration date and any excess credit may be carried forward up to 10 years.

Note: If you installed solar panels after December 31, 2016 you will apply for the solar tax credit next year when you file your 2017 income taxes.

If you haven’t gone solar yet, you still have until the end of the year to install solar panels so that you can take advantage of these incredible solar incentives! Learn more about solar solutions for the home, or Contact Us to schedule a FREE solar consultation and find out how much you could be saving with solar!