U.S. Federal Clean Energy Tax Credit for Residential Solar Water Heaters
The U.S. Federal government has provided tax credits for qualifying renewable and energy efficient products installed in U.S. residences since 2006 (§ 25D of the Internal Revenue Code). This was amended with the passage of the Inflation Reduction Act of 2022 (IRA), Public Law 117-169, 136 Stat. 1818, and is now known as the “residential clean energy property credit.”
To qualify for the residential clean energy property tax credit, the IRA legislation states that the solar water heaters installed homes must be certified (see IRS Form 5695):
“To qualify for the credit, the property must be certified for performance by the nonprofit Solar Rating Certification Corporation or a comparable entity endorsed by the government of the state in which the property is installed.“
U.S. Code 26 § 25D(b)(2)
Other conditions and requirements apply as set by the law and the IRS. Consult a qualified tax professional and additional resources including the following:
- Frequently asked questions about Energy Efficient Home Improvements & Residential Clean Energy Property Credits (IRS FS-2024-15)
- Inflation Reduction Act of 2022 (IRS)
- Form 5695 (IRS)
- Form 5695 Instructions (IRS)
- IRA-Related Tax Guidance (US Department of the Treasury)
- Taxpayer IRA Resource Hub (US Department of the Treasury)
- Residential Renewable Energy Tax Credit (DSIRE)
- Homeowner’s Guide to 2025 Federal Solar Tax Credit (Solar Reviews)