The Federal Residential Investment Tax Credit (ITC) has provided tax credits for qualifying renewable and energy efficient products installed in U.S. residences since 2006 (§ 25D of the Internal Revenue Code). Solar Water Heating equipment is included this credit where the product is “certified for performance by the nonprofit Solar Rating and Certification Corporation or a comparable entity endorsed by the government of the state in which the property is installed.” (§ 25D(b)(2)). For more information see the IRS Instructions for Form 5695 and consult a qualified tax professional.
Note: The Inflation Reduction Act (IRA) of 2022 extended term of this program, increased the credit available and added new requirements. Updated guidance from the IRS is expected in late 2022/early 2023.
Additional resources are provided below: