Federal and state incentives can significantly lower the cost of going solar or installing a heat pump.
Federal tax credit (IRA)
The Inflation Reduction Act extended and expanded the residential clean energy credit:
- Solar (PV): 30% of cost through 2032, then stepping down
- Heat pumps (air-source, geothermal): 30% of cost (up to limits)
- Battery storage: 30% when installed with or added to solar
No income limit for the credit, but you must owe federal tax to benefit. Unused credit can carry forward.
Credit at a glance
| Technology | Credit | Notes |
|---|---|---|
| Solar PV | 30% | Through 2032 |
| Heat pump (HVAC) | 30% | Up to $2,000/year limit for certain equipment |
| Heat pump (water) | 30% | Up to $2,000/year |
| Geothermal | 30% | No annual cap |
| Battery storage | 30% | Often with solar |
State incentives (rebates, extra tax credits, utility programs) stack on top. Check your state energy office or utility for current programs.
How to claim
Keep all receipts and manufacturer certifications. File with your federal return using IRS Form 5695 (Residential Energy Credits). For state programs, follow each program's application process—often after installation is complete.