The federal government encourages residents to explore renewable energy by offering a 30-percent tax credit on qualifying solar hot water or solar electric systems for the tax year 2008. Most Focus on Energy co-funded solar water heating and solar electric systems qualify for the federal tax credit. Qualifying solar energy systems must be in operation by midnight December 31, 2008 to be eligible.
The eligibility period for the residential solar tax credit may be extended beyond 2008 and modified. Contact Focus on Energy or consult the resources listed under “Learn More” at the end of this fact sheet to learn the current status of the federal tax credit.
Focus on Energy strongly encourages you to discuss your eligibility and your solar system’s eligibility for the tax credit with a trusted tax professional.
THE RESIDENTIAL SOLAR TAX CREDIT
An eligible Wisconsin resident can claim the 30-percent tax credit on the installed price of qualifying solar electric and/or solar water heating systems. The total solar tax credit for each dwelling unit is capped at $2,000. The basis for the tax credit is the installed cost of the qualifying solar system less the Focus on Energy incentive and any other utility-funded incentives. For example, if an eligible homeowner installs a qualifying solar system with an installed price of $7,000 and receives a $2,000 Cash-Back Reward from Focus on Energy, the basis for the tax credit calculation is $7,000 minus $2,000, or $5,000. The tax credit’s value is 30 percent of this $5,000, or $1,500. Therefore, the eligible homeowner would receive $1,500 in federal tax credit. Since the total solar tax credit for each dwelling unit is capped at $2,000, only $500 of the tax credit remains for that dwelling unit should the homeowner install a second qualifying solar system.
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