Quick Guide To IRS Form 5695 for 2024
- Hanna Kielar
- Mar 26
- 8 min read
Updated: May 11
Table of Contents:
-- How To Fill Out Form 5695 for 2024
You made the smart decision to install a solar system in 2024—now it’s time to make sure you get the full benefit of the Federal Solar Tax Credit. This credit can significantly reduce your tax bill, but to claim it, you’ll need to complete IRS Form 5695 when you file your taxes.
Form 5695 is used to claim residential energy credits, including the 30% solar tax credit, which helps offset the cost of your solar installation. Filling it out correctly ensures you receive the maximum savings available.
Not sure where to start? Don’t worry—we’ll walk you through what IRS Form 5695 for 2024 includes, what information you’ll need, and how to properly claim your credit. Let’s make sure you get the most out of your clean energy investment.
What Is IRS Form 5695 For Residential Energy Credits?
IRS Form 5695 is the paperwork you file with your income taxes to take advantage of the financial incentives of going green. The Form 5695 worksheet is for calculating and claiming non-business energy property credits or residential energy-efficient property credits.
This form isn’t just for the solar tax credit—it also covers geothermal heat pumps, wind turbines, fuel cells, solar water heating systems, and biomass energy systems. The IRS provides Form 5695 instructions to ensure taxpayers correctly complete the form and maximize their renewable energy tax benefits.
How To Fill Out Form 5695 for 2024
To claim the Residential Clean Energy Credit, the first step in completing IRS Form 5695 is verifying eligibility. The form includes a checklist to help you determine which solar panel system or home energy upgrades qualify for the tax credit.
Information Needed for IRS Form 5695
You will need the following details to calculate your tax credit accurately:
Gross cost of the solar panel system – This includes solar panels, inverters, racking, labor, and permitting fees. Subtract any state tax credits, rebates, or incentives from the total cost.
Costs for related home upgrades – If your solar installation requires upgrades like a new electrical panel, these costs may also qualify. Your solar installer can provide an itemized breakdown.
Tax credit limits – On Page 4 of Form 5695, you will calculate the maximum tax credit you can claim for the year.
Be prepared to gather information about other qualifying expenses that may affect the overall credit calculation, including:
Adoption expenses
Purchases of a battery-electric vehicle (BEV) or plug-in hybrid electric vehicle (PHEV)
First-time home purchases
Form 5695 Instructions
To complete IRS Form 5695, first determine your eligibility for the Residential Clean Energy Credit or the Energy Efficient Home Improvement Credit. Use the Form 5695 instructions to enter qualified expenses, calculate the credit amount, and transfer it to your tax return. Keep records of receipts and manufacturer certifications in case the IRS requests verification.
What Qualifies For IRS Form 5695 in 2024?
IRS Form 5695 allows homeowners to claim Residential Energy Credits for various clean energy upgrades beyond solar panel systems. Eligible improvements for 2024 include:
Renewable Energy Systems (30% Tax Credit)
Solar panel systems (including panels, inverters, racking, labor, and permitting)
Solar water heaters (must be certified by the Solar Rating and Certification Corporation (SRCC))
Battery storage systems (must have at least 3 kWh capacity)
Small wind energy systems
Geothermal heat pumps (must meet ENERGY STAR® requirements)
Fuel cells (limited to $500 per 0.5 kW capacity)
Energy-Efficient Home Improvements (Up to $3,200 in Credits Per Year)
ENERGY STAR® certified appliances, including:
Natural gas, propane, and oil water heaters
High-efficiency furnaces
Biomass stoves and boilers
Electric or natural gas heat pumps
Exterior doors (must meet ENERGY STAR® standards) – up to $250 per door, $500 max
Exterior windows and skylights – up to $600
Insulation and air sealing materials (installation costs not included)
Energy-efficient roofing materials (installation costs not included)
Home energy audits – 30% of cost, up to $150
Carry-Over Credit for Previous Years
If you installed solar panels or other clean energy upgrades in a previous tax year but did not claim the full credit due to insufficient tax liability, you may carry over the remaining credit to future years.
To maximize your savings and understand all eligible upgrades, consult a tax professional. Also, other programs may provide incentives for energy efficiency and cost savings, complementing the benefits of IRS 5695.
The Energy Efficient Home Improvement Credit
The Nonbusiness Energy Efficient Property Credit was expanded and renamed the Energy Efficient Home Improvement Credit, offering enhanced benefits for homeowners from 2023 through 2032. Here's how it works, with references to IRS 5695 for claiming the credit:
Nonbusiness Energy Efficient Property Credit (2022)
For expenses incurred in 2022, homeowners could claim a 10% tax credit, with a lifetime cap of $500 for most items. Specific limits include:
Doors: $200 cap
Coverage: Installation and purchase costs for energy-efficient HVAC systems, water heaters, and biomass stoves, plus the purchase of energy-saving doors, windows, skylights, insulation, and roofing materials (installation costs excluded).
Energy Efficient Home Improvement Credit (2023–2032)
Starting in 2023, the updated credit increases to 30% of eligible expenses, with an annual cap of $1,200 per year, replacing the previous lifetime limit of $500. This expansion supports investments in energy-efficient upgrades, including:
ENERGY STAR® certified appliances
Insulation, doors, and windows
Heat pumps and biomass stoves
You can use Form 5695 to claim this credit, ensuring you maximize the tax benefits while contributing to energy efficiency and sustainability. For detailed guidance, consult a tax professional and review IRS 5695 instructions for 2024.
Overview Of The Federal Solar Tax Credit - IRS 5695
The federal solar tax credit, known as the Residential Clean Energy credit, allows eligible homeowners to claim significant tax credits for installing solar panels through 2034. This credit offers a 30% reduction on taxes owed for installations until 2032, then decreases to 26% in 2033 and 22% in 2034, with a complete phase-out by 2035.
These credits, detailed on IRS Form 5695, directly reduce tax liability, not deductions. Homeowners with lower tax liabilities can carry over unused credits, so consulting a tax professional is advisable for guidance.
FAQs: Using IRS Form 5695
Homeowners often have questions about IRS Form 5695 and how to claim Residential Energy Credits for solar panels and other clean energy upgrades.
Who fills out IRS Form 5695?
If you installed a qualifying renewable energy system, such as solar panels, you must complete IRS Form 5695 for 2024 to claim the Residential Clean Energy Credit. Submit this form with your tax return to apply the credit to your federal tax liability.
What is the energy tax credit for 2024?
Under the Inflation Reduction Act, the federal solar tax credit remains at 30% of the total system cost until 2032. Previously, the credit was set to drop to 26% in 2022 and 22% in 2023 before expiring in 2024. However, with the new law, homeowners can claim 30% on qualifying solar installations through IRS Form 5695.
Can I claim expenses from previous years on Form 5695?
IRS Form 5695 for 2024 applies to clean energy upgrades made in the current tax year. If you had qualifying solar panel expenses or other residential energy improvements in previous years but did not claim the credit, you may need to file an amended return for that tax year. Check the latest IRS Form 5695 instructions or consult a tax professional for guidance.
Do I need to submit documentation with IRS Form 5695?
Submitting documentation with IRS Form 5695 when filing your tax return is not required, but keeping all relevant documents and receipts is highly recommended. Retaining this information ensures you can verify your claim for the Residential Clean Energy Credit or the Energy Efficient Home Improvement Credit if the IRS 5695 form triggers an audit or a request for additional information.
Can I claim the residential energy credits on Form 5695 for a rental property?
No, the residential energy credits on Form 5695 are exclusively for primary residences or second homes and generally do not apply to rental properties. However, there is a separate credit available for certain energy improvements made to qualifying rental properties, known as the Energy-Efficient Commercial Building Tax Deduction. It’s advisable to consult the latest IRS guidance and seek advice from a tax professional for specific information regarding energy credits for rental properties.
How do I get IRS Form 5695?
The IRS provides Form 5695 for 2024 on its official website, along with Form 5695 instructions to help homeowners complete it correctly. You can download the form directly from the IRS website or use tax preparation software like TurboTax or H&R Block, which guides you through the process and ensures you claim all eligible Residential Energy Credits.
When will Form 5695 be available?
The IRS has released Form 5695 for 2024, and it is now available to download on its website as a PDF. You can also access the form through tax preparation software, including TurboTax and H&R Block. There is a common misconception that Form 5695 is not ready for 2024, but this is not true.
Where can I get Form 5695 instructions for 2024?
The IRS published detailed instructions for completing Form 5695 for Residential Energy Credits, and the PDF is available for download. IRS Form 5695 instructions explain who can take the tax credit, the requirements for claiming it, and how to fill out the form line by line.
What other home efficiency upgrades can be claimed on Form 5695?
Home efficiency upgrades that can be claimed on Form 5695 include energy-saving improvements like water heaters, furnaces, exterior doors, windows, air conditioning units, heat pumps, biomass stoves, and small wind energy turbines. These upgrades contribute to energy efficiency and can qualify for tax credits, making them a valuable investment for homeowners wishing to enhance their properties.
What is the solar tax credit form?
The solar tax credit form is a form used to claim the Residential Renewable Energy Tax Credit, which provides a credit for the costs of installing qualified clean energy property, such as solar panels, in residential homes. IRS Form 5695 allows you to report and claim the credit on your federal income tax return, along with other qualifying home upgrades that improve home energy efficiency.
Have there been any changes to the solar tax credit under the Trump administration?
As of February 2025, there have been no changes affecting the federal solar tax credit or IRS Form 5695. You can still use IRS Form 5695 to claim 30% of your eligible solar installation costs, with the credit available through 2032. However, it’s important to stay informed about potential legislative changes that could impact tax incentives.
How do I claim the solar tax credit on my taxes?
To claim the solar tax credit, you need to complete IRS Form 5695, "Residential Energy Credits," when filing your federal tax return. This form will help you calculate the credit amount based on your qualified solar energy installation expenses. Ensure you have all related receipts and documentation to support your claim.
Can homeowners carry a solar tax credit forward for future tax years?
Homeowners can carry forward any unused portion of the solar tax credit to future tax years, according to the US Department of Energy. The Residential Energy Credits, which include the solar tax credit claimed on Form 5695, allow for a carryover of any excess credit not fully utilized in the current tax year. However, it's essential to check the latest IRS guidelines or consult with a tax professional for the most accurate information.
Form 5695 For Residential Energy Credits
Solar panel systems have a high up-front cost, so filling out IRS Form 5695 is critical to shortening your payback period. If you run into difficulties, get help from a qualified tax professional.
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