At this time the IRS offers a 30% Investment Tax Credit for most renewable energy installations. This credit is available for both Residential and Commercial installations and is taken as an Income Tax credit. The basis for this tax credit depends on the incentives offered in the state where the installation occurs but follows the general guidelines below.
Residential – The basis for the income tax credit is the full system price less any incentive paid directly to the solar installer. As an example, in New York, if a 5,000 watt solar PV array is installed at $4.00/watt, the system cost would be $20,000. At this time the NYSERDA incentive is $0.90/watt, therefore NYSERDA pays the installer is $4,500 and the cost to the homeowner is $15,500. The Federal Income Tax Credit would therefore be $4,650 (30% * $15,500).