Solar Tax Incentives 2025
Take advantage of generous state and local incentives that can reduce your solar installation cost by 20-40%.
Example Savings:
$12,500+
On a $25,000 system with incentives
State & Local Solar Incentives
Credit Schedule
- 2025-2032:30%
- 2033:26%
- 2034:22%
Example Calculation
What's Included in the Tax Credit:
- Solar panels and racking
- Inverters and optimizers
- Battery storage systems
- Installation labor
- Electrical work and permits
- Sales tax on equipment
Important Deadlines:
- System must be installed and operational by December 31, 2025 to claim on 2025 taxes
- 30% credit guaranteed through 2032 - plenty of time to go solar
- File IRS Form 5695 with your tax return in the installation year
State & Local Incentives
Additional incentives stack on top of the federal tax credit for even greater savings
State Tax Credit
Up to $5,000
Unused credit rolls over for 5 years
Additional Benefits:
- SRECs: $70-90 per certificate
- Property Tax: 100% exemption (permanent)
- Net Metering: 1:1 credit for excess production
- MEA Grants: For income-qualified residents
Total 25-Year Value:
$57,000-$82,000
Solar for All Program
Income-qualified residents
Additional Benefits:
- SRECs: $50-400 per certificate
- Property Tax: Exemption for solar installations
- Net Metering: Available for all system sizes
- PPAs Available: Zero-down through partners
SREC Market:
One of the strongest in the nation
Tax Exemptions
No state tax credit, but valuable exemptions
Available Benefits:
- Property Tax: 80% exemption for 5 years
- Sales Tax: Exemption on equipment purchase
- Net Metering: Excellent programs
- Dominion Energy: Select area incentives
Best For:
Homeowners combining federal credit with local utility programs
Solar Renewable Energy Certificates (SRECs)
What are SRECs?
When your solar system generates 1,000 kWh (1 MWh) of electricity, you earn 1 SREC that can be sold on the market. This creates an ongoing income stream for 15 years in addition to your electricity savings.
Maryland SREC Market
DC SREC Market
* DC SREC prices fluctuate based on market demand
How to Earn SRECs:
- 1.We register your system with PJM-GATS during installation
- 2.SRECs automatically generate as your system produces electricity
- 3.Choose an SREC aggregator or broker to sell your certificates
- 4.Receive quarterly or annual payments for 15 years
Complete Savings Breakdown Example
8 kW Residential System in Maryland
Complete 25-year value breakdown
Plus Ongoing Benefits:
How to Claim Your Incentives
- 1.Complete installation by Dec 31, 2025
- 2.File IRS Form 5695 with tax return
- 3.Include installation receipts
- 4.Receive credit on taxes owed
- 1.File Maryland Form 502CR
- 2.Include installation receipts
- 3.Claim up to $5,000 credit
- 4.Carry forward unused credit for 5 years
- 1.We handle PJM-GATS registration
- 2.Choose your SREC broker
- 3.SRECs auto-generate as you produce
- 4.Receive passive income payments
We handle the complex paperwork! Aduu Solar assists with SREC registration and can recommend reputable aggregators. We make claiming your incentives as easy as possible.
Incentive FAQs
The federal Investment Tax Credit (ITC) for 2025 is 30% of your total solar installation cost. This credit remains at 30% through 2032, then steps down to 26% in 2033 and 22% in 2034. You can deduct this amount directly from your federal income taxes.
Yes! You can often combine multiple state and local incentives. For example, Maryland residents can receive the state tax credit plus ongoing SREC income. DC residents can combine rebates with property tax exemptions. These incentives stack for maximum savings.
To claim the federal solar tax credit, file IRS Form 5695 with your federal tax return for the year your system was installed. Include all installation costs and equipment receipts. For state credits, file your state's specific form (Maryland Form 502CR) with required documentation. We provide all necessary paperwork for your tax preparer.
SRECs are tradable certificates earned when your solar system generates 1,000 kWh of electricity. In Maryland and DC, you can sell these certificates for additional income. Maryland SRECs trade at $70-90 each, while DC SRECs range from $50-400. An average 8 kW system generates 8-12 SRECs per year, providing $560-$4,800 in annual passive income.
Yes! Battery storage systems may qualify for state and local incentives when installed with solar panels. This means batteries like Tesla Powerwall, Enphase batteries, and others may be eligible for various incentive programs depending on your location.
The federal tax credit can be carried forward to future tax years if you don't owe enough taxes in the installation year. There's no expiration on the carryforward. Maryland's state credit can also be carried forward for up to 5 years, giving you flexibility to use the full value.