Tax Credit Benefits of a Residential Clean Energy Credit (RCEC)
If you’ve been thinking about installing solar panels or upgrading your home with renewable energy technology, the clock may be ticking on your best opportunity to maximize savings. The federal Residential Clean Energy Credit (RCEC) currently offers homeowners a valuable tax incentive, but pending legislation has shortened the timeline.
What Is the RCEC?
The RCEC is a federal, non-refundable tax credit equal to 30% of the cost of qualifying clean energy systems. These can include:
- Solar electric panels
- Solar water heating systems
- Geothermal heat pumps
- Small wind energy systems
The credit applies to both primary and secondary residences, as well as rental properties that you personally occupy. However, landlords who do not live in the property cannot claim the benefit.
Why the Urgency?
As it stands today, the 30% RCEC is scheduled to remain in place through 2032, gradually stepping down in 2033 and 2034 before expiring completely in 2035. However, the recently passed “One Big Beautiful Bill” effectively terminates the RCEC for homeowners after December 31, 2025. As of now, this will be the final year to take advantage of the full 30% credit.
Why You Should Act Now
Even if you’re ready to commit, renewable energy projects don’t happen overnight. From researching and selecting a system, to securing permits, installation and inspection, the process can take several months. To qualify for the credit, your system must be placed in service by December 31, 2025.
Another important point: while the RCEC is non-refundable—meaning it won’t create a refund by itself—any unused portion of the credit can carry forward into future tax years. That flexibility makes it easier to maximize the benefit, even if your tax liability is smaller in the first year.
Take Advantage While You Can
The Residential Clean Energy Credit is one of the most generous incentives for clean energy adoption in the U.S. But with potential legislative changes on the horizon, waiting could mean missing out. If solar panels, geothermal systems or other clean energy upgrades are on your radar, now is the time to plan ahead and ensure you’re positioned to take full advantage of this opportunity.
For help with your tax planning and claiming valuable tax credits like the RCEC, contact Illumination Wealth today for expert financial guidance personalized to your specific needs and goals.