State & Local Incenvites

State Solar Tax Credits: Forms and Instructions

In an effort to promote clean energy adoption, several U.S. states offer residents tax credits for going solar. These are in addition to the Residential Clean Energy Credit, a federal income tax credit worth up to 30% of the total cost of an eligible system. 

This article will provide general information on which states offer a state income tax credit, along with links to required forms and any corresponding instructions. Palmetto customers who installed their system in a state offering such credits will have already been sent detailed instructions along with their contract. 

In each state described in this article, the incentive is a tax credit, not a rebate or refund. You must have state income tax liability to be eligible; however, many allow you to utilize the credit in future years if you do not have sufficient tax liability the same year the system was installed. 

Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.

Arizona

Arizona offers eligible solar owners a state income tax credit worth 25% of the total system cost up to a maximum of $1,000. Arizona Form 310 and instructions for completing can be found on the Arizona Department of Revenue’s website below. 

New York

New York offers eligible solar owners a state income tax credit worth 25% of the contracted value of the system up to a maximum of $5,000. This credit is non-refundable and can only be used to offset existing state tax liability. If a customer does not have enough tax liability to redeem the entire credit in year one, it can be carried over for up to five tax years. 

Form IT-255 and instructions for completing can be found on the New York Department of Taxation and Finance’s website below. 

Massachusetts

Massachusetts offers eligible solar owners a state income tax credit worth up to 15% of the total cost of their solar energy system up to a maximum of $1,000. The required tax form, Schedule EC, and instructions can be found on the Commonwealth of Massachusetts’s website below.

New Mexico

New Mexico offers eligible solar owners a state income tax credit, the New Solar Market Development Income Tax Credit (SMDTC), worth 10% of the total system cost up to a maximum of $6,000 per project. To secure the credit, a complete application before the annual $12 million budget is fully allocated. Once the program budget has been fully allocated for that tax year, no new credits will be granted. The program budget status is publicly tracked on this dashboard. 

In order to qualify for the tax credit, you must apply for and obtain a Certificate of Eligibility through the New Mexico Energy, Minerals, and Natural Resources Department (EMNRD). While Palmetto does not have all the information required to file this application on customers’ behalf, we will ensure projects meet all the technical program requirements and issue a partially completed application to the customer of record once the system has been granted Permission To Operate (PTO). Customers must then complete and submit an application with all the required information online to the New Mexico Energy Conservation and Management Division (ECMD).

The application, instructions, and submission portal can be found on the New Mexico EMNRD’s website below. 

Once you submit your application, the New Mexico ECMD will review the application. If approved, you will receive a Certificate of Eligibility via email that you must submit with your state income taxes for the tax year in which your system was turned on. You must obtain a Certificate of Eligibility to qualify for the tax credit. 

South Carolina

South Carolina offers eligible solar owners a state income tax credit worth 25% of the total cost of their solar energy system up to a maximum of $35,000 over 10 years. The maximum credit amount that a homeowner can receive each year is less than $3,500 or 50% of their annual state tax liability. If homeowners cannot claim their full tax credit in the first year, they will have up to 10 years to do so. The required form, SCH. TC-38, and instructions for completing can be found below on the South Carolina Department of Revenue's website.

Utah

Utah offers eligible solar owners a state income tax credit worth up to 35% of the total system cost up to a maximum of $800 for installations in 2022 or $400 for installations in 2023. Customers must file form TC-40A with their state income tax return and TC-40E with the Governer’s Office of Energy Development. 

On form TC-40A, under “Part 4 - Nonapportionable Nonrefundable Credit,” you’ll want to write “21” under the “Code” column for renewable residential energy systems credit. Under the “Amount” column, you’ll want to write “$800” if your system was installed in 2022 or “$400” if installed in 2023. You can complete the rest of the form as you normally would when filing your state taxes. This form should be filed with your state income tax return. 

TC-40A can be found on the Utah State Tax Commission’s website below: 

TC-40E can be completed online through the Utah Office of Energy Development’s tax credit portal. 

The Utah Office of Energy Development requires a non-refundable application fee of $15 that must be paid by credit card to receive the TC-40E tax form. Paying the fee does not guarantee that you will be approved for the tax credit.

TC-40E should be filed with the Governor’s Office of Energy Development, not with your state income tax return. To register, follow the instructions provided on their website. If no instructions are provided, you may use these tips as guidelines to help submit your application:

  1. Visit the Utah Office of Energy Development’s tax credit portal. 
  2. Create an account and verify your email address
  3. Select “View programs” and then “Fill out eligibility profile” 
  4. Select “Renewable Energy Systems Tax Credit for SOLAR PV…” then “Save my profile” 
  5. Select “Apply” then begin completing “Your tasks”
  6. Follow the steps to pay the $15 application fee online
  7. Begin the RESTC - Solar PV application by selecting “Residential” and filling in your address
  8. Select the answer to “Have you claimed a Utah state tax credit for a separate system at this location?”
  9. Fill in the name of the person filing the income tax return and enter your email address
  10. When asked “Is the solar panel grid connected?,” Select yes
  11. When asked “What is the solar PV system output capacity?,” enter the amount found in your solar system contract
  12. Select the year the installation was completed
  13. Indicate if you received a rebate or grant (Note: Tax credits are not considered rebates or grants)
  14. Upload utility confirmation by attaching a file of your countersigned net metering agreement sent to you by your utility company and contact them if you do not have it
  15. Upload an invoice for cash purchases or your loan agreement
  16. Upload a picture of the solar system installed
  17. Press “Submit” to complete your application

If you have issues completing the online application, you may also email energytaxcredits@utah.gov and include the following information: 

  • Your name or the applicant's name
  • Address where the system is or will be installed
  • A phone number you can be reached at
  • A brief description of your issue or concern

Once the application is approved, you will receive a copy of the TC-40E with a stamp of certification. This is not required when filing your taxes, but you must keep this form for auditing purposes.

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State Solar Tax Credits: Forms and Instructions

In an effort to promote clean energy adoption, several U.S. states offer residents tax credits for going solar. These are in addition to the Residential Clean Energy Credit, a federal income tax credit worth up to 30% of the total cost of an eligible system. 

This article will provide general information on which states offer a state income tax credit, along with links to required forms and any corresponding instructions. Palmetto customers who installed their system in a state offering such credits will have already been sent detailed instructions along with their contract. 

In each state described in this article, the incentive is a tax credit, not a rebate or refund. You must have state income tax liability to be eligible; however, many allow you to utilize the credit in future years if you do not have sufficient tax liability the same year the system was installed. 

Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.

Arizona

Arizona offers eligible solar owners a state income tax credit worth 25% of the total system cost up to a maximum of $1,000. Arizona Form 310 and instructions for completing can be found on the Arizona Department of Revenue’s website below. 

New York

New York offers eligible solar owners a state income tax credit worth 25% of the contracted value of the system up to a maximum of $5,000. This credit is non-refundable and can only be used to offset existing state tax liability. If a customer does not have enough tax liability to redeem the entire credit in year one, it can be carried over for up to five tax years. 

Form IT-255 and instructions for completing can be found on the New York Department of Taxation and Finance’s website below. 

Massachusetts

Massachusetts offers eligible solar owners a state income tax credit worth up to 15% of the total cost of their solar energy system up to a maximum of $1,000. The required tax form, Schedule EC, and instructions can be found on the Commonwealth of Massachusetts’s website below.

New Mexico

New Mexico offers eligible solar owners a state income tax credit, the New Solar Market Development Income Tax Credit (SMDTC), worth 10% of the total system cost up to a maximum of $6,000 per project. To secure the credit, a complete application before the annual $12 million budget is fully allocated. Once the program budget has been fully allocated for that tax year, no new credits will be granted. The program budget status is publicly tracked on this dashboard. 

In order to qualify for the tax credit, you must apply for and obtain a Certificate of Eligibility through the New Mexico Energy, Minerals, and Natural Resources Department (EMNRD). While Palmetto does not have all the information required to file this application on customers’ behalf, we will ensure projects meet all the technical program requirements and issue a partially completed application to the customer of record once the system has been granted Permission To Operate (PTO). Customers must then complete and submit an application with all the required information online to the New Mexico Energy Conservation and Management Division (ECMD).

The application, instructions, and submission portal can be found on the New Mexico EMNRD’s website below. 

Once you submit your application, the New Mexico ECMD will review the application. If approved, you will receive a Certificate of Eligibility via email that you must submit with your state income taxes for the tax year in which your system was turned on. You must obtain a Certificate of Eligibility to qualify for the tax credit. 

South Carolina

South Carolina offers eligible solar owners a state income tax credit worth 25% of the total cost of their solar energy system up to a maximum of $35,000 over 10 years. The maximum credit amount that a homeowner can receive each year is less than $3,500 or 50% of their annual state tax liability. If homeowners cannot claim their full tax credit in the first year, they will have up to 10 years to do so. The required form, SCH. TC-38, and instructions for completing can be found below on the South Carolina Department of Revenue's website.

Utah

Utah offers eligible solar owners a state income tax credit worth up to 35% of the total system cost up to a maximum of $800 for installations in 2022 or $400 for installations in 2023. Customers must file form TC-40A with their state income tax return and TC-40E with the Governer’s Office of Energy Development. 

On form TC-40A, under “Part 4 - Nonapportionable Nonrefundable Credit,” you’ll want to write “21” under the “Code” column for renewable residential energy systems credit. Under the “Amount” column, you’ll want to write “$800” if your system was installed in 2022 or “$400” if installed in 2023. You can complete the rest of the form as you normally would when filing your state taxes. This form should be filed with your state income tax return. 

TC-40A can be found on the Utah State Tax Commission’s website below: 

TC-40E can be completed online through the Utah Office of Energy Development’s tax credit portal. 

The Utah Office of Energy Development requires a non-refundable application fee of $15 that must be paid by credit card to receive the TC-40E tax form. Paying the fee does not guarantee that you will be approved for the tax credit.

TC-40E should be filed with the Governor’s Office of Energy Development, not with your state income tax return. To register, follow the instructions provided on their website. If no instructions are provided, you may use these tips as guidelines to help submit your application:

  1. Visit the Utah Office of Energy Development’s tax credit portal. 
  2. Create an account and verify your email address
  3. Select “View programs” and then “Fill out eligibility profile” 
  4. Select “Renewable Energy Systems Tax Credit for SOLAR PV…” then “Save my profile” 
  5. Select “Apply” then begin completing “Your tasks”
  6. Follow the steps to pay the $15 application fee online
  7. Begin the RESTC - Solar PV application by selecting “Residential” and filling in your address
  8. Select the answer to “Have you claimed a Utah state tax credit for a separate system at this location?”
  9. Fill in the name of the person filing the income tax return and enter your email address
  10. When asked “Is the solar panel grid connected?,” Select yes
  11. When asked “What is the solar PV system output capacity?,” enter the amount found in your solar system contract
  12. Select the year the installation was completed
  13. Indicate if you received a rebate or grant (Note: Tax credits are not considered rebates or grants)
  14. Upload utility confirmation by attaching a file of your countersigned net metering agreement sent to you by your utility company and contact them if you do not have it
  15. Upload an invoice for cash purchases or your loan agreement
  16. Upload a picture of the solar system installed
  17. Press “Submit” to complete your application

If you have issues completing the online application, you may also email energytaxcredits@utah.gov and include the following information: 

  • Your name or the applicant's name
  • Address where the system is or will be installed
  • A phone number you can be reached at
  • A brief description of your issue or concern

Once the application is approved, you will receive a copy of the TC-40E with a stamp of certification. This is not required when filing your taxes, but you must keep this form for auditing purposes.

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