Are Portable Solar Generators Tax Deductible?

You’ve probably heard of the tax rebates and benefits offered to homeowners who install solar electric systems. Still, it’s hard not to wonder whether portable solar generator systems qualify for the same benefits. Can you claim tax deductions for your portable solar generator?

Your portable solar generator is tax deductible. But it needed to be installed in your primary or secondary residence between 01/01/2006 and 12/31/2023. You must directly own and use it for the first time when you claim the federal tax credit.

In this article, I’ll explain everything you need to know about portable solar generator tax deductions, including how the federal solar tax credit works, who is eligible to receive it, what expenses are included in the deduction, and whether you can combine it with other tax incentives.

Portable Solar Generators Are Eligible For the Federal Solar Tax Credit

While it’s clear that the federal solar tax credit applies to solar electric systems that are connected to the grid, it can be difficult to discern what other types of systems it applies to and whether portable solar generators are eligible at all.

Fortunately, as long as your system meets all other qualifications, portable solar generators are eligible for the federal solar tax credit. This is great news for anyone looking for a budget-friendly or easily portable solar power system for their home.

If you want to install a portable solar generator in your home and receive a tax credit, you must meet a few basic standards. These standards require you to use the generator as the power source for your primary or secondary residence and also regulate what types of systems are eligible.

From 2023 onwards, there is one additional requirement you’ll have to meet if you want your portable solar generator to be eligible for a federal solar tax credit.

Specifically, your new solar generator must be rated at or above three kilowatt-hours (kWh). Most medium-range and high-end solar generators meet this cut-off, but unfortunately, many budget options are now considered ineligible for a solar tax credit, with exceptions.

As you consider whether or not your portable solar generator is eligible for the tax credit, you should also carefully consider whether it meets the criteria precisely as they are written. Unfortunately, given the nature of legal documents, it’s easy to misinterpret a regulation when you don’t have legal training.

Here are some of the most important points to clarify:

Your portable generator needs to use solar energy to generate electricity. Other types of generators aren’t eligible for the federal solar tax credit.
Your portable generator needs to provide electricity to a dwelling unit. If you primarily use your portable solar generator for purposes like camping, it isn’t eligible for the federal solar tax credit.
If your portable solar generator is rated under three kilowatt-hours (kWh), it must exclusively use the sun’s power. If your sub-3-kWh portable solar generator can be charged with electricity from an outlet, it isn’t eligible for the federal solar tax credit.
Your portable solar generator needs to be installed. Unfortunately, while the IRS requires that generators are installed, no effort is made to clarify whether portable solar generators are eligible for a tax credit when installed as a permanent power source. You should consult a tax professional if you have doubts about whether your solar generator qualifies as an installation.

When you install your new portable solar generator, the savings and benefits won’t stop with your federal tax credit.

In fact, you’ll quickly notice a measurable decrease in your electricity bill. And unlike any other generator, you might have used before, portable solar generators are low-maintenance, quiet, durable, and eco-friendly.

What Is the Federal Solar Tax Credit?

The federal solar tax credit is a federal tax incentive that offers a 30% tax credit for the cost of your new solar electric system. But the system needs to be installed in your primary or secondary residence, newly installed, and you must own it directly.

In other words, it is an incentive program offered to homeowners to encourage them to install solar electric systems. While the credit was initially introduced in 2005 and scheduled to expire in 2007, the program has proved so popular that Congress has continued to delay its expiration.

Many types of solar electric systems qualify for this federal credit, provided the IRS accepts the vehicle as one of your primary residences. These include the following:

Built-in solar electric systems
Solar emergency backup power systems
Portable solar generators
Solar electric systems for vehicles such as RVs and boats

While the federal solar generator tax credit program will eventually expire, it will continue to provide Americans with the support they need to install new solar electric systems in their homes for years to come.

The solar credit program will expire in 2035, although Congress may choose to extend the credit again.

There’s no upper ceiling to how much of a tax credit you can receive under the federal solar tax program. The credit will always be worth 30% of qualifying purchases you made while installing your new solar electric system.

How the Federal Solar Tax Credit Works

The federal solar tax credit is offered by the U.S. government to homeowners who purchase and install a new solar electric system in their residences. Once the credit is claimed, the homeowner will enjoy a tax credit worth 30% of the solar electric system’s value.

As a tax credit, the federal solar tax credit serves as a dollar-for-dollar value that you can remove from the taxes you owe the federal government. Unlike tax deductions, which reduce the amount of income text by the federal government, this tax credit is directly subtracted from the taxes you owe at the end of the year.

The federal solar tax credit is a specialized tax credit meant to service homeowners who want to upgrade their residence’s electrical system to a newer eco-friendly alternative. The program has proven extremely popular because it lowers the barriers to switching to solar electric power and allows homeowners to enjoy significant savings on their power bills.

The solar tax credit is awarded as a one-time tax credit.

The value is deducted from your taxes owed during the year you file. If the tax credit you receive exceeds the taxes you owe, the remaining tax credit will roll over to the next year and provide a delayed deduction.

The federal solar tax credit is designed to be inclusive of various lifestyles.

As a result, portable solar generators are tax deductible through the federal solar tax credit, provided that you use the generator as the primary power source for your residence and meet all other requirements.

Who Is Eligible To Receive Federal Solar Tax Credits?

Most homeowners who have directly purchased and installed a solar electric system are eligible to receive the federal solar tax credit. Still, there are a few rules to be aware of. Unqualified residences, leased or rented solar electric systems, and unused systems are not eligible for a tax credit.

Before applying for the tax credit, assess whether you meet the basic qualifications to receive it, such as the following:

You installed your solar electric system within the correct timeframe. Homeowners who install their solar electric system between January 1, 2006, and December 31, 2034, can receive federal solar tax credits.
You own the solar electric system for which you intend to claim a tax credit. Specifically, you’re eligible for a credit if you paid or financed your solar electric system in cash or financed it. You aren’t eligible for the credit if you’re actively leasing or renting a system.
Your solar electric system is new or being used for the first time. You can claim the federal tax credit if you purchase a new or unused system.
The solar electric system powers your primary or secondary residence. You don’t qualify to receive the federal tax credit if the solar electric system is being used outside of the United States or if you’re using it to power a property that is not your residence.

However, it can be challenging to determine eligibility when several scenarios can apply. I’ve gathered the most common questions from the web below to help you determine whether your unusual situation qualifies.

Can I Claim a Tax Credit For a Portable Solar Generator?

You can claim a tax credit for any solar electric system not directly connected to the electric grid, including a portable solar generator, provided that you meet all other qualifications to receive the tax credit.

Can I Claim a Tax Credit For a Solar Electric System On My Rental Property?

Solar electric systems on rental properties aren’t eligible for taxpayer solar credit. But you might be able to file for a tax credit under the business ITC, provided that the solar electric system powers a residence in the United States that is resided in by a taxpayer.

If you rent the property seasonally and use it as a second residence during other parts of the year, you can claim the tax credit. You should determine whether the rental property qualifies as your second residence under IRS policy.

Can I Claim a Tax Credit For a Solar Electric System At My Second Residence?

You can claim a tax credit for a solar electric system at your second residence if your use of the residence meets IRS standards. RVs and boats with solar electric systems are also eligible for federal solar tax credits if you reside in them.

Can I Claim a Tax Credit For a Solar Electric System In My Apartment?

You can claim a tax credit for a solar electric system in your apartment provided that you own it, that it serves as the power source for your residence, and that you meet all other necessary qualifications. The tax credit isn’t limited to homeowners.

Can I Claim a Tax Credit For a Solar Electric System I’m Not Using Yet?

You cannot claim a tax credit for a solar electric system you aren’t using yet. But you will be eligible to apply for the federal solar tax credit on the year you install the solar electric system, provided that the system is new or unused and meets all other qualifications.

What Expenses Are Included In the Federal Solar Tax Credit?

The federal solar tax credit includes most of the expenses of purchasing a solar electric system. This includes the cost of solar panels, installation and associated fees, energy storage systems, solar equipment like wires and mounting hardware, and even sales taxes.

Here are all the expenses you can expect to include in your federal solar tax credit calculation:

The cost of solar panels and the solar electric system itself. This is the primary expense that the federal solar tax credit is meant to address.
The cost of installation. This includes the labor needed to install the system and expenses like inspection costs and permitting fees that add up during the process.
The cost of energy storage systems. Not all energy storage systems qualify for the tax credit, but you can include the cost of any system rated at or above three kilowatt-hours (kWh).
The cost of any additional equipment. Solar electric systems can’t work without the equipment to install them correctly. As a result, you can expect the IRS to include equipment like wires, mounting hardware, and inverters in your tax credit calculation.
Sales taxes. Anything you purchased that was subject to taxing will include the taxes when the federal solar tax credit is calculated.

How Can I Claim the Federal Solar Tax Credit?

You can claim the federal solar tax credit when you file your annual federal tax return by filling out the IRS Form 5695 and adding the right information to your Form 1040 and Schedule 3 worksheets. If you’re unfamiliar with taxes, consult an accountant to maximize your savings.

Final Thoughts

It can be difficult to understand all of the information the government provides to determine whether or not your portable solar generator is eligible for a tax deduction. Using this guide, however, you’ll be equipped with all the information you need to make your solar electric system eligible for a tax credit and apply for the credit itself when the tax season arrives.