In Solar Tax Credits Are Disappearing! I related that before January 1, 2020, an owner of solar panels was entitled to a 30% credit against federal income tax owed. In 2020 the credit was reduced to 26%, and for 2021 it was to drop to 22%. But thanks to the Covid Relief package the tax credit for this year will remain at the 2020 level of 26%. 2022 will be the same, with a reduction to 22% in 2023. After that year it is scheduled to disappear entirely. To qualify, a system needs to be “placed in service” prior to the year end deadlines, which means installed, operable and ready for inspection. Don’t forget that a solar tax credit will be reduced by the sum of any credit for a plug-in hybrid or electric vehicle purchased that same year. So stagger those purchases in consecutive years to get the full benefit of these tax credits.