2017 Residential Clean Energy Credit
For 2017, the Residential Clean Energy Credit is 30% (Credit rate) and $500 (Fuel cell credit limit, per half kilowatt).
Effective 2017-01-01Source: 2017 Instructions for Form 5695 (IRS)Verified 2026-08-29
Compared with 2016
Every figure on this page is unchanged from 2016.
| Item | 2016 | 2017 | Change |
|---|---|---|---|
| Credit rate | 30% | 30% | +0% (+0.0%) |
| Fuel cell credit limit, per half kilowatt | $500 | $500 | +$0 (+0.0%) |
Who it applies to
Taxpayers who made qualifying energy-efficient improvements to a home in the United States in 2017 and who claim the residential energy efficient property credit on Form 5695.
What changed this year, and why
For 2017, the residential energy efficient property credit allows a credit of 30% of the cost of qualified solar electric, solar water heating, small wind, geothermal heat pump, and fuel cell property installed on or in connection with a home in the United States. Qualified costs include labor for onsite preparation, assembly, or original installation, and for piping or wiring to interconnect the property to the home. The credit for qualified fuel cell property is limited to $500 for each one-half kilowatt of the property's capacity.
Common questions
- What percentage is the residential clean energy credit?
- 30% of the cost of qualified property, including labor for onsite preparation, assembly, and original installation.
- Is there a limit on the fuel cell portion of the credit?
- $500 for each one-half kilowatt of the property's capacity.
What happens when the credit is bigger than your tax
If the credit you calculate on Form 5695 is larger than your tax liability for 2017, you do not lose the excess. The portion that exceeds your tax liability limit (line 14 being less than line 13) may be carried forward to the next tax year, 2018. You must file the form even if you cannot use any of the credit in the current year. The carryforward lets you apply the unused balance against your 2018 tax liability, subject again to that year's liability limit. This rule applies to the residential energy efficient property credit calculated at 30% of qualified expenditures.
If you can't use all of the credit because of the tax liability limit (line 14 is less than line 13), you can carry the unused portion of the credit to 2018.
2017 Instructions for Form 5695 (IRS)
Business use of the property can cut the credit
If you use an item partly for business and partly for personal purposes, the 80% test determines whether you can claim the credit at all. When less than 80% of the use of an item is for nonbusiness purposes, only the portion of costs allocable to that nonbusiness use may be counted toward the credit. In other words, the business-use share is excluded entirely, and only the residential share of the expenditure qualifies. This rule applies to both the nonbusiness energy property credit and the residential energy efficient property credit. For the residential energy efficient property credit, the credit rate is 30% of the qualifying nonbusiness portion of the cost.
If less than 80% of the use of an item is for nonbusiness purposes, only that portion of the costs that is allocable to the nonbusiness use can be used to determine either credit.
2017 Instructions for Form 5695 (IRS)
A cost counts when installation is finished, not when you paid
For purposes of both credits, a cost is treated as paid when the original installation of the item is completed. If the costs are connected with the reconstruction of your home, the cost is treated as paid when your original use of the reconstructed home begins. For the residential energy efficient property credit only, costs connected with the construction of a home are treated as paid when your original use of the constructed home begins. This means the timing of the credit is tied to completion and original use, not the date you actually paid the contractor or purchased the equipment. The credit rate for qualifying expenditures is 30%.
For purposes of both credits, costs are treated as being paid when the original installation of the item is completed, or, in the case of costs connected with the reconstruction of your home, when your original use of the reconstructed home begins.
2017 Instructions for Form 5695 (IRS)
Utility rebates come off the cost first
If you received a subsidy from a public utility for the purchase or installation of an energy conservation product and that subsidy was not included in your gross income, you must reduce your cost for the product by the amount of that subsidy before figuring your credit. This rule also applies when a third party, such as a contractor, receives the subsidy on your behalf. The effect is that the credit is calculated on your net out-of-pocket cost after the tax-free subsidy is subtracted. The residential energy efficient property credit rate is 30% of the reduced qualified expenditure. For fuel cell property, the credit is further limited to $500 per each half kilowatt of capacity.
If you received a subsidy from a public utility for the purchase or installation of an energy conservation product and that subsidy wasn't included in your gross income, you must reduce your cost for the product by the amount of that subsidy before you figure your credit.
2017 Instructions for Form 5695 (IRS)
Fuel cells must be at your main home; solar need not be
Qualified fuel cell property costs are costs for qualified fuel cell property installed on or in connection with your main home located in the United States. The fuel cell must have a nameplate capacity of at least one-half kilowatt. Unlike solar electric property, geothermal heat pumps, small wind energy property, and solar water heating property, which may be installed in a home that is not your main home, fuel cell property must be placed at your main home to qualify for the credit. The credit rate for qualified fuel cell property is 30%, with a limit of $500 per each half kilowatt of capacity.
Qualified fuel cell property costs are costs for qualified fuel cell property installed on or in connection with your main home located in the United States.
2017 Instructions for Form 5695 (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
2017 Instructions for Form 5695 (IRS)
- Credit rate
You may be able to take a credit of 30% of your costs of qualified solar electric property, solar water heating property, small wind energy property, geothermal heat pump property, and fuel cell property.
- Fuel cell credit limit, per half kilowatt
The credit amount for costs paid for qualified fuel cell property is limited to $500 for each one-half kilowatt of capacity of the property.