2019 Residential Clean Energy Credit
For 2019, the Residential Clean Energy Credit is 30% (Credit rate) and $500 (Fuel cell credit limit, per half kilowatt).
Effective 2019-01-01Source: 2019 Instructions for Form 5695 (IRS)Verified 2026-08-29
Compared with 2018
Every figure on this page is unchanged from 2018.
| Item | 2018 | 2019 | 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 installed qualified residential energy efficient property in their U.S. home in 2019
What changed this year, and why
The Residential Energy Efficient Property Credit allows a 30% credit for qualified solar, wind, geothermal, and fuel cell property installed in 2019. The fuel cell credit is capped at $500 per half kilowatt of capacity.
Common questions
- What is the credit rate and what property qualifies?
- The credit equals 30% of the cost of qualified solar electric, solar water heating, small wind, geothermal heat pump, and fuel cell property. The fuel cell credit is limited to $500 for each half kilowatt of capacity.
What happens when the credit is bigger than your tax
When the Residential Clean Energy Credit you calculated on Form 5695 is larger than the tax liability you owe for 2019, the portion of the credit that exceeds your tax cannot be refunded as a payment. Instead, the unused amount is carried forward to the following tax year - in this case, 2020 - where it can offset your tax liability then. The rule applies whenever line 14 of the form is less than line 13. You are required to file Form 5695 for 2019 even if you cannot use any of the credit at all in that year, so that the carryforward is properly recorded. The credit rate for 2019 is 30%, so a large installation can easily produce a credit that exceeds the tax owed; the carryforward ensures the full 30% benefit is eventually received, just shifted into a later return.
If you can't use all of the credit because of the tax liability limit (that is, line 14 is less than line 13), you can carry the unused portion of the credit to 2020.
2019 Instructions for Form 5695 (IRS)
Business use of the property can cut the credit
When an item such as a solar panel system is used partly for business and partly for personal purposes, only the share of the cost that corresponds to personal use can be counted toward the residential energy credits. The 80% threshold is the test: if less than 80% of the item's use is for nonbusiness purposes, only that portion of the costs that is allocable to the nonbusiness use can be used to determine either credit. This means you must prorate the cost based on the actual percentage of nonbusiness use. The credit rate is 30%. If the item's nonbusiness use falls below 80%, you take only the proportional share of the cost into account when computing the credit, potentially reducing the credit you can claim.
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.
2019 Instructions for Form 5695 (IRS)
A cost counts when installation is finished, not when you paid
For both the Residential Clean Energy Credit and the Nonbusiness Energy Property Credit, costs are treated as paid when the original installation of the item is completed, not when you actually hand over payment. For costs connected with the reconstruction of your home, the costs are treated as paid when your original use of the reconstructed home begins. Likewise, for the Residential Clean Energy Credit only, costs connected with the construction of a brand-new home are treated as paid when your original use of the constructed home begins. This timing rule matters for determining which tax year the credit belongs to. The credit rate for qualified expenditures in 2019 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.
2019 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 you figure your credit. The same reduction applies if a third party, such as your contractor, receives the subsidy on your behalf. The purpose of the rule is to prevent a double tax benefit: you cannot claim the 30% credit on costs that were effectively paid for by a tax-free utility rebate. Only your net out-of-pocket cost, after subtracting the subsidy, is eligible to generate the Residential Clean Energy Credit or the Nonbusiness Energy Property Credit.
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.
2019 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 be an integrated system that converts a fuel into electricity using electrochemical means, with a nameplate capacity of at least one-half kilowatt. Unlike solar panels or geothermal heat pumps, which can qualify even if installed on a second home or vacation property, fuel cell property must be placed at your main home to be eligible for the credit. The credit rate is 30%. In addition, the fuel cell credit is subject to a per-half-kilowatt limit of $500, meaning the qualifying cost is capped based on the system's kilowatt capacity multiplied by this amount.
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.
2019 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.
2019 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
- 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.