2022 Residential Clean Energy Credit
For 2022, the Residential Clean Energy Credit is 30% (Credit rate) and $500 (Fuel cell credit limit, per half kilowatt).
Effective 2022-01-01Source: 2022 Instructions for Form 5695 (IRS)Verified 2026-08-29
Compared with 2021
| Item | 2021 | 2022 | Change |
|---|---|---|---|
| Credit rate | 26% | 30% | +4% (+15.4%) |
| Fuel cell credit limit, per half kilowatt | $500 | $500 | +$0 (+0.0%) |
Who it applies to
Taxpayers who made qualifying clean energy improvements to a U.S. residence in 2022
What changed this year, and why
For 2022, the residential clean energy credit allows a credit equal to 30% of the cost of qualified solar electric, solar water heating, small wind energy, geothermal heat pump, biomass fuel, and fuel cell property installed in a home located in the United States. The credit is claimed on IRS Form 5695, Part I. The home does not have to be the taxpayer's main home. Both existing homes and homes under construction qualify. Labor costs for onsite preparation, assembly, or original installation, as well as piping or wiring to interconnect the property to the home, are included in the eligible costs.
Common questions
- What is the credit rate for 2022?
- The credit rate for property placed in service in 2022 is 30%.
- What types of property qualify?
- Qualified solar electric property, solar water heating property, small wind energy property, geothermal heat pump property, biomass fuel property, and fuel cell property.
What happens when the credit is bigger than your tax
Under the residential clean energy credit, if your calculated credit exceeds your tax liability for 2022, the portion you cannot use does not expire. The IRS instructions specify that when the credit limitation (the amount your credit is capped at based on tax owed) is lower than the total credit you would otherwise claim, the difference is treated as an unused credit. You may carry that unused amount forward to the next tax year, 2023, where it can be applied against your tax liability for that year. The instructions also require you to file the credit form for 2022 even if you are unable to use any of the credit in the current year, so that the carryforward is properly documented and available in future years.
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 2023.
2022 Instructions for Form 5695 (IRS)
Business use of the property can cut the credit
For property that serves both personal and business purposes, the credit calculation depends on how the item is used. The IRS instructions state that if less than 80 percent of an item's use is for nonbusiness purposes, only the portion of costs allocable to that nonbusiness use qualifies for the credit. This means that property used primarily for business (80 percent or more) does not qualify at all, while property used partly for business but predominantly for personal purposes allows a credit only on the personal-use share. You must allocate the costs between the two uses and claim the credit only on the nonbusiness fraction.
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.
2022 Instructions for Form 5695 (IRS)
A cost counts when installation is finished, not when you paid
For the residential clean energy credit, a cost is treated as paid at a specific point in time rather than when you actually write a check or pay an invoice. Generally, costs are treated as paid when the original installation of the item is completed. For costs connected with the reconstruction of a home, the cost is treated as paid when your original use of the reconstructed home begins. Similarly, for the residential clean energy credit only, costs connected with the construction of a home are treated as being paid when your original use of the constructed home begins. This timing rule determines which tax year the credit applies to, regardless of when you made payments to contractors or suppliers during the building process.
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.
2022 Instructions for Form 5695 (IRS)
Utility rebates come off the cost first
If you receive a subsidy from a public utility to help pay for the purchase or installation of an energy conservation product, and that subsidy is not included in your gross income, you must reduce the cost of the product by the subsidy amount before calculating your credit. This reduction applies whether you receive the subsidy directly or a third party such as a contractor receives it on your behalf. The purpose is to ensure that you claim a credit only on the net amount you actually paid, not on funds that were effectively provided to you tax-free by the utility. This rule prevents double benefits from the same expenditure.
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.
2022 Instructions for Form 5695 (IRS)
Fuel cells must be at your main home; solar need not be
Qualified fuel cell property costs are limited to costs for property installed on or in connection with your main home located in the United States. This means a fuel cell system must be placed at the residence you live in most of the time to qualify for the credit. A temporary absence due to illness, education, business, military service, or vacation does not change which home is your main home. In contrast, other types of qualified property for the residential clean energy credit, such as solar panels, may be installed at any home you own and use as a residence, not necessarily your main home. The fuel cell credit therefore has a stricter location requirement than solar or other eligible property.
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.
2022 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.
2022 Instructions for Form 5695 (IRS)
- Credit rate
The credit rate for property placed in service in 2022 through 2032 is 30%.
- 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.