To request a Solar Energy System Tax Credit, you are required to complete a timely application. The application must be received by June 30, 2022, for residential installations completed during the 2021 calendar year. All other applications are due May 1 following the year of the installation of the solar energy system.

Important update on the Solar Energy System Tax Credit

Legislation (Senate File 2367, Division X) signed by Governor Reynolds on June 17, 2022, modifies the Iowa Solar Energy System Tax Credit for residential installations completed prior to the 2022 calendar year. This legislation does two things:

1. The legislation allows the Department to review applications for residential installations that were both completed prior to the 2022 calendar year and previously denied without review due to the expiration of the residential Iowa Solar Energy System Tax Credit. The Department has begun the process of contacting affected applicants and will place these applications back under review. Each application will be reviewed in full to determine whether it qualifies for an Iowa Solar Energy System Tax Credit award. If your application was previously denied because it expired under Iowa law, you do not need to reapply. Reapplying may cause additional delays in the review of your application. If additional information is needed, you will be contacted by the Department. If your application is approved, you will receive a tax credit certificate that may be claimed on your 2022 Iowa income tax return (i.e. the return that will be filed in 2023).
2. The legislation re-opens and extends the application deadline for residential installations completed during the 2021 calendar year. Taxpayers who completed a residential solar installation during the 2021 calendar year who have not yet applied for the Iowa Solar Energy System Tax Credit must submit an application by June 30, 2022, in order to have their application considered. Applications must be submitted online within the Tax Credit Award, Claim & Transfer Administration System (CACTAS). The Department will review valid and timely applications in the order they are received. The Department may contact you for additional information. If your application is approved, you will receive a tax credit certificate that may be claimed on your 2022 Iowa income tax return (i.e. the return that will be filed in 2023).

Residential Solar Energy System Tax Credit applications described above are not subject to the $5 million aggregate annual award limitation under Iowa law. All other installations, including business installations, remain subject to the annual aggregate award limitation.

Residential Installations

Individuals cannot apply for the Iowa credit for residential installations until the installation of the solar energy system is complete.

Qualifying installations must meet the criteria for the federal residential energy efficient property credit related to solar energy provided in sections 25D(a)(1) or 25D(a)(2) of the Internal Revenue Code. The credit amount for a residential installation that occurs after January 1, 2016, is equal to an applicable Iowa credit rate (see table below) up to $5,000. Residential installations placed in service after December 31, 2021, are not eligible for the Iowa credit.

Business Installations

Businesses cannot apply for the Iowa credit until the installation of the solar system is complete and the system is placed in service. Qualifying installations must meet the criteria for the federal energy efficient property credit related to solar energy provided in sections 48(a)(2)(A)(i)(II) or 48(a)(2)(A)(i)(III) of the Internal Revenue Code. The credit amount for a business Installation that occurs after January 1, 2016, is equal to an applicable Iowa credit rate (see table below) up to $20,000. Installations that begin construction after December 31, 2021, are not eligible for the Iowa credit.

For additional information about the Iowa solar energy system tax credit, please consult Iowa administrative rule 701-42.48.

Iowa Solar Energy System Tax Credit Rates for Installations On or After January 1, 2016 Based on 50% of Applicable Federal Rate Under Sections 25D and 48 of the Internal Revenue Code in Effect on January 1, 2016
Applicable Property	Calendar Year Construction Begins	Calendar Year Property Placed in Service	Iowa Tax Credit Rate
Qualified Residential Solar Electric Property Under Section 25D(a)(1) of the Internal Revenue Code	N/A	2016-2019	15%
	N/A	2020	13%
	N/A	2021	11%
	N/A	2022 or later	0%
Qualified Residential Solar Water Heating Property Under Section 25D(a)(2) of the Internal Revenue Code	N/A	2016-2019	15%
	N/A	2020	13%
	N/A	2021	11%
	N/A	2022 or later	0%
Qualified Business Energy Property (electric, heat/cool, solar process heat) Under Section 48(a)(2)(A)(i)(II) of the Internal Revenue Code	2016-2019	2016-2023	15%
		2024 or later	5%
	2020	2020-2023	13%
		2024 or later	5%
	2021	2021-2023	11%
		2024 or later	5%
	2022 or later	2022 or later	0%
Qualified Business Energy Property (fiber-optic solar illumination) Under Section 48(a)(2)(A)(i)(III) of the Internal Revenue Code	N/A	2016	15%
	N/A	2017 or later	0%

The credits will be issued on a first-come, first-served basis until the $5 million cap (business installations only) is reached each year. If the Department receives applications for tax credit awards in excess of the $5 million available in a year, the applications will be prioritized based on the date and time a completed application is successfully submitted. To complete an application you must have electronic copies of the following required documents:

• An invoice or other document showing the cost of the system
• A copy of all signed agreements made regarding the qualifying solar equipment that verify you are a qualified applicant. For example, provide a copy of your lease agreement if applicable.
• A copy of the “utility completion sheet” that you obtain from your utility company
• Documentation that you meet the separate and distinct rules if you have installed more than one system at the same location or address and have claimed or are claiming a credit for each installation
• The Tax Credit Applicant Certification form that you will complete during the application process
• The Department may also request any documentation necessary to verify you meet the requirements for the type of application you have submitted.

If you are applying for the credit for a business installation, the application will also request the beginning construction date and documentation to verify the date the system was placed in service. The documentation includes approval of required license or permits, or a letter from the utility company that you are connected to the power grid. Alternatively, if you are unable to obtain a document from the utility company you must also attach a statement that includes the following information:

• Your name, address, taxpayer identification number, email address, and telephone number
• The date that the energy property was placed in service
• A declaration, applicable to the statement and any accompanying documents, signed by you, or signed by a person currently authorized to bind you in such matters, in the following form: “I, the undersigned, declare under penalties of perjury or false certificate, that I have examined this and accompanying documents, and, to the best of my knowledge and belief, it is true, correct, and complete.”

Although you have the option to save a partially completed application and return to finish it later, a saved application is NOT considered submitted. Failure to submit the application by the application deadline will result in a denial of the application. However, submission of a completed application at any time before the due date does not guarantee that you will be awarded a Solar Energy System Tax Credit.

If your application is approved, a tax credit certificate will be mailed to you.