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Solar Energy System Tax Credit

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To request a Solar Energy System Tax Credit, you are required to complete an application. The application must be received by May 1 following the year of the installation of the solar energy system or the application will be denied.

The 2020 award cap has been met and the Department is in the process of issuing 2020 awards. The Department is also continuing to review 2020 applications. Once your application is reviewed, it will either be denied or updated to waitlisted status. If your 2020 application is updated to waitlisted status, the earliest you may be awarded a credit is for award year 2021. An application in waitlisted status shall not constitute a promise binding the state; the credit is contingent upon availability of tax credits for that particular year. Tax credit certificates for the 2021 award year will not be issued until after May 1, 2021.

Residential Installations

The application for the Iowa credit cannot be made for individuals 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) and 25D(a)(2) of the Internal Revenue Code. Installations that occur after January 1, 2016 are equal to 50% of the federal credit up to $5,000.

Business Installations

An application for the Iowa credit for businesses cannot be made 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)(3)(A)(i) and 48(a)(3)(A)(ii) of the Internal Revenue Code. Installations that occur after January 1, 2016 are equal to 50% of the federal credit up to $20,000.

Solar Energy System Tax Credit Awarded by Year(includes awarded & waitlisted applications)

2021
$3,486,723
2020
$4,999,672*
2019
$5,006,704

*The Department has received a high volume of Solar Energy System Tax Credit applications. The Department has already awarded and issued the 2019 awards. The Department is in the process of awarding and issuing 2020 awards. If your application is not awarded, your application will be considered for an award in 2021 or later. Tax credit awards for the 2021 award year will first be issued after May 1, 2021. Once the 2021 cap is reached, the remaining applications will be placed on the 2022 award waitlist.

The credits will be issued on a first-come, first-served basis until the $5 million cap 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 by the date and time your completed application is successfully submitted. To create a completed application to submit, 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 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 penalty of perjury or false statement, 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 May 1 following the installation year 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.

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

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