Policy
The Investment Tax Credit (ITC) is a federal policy incentive in the U.S. that allows a taxpayer to deduct a certain percentage of the cost of installing a renewable energy system (like solar) from their federal taxes. For solar projects, the ITC has historically been 30% of eligible project costs (recently extended under new legislation). This dollar-for-dollar tax credit significantly improves project economics by reducing upfront capital costs effectively. The ITC can be claimed by residential owners, businesses, or third-party financiers, and if the credit exceeds tax liability, rules allow carrying forward the excess. The ITC has been a major driver of solar investment, spurring industry growth by making projects more financially attractive.