Last year, we covered the 2024 solar tax credit and how to apply it to your tax refund. But, for Marylanders, there are many other solar tax incentives that you should be aware of for 2025.
If you haven’t filed your taxes yet or plan on utilizing solar incentives in the future, then you should be aware of current federal and local guidelines.
Start your refund off right by reading this article about Maryland solar tax credits and how to apply them to your taxes.
The Big One: Federal Solar Tax Credit
Officially known as the Residential Clean Energy Credit is the most significant financial incentive available to homeowners nationwide. This federal tax credit allows you to claim 30% of the total cost of your solar installation, including labor, equipment, and permitting fees, as a credit on your federal income tax return.
How the Federal Solar Tax Credit Works
Calculating your solar tax credit is easy because it is a flat 30% of your total solar unit cost.
Here is an example of how much tax credit you may receive based on how much your paid for your solar panels:
If you install a solar system that costs $20,000, you can claim $6,000 in tax credits.
This credit directly reduces the amount of taxes you owe. If your tax liability is lower than the credit amount, you can carry forward the remaining credit to future tax years.
You should apply for the incentive for the same year that installation and activation occurred. In addition, the tax credit is set to expire at the 30% rate in 2032, which is the all-time high for this solar benefit. This means that it has never been a better time to go solar.
How to Apply for the Federal Tax Credit
Everyone’s taxes are different, so it is important to consult a tax expert when filing your tax with the solar credit. However, no matter your filing situation, it is a good idea to do the following:
1. Keep Your Documentation: Save all receipts, invoices, and proof of installation.
2. File IRS Form 5695: This form is specifically for the Residential Clean Energy Credit.
3. Include the Credit on Your Tax Return: Transfer the credit amount to your IRS Form 1040.
Based on your tax liability, you should see various amounts of credit being added to what you owe the government.
Maryland State Solar Tax Incentives
In addition to the federal credit, Maryland offers several state programs that help homeowners save money on solar energy.
- Maryland Residential Clean Energy Grant Program
The Maryland Energy Administration (MEA) offers a one-time grant of $1,000 for homeowners who install a solar photovoltaic (PV) system.
Eligibility Requirements
- The system must be installed at a primary residence** in Maryland.
- The system size must be at least 1 kW (kilowatt).
- The installer must be a certified solar contractor.
How to Apply for the Grant
This grant is different than the solar tax credit because you have to apply for it separately. In other words, it is not part of your taxes. Instead, the deadline for submitting your grant application is usually in November.
Here is the process:
1. Complete the Online Application: Visit the Maryland Energy Administration’s website and fill out the Clean Energy Grant application.
2. Submit Required Documents: Include invoices, a copy of the solar contract, and proof of residence.
3. Receive the Grant: Once your application is approved, you’ll receive a check from the MEA.
Before applying, also check the requirements to see if your solar unit qualifies for the grant.
Maryland Solar Renewable Energy Credits (SRECs)
Another Maryland solar incentive includes the Solar Renewable Energy Credit (SREC) program, which allows homeowners to earn money by generating solar electricity. Utility companies in Maryland are required to buy a certain number of SRECs each year, which creates a market for homeowners to sell their excess solar energy.
How SRECs Work
Getting paid for your solar energy production has never been easier as Maryland has one of the best SREC energy programs to meet state environmental/renewable energy requirements.
Here is how you can make money with SRECs:
- For every 1 megawatt-hour (MWh) of solar energy your system generates, you earn 1 SREC.
- Homeowners can sell SRECs to utility companies for additional income.
- The price of an SREC varies, but it can range from $30 to $80 per credit.
Maryland Property Tax Exemption for Solar Energy Systems
Installing solar panels can increase your home’s value, but thanks to Maryland’s property tax exemption, this increase won’t raise your property taxes.
How It Works
- The added home value from your solar system is not included in property tax assessments.
- You don’t need to apply separately—this exemption is automatic for solar system owners in Maryland.
Maryland Sales Tax Exemption for Solar Equipment
Another way to save on solar installation is through Maryland’s 6% sales tax exemption on solar energy equipment. This applies to solar panels, inverters, mounting hardware, and battery storage systems.
How to Benefit
- When purchasing solar equipment, ensure that the retailer does not charge sales tax.
- Work with a certified Maryland solar installer, like Rising Sun Solar Solutions, who can apply for the exemption at the time of sale.
Local Utility Solar Incentives in Maryland
Certain local utility companies in Maryland also offer additional rebates and incentives for homeowners installing solar energy systems. Here are a few examples:
Baltimore Gas & Electric (BGE) Smart Energy Program
- Offers cash rebates for customers who install solar battery storage in conjunction with a solar system.
- Battery rebates can range from $500 to $1,500, depending on system size.
Pepco and Delmarva Power Solar Programs
- Provide net metering benefits, allowing homeowners to sell excess electricity back to the grid for credits on their utility bills.
- Additional rebates may be available for energy-efficient home upgrades.
How to Take Advantage of Solar Incentives
Understanding how to apply solar incentives to your tax return ensures you receive the maximum benefit.
Your first step is to check the deadlines for submitting your application for solar incentives and grants. For tax credits, you need to apply when you complete your tax return for the year in which your solar unit become active.
Check with your solar installation company for these deadlines and to get assistance with the paperwork. At Rising Sun Solar Solutions, we walk you through this process to ensure that your save the most money and get all the available benefits from your solar panels.
Why Now Is the Best Time to Go Solar in Maryland
With the 30% federal tax credit still in effect and Maryland’s strong state incentives, 2025 is an excellent time to install solar panels. By combining federal and state programs, many homeowners can reduce their installation costs by 50% or more.
Additionally, Maryland’s push for renewable energy adoption means that incentives and rebates are still widely available—but they may not last forever. As more homeowners install solar, programs like SRECs and grants could phase out or decrease over time.
If you’re ready to make the switch to solar, contact Rising Sun Solar Solutions today. Our team can help you navigate the available incentives, file for tax credits, and design the perfect solar system for your home. Get started today and take advantage of the incredible financial benefits of going solar in Maryland!
