Solar Tax Credit for Churches and Houses of Worship
A congregation does not owe federal income tax, so for forty years the solar investment credit was worth nothing to it. Section 6417 changed that in 2023. The church claims the credit on a Form 990-T and the IRS sends the money.
Thirty percent of what the system cost, paid in cash
Not a discount on a bill you do not receive, and not a credit carried forward against tax you will never owe. The amount is claimed on a return and the IRS pays it.
Of eligible basis, where prevailing wage and apprenticeship requirements are met or the facility is under 1 MW AC.
Ten points on top, tested at the project’s census tract or county against the current IRS appendix.
Section 48E(h), facilities under 5 MW AC. This one is allocated, not automatic, and the application has to be in before the system is energized.
Domestic content adds a further ten points. For an applicable entity it is also a condition: at 1 MW AC and above, a project whose construction began after December 31, 2025 loses the elective payment entirely if the domestic content requirement is not met and no exception applies. Below 1 MW AC the condition does not apply.
Four steps, and one of them has a queue
Step 1Confirm you own it
Elective pay reaches the owner of the energy property. If a developer owns the system and sells you power, the credit is theirs. This is settled before any tax analysis begins.
Step 2Price the credit
Eligible basis, the base rate, and every bonus the project can actually document. Sitework, roofing and interconnection are not automatically in basis, and an invoice total is not an eligible basis.
Step 3Register with the IRS
Pre-filing registration through IRS Energy Credits Online, one number per property. The IRS works these in the order received and does not expedite. Leave the number off the return and the election is ineffective.
Step 4File the return
Form 990-T carrying the election, with Form 3468 and Form 3800, and Form 7220 where prevailing wage and apprenticeship apply. An enrolled agent signs it and holds your Form 2848.
The questions that decide whether the money arrives
Do churches qualify for the solar tax credit?
Yes. A house of worship is an applicable entity under Section 6417, which means it can make an elective payment election and be paid the investment credit in cash. It does not matter that the congregation owes no income tax. That is the entire point of the provision.
We have never filed a Form 990-T. Do we have to start?
Yes, and only for this. A church that is not otherwise required to file still files a 990-T to make the election. The return exists to carry the claim; it does not create an ongoing filing obligation for unrelated business income you do not have.
Is the solar tax credit refundable for a church?
The mechanism is an elective payment, not a refundable credit in the ordinary sense. You elect to treat the credit as a payment of tax, and the overpayment is refunded to you. The practical result is cash.
A solar company offered to put panels on our roof at no cost. Does that work?
Usually not, for this purpose. If the installer or an investor owns the system, the credit belongs to them. You can still buy the power, but the elective payment is not available to you. Before signing, find out who holds title to the equipment.
Is there a deadline?
Two of them. The election is only available on an original Form 990-T filed on time, and there is no late election and no administrative relief if that date passes. Separately, solar under Section 48E has to be placed in service by December 31, 2027 unless construction began on or before July 4, 2026.
Our building is on the National Register. Does that change anything?
Historic status affects what you can install and how, which is a permitting and design question rather than a tax one. It does not disqualify the credit. What matters for the credit is ownership, eligible basis and when the system was placed in service.
Send us the project and who owns it, and we will tell you whether the election is available and what it is worth.
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