North Carolina · Residential Solar Tax Credit
Residential Solar Tax Credit in North Carolina (2026)
30% tax credit on the cost of installing solar panels on your home. North Carolina has a flat 3.99% income tax, so a North Carolina filer's combined marginal rate on the next dollar at $64,350 of income is about 15.99% (12% federal + 3.99% NC).
2026 savings example for North Carolina
Planning estimate for a single filer earning $64,350 (North Carolina median household income in LevyIO's state dataset) who claims a $5,000 credit. Federal tax uses the 2026 IRS brackets after the $16,100 standard deduction; NC tax uses the state brackets in LevyIO's dataset and assumes the state follows the federal treatment.
Estimated total savings
$5,000
Federal savings
$5,000
$5,542 → $542 · 12% bracket
NC state savings
$0
Federal credit only; check for a state credit
Combined marginal rate
15.99%
Credits do not depend on the bracket
Federal × North Carolina marginal rates (2026, single)
Gross-income ranges include the federal standard deduction. The NC column is the state marginal rate at the midpoint of each range. A credit saves its face value regardless of bracket.
| Federal bracket | Gross income (single) | NC marginal | Combined | Per $1,000 |
|---|---|---|---|---|
| 10% | $16,100 - $28,500 | 3.99% | 13.99% | $1,000 |
| 12% | $28,500 - $66,500 | 3.99% | 15.99% | $1,000 |
| 22% | $66,500 - $121,800 | 3.99% | 25.99% | $1,000 |
| 24% | $121,800 - $217,875 | 3.99% | 27.99% | $1,000 |
| 32% | $217,875 - $272,325 | 3.99% | 35.99% | $1,000 |
| 35% | $272,325 - $656,700 | 3.99% | 38.99% | $1,000 |
| 37% | Over $656,700 | 3.99% | 40.99% | $1,000 |
Eligibility & forms
Homeowners who install solar energy systems
- Must own the system
- New or existing home
- 30% of cost
Federal forms: Form 5695
North Carolina filing notes
Do not mix filing season with tax year: 2025 returns due April 15, 2026 use 4.25%, while tax year 2026 uses 3.99%. Social Security is fully exempt. NC does not allow the same standard deduction amount as the federal return, so use the NC standard deduction or NC itemized deductions rules separately.
Common mistakes: Leasing vs owning solar; Not carrying forward unused credit.
Frequently asked questions
How much can the Residential Solar Tax Credit save a North Carolina taxpayer in 2026?
Credits reduce tax dollar-for-dollar. In LevyIO's example, a single filer with $64,350 of income (the North Carolina median household income in our state dataset) and a $5,000 credit would cut 2026 federal tax from $5,542 to $542, a $5,000 saving. Whether North Carolina offers a matching state credit depends on the NC return, so the estimate counts federal savings only.
What is the North Carolina income tax rate for 2026?
North Carolina has a flat 3.99% income tax. The NC standard deduction in LevyIO's dataset is $12,750 single / $25,500 married. Flat 3.99% for tax year 2026 (4.25% for tax year 2025 returns filed in 2026). Own standard deduction ($12,750/$25,500). Social Security exempt. Future rate cuts depend on revenue triggers.
Who qualifies for the Residential Solar Tax Credit in North Carolina?
Homeowners who install solar energy systems. The federal rules are the same in every state; the requirements are: Must own the system; New or existing home; 30% of cost. North Carolina filers should confirm on the NC return whether the state follows the federal treatment.
Which forms do I file to claim the Residential Solar Tax Credit?
Federal: Form 5695. North Carolina: check the North Carolina Department of Revenue instructions for the matching state schedule. Common mistakes: Leasing vs owning solar; Not carrying forward unused credit.
Residential Solar Tax Credit in other states
Sources
Reviewed 2026-09-17. Estimates are educational planning figures computed from the IRS 2026 inflation adjustments and LevyIO's state bracket dataset; they are not tax advice.