Canada's 30% Solar Tax Credit:
Who Actually Qualifies in 2026

What Is the Clean Technology Investment Tax Credit?

The Clean Technology ITC is a refundable federal tax credit worth 30 percent of the capital cost of eligible clean technology equipment, including solar panels and battery storage. Introduced in Budget 2023 under section 127.45 of the Income Tax Act, it is the largest federal incentive available for commercial solar and battery storage in Canada in 2026. The part most articles get wrong is eligibility: the credit is limited to taxable Canadian corporations, including incorporated businesses and farms, and flows through partnerships only to their corporate members.

Unlike a deduction (which reduces taxable income), the ITC is a credit, and because it is refundable, an eligible corporation receives its full value even in a year with little or no tax owing. On a $400,000 commercial solar and battery installation, the 30 percent credit is worth $120,000.

For businesses, combining the credit with CCA Class 43.2 accelerated depreciation and a well-designed load displacement system can bring commercial payback periods down to 6 to 8 years on a 30-year asset.

Do Homeowners Qualify? No, Here Is What You Get Instead

Individual homeowners do not qualify for the federal Clean Technology Investment Tax Credit, which is for businesses. For a home, the main incentive is the provincial Home Renovation Savings Program, and net metering. Section 127.45 restricts the credit to taxable Canadian corporations, there is no line for it on the personal T1 return, and CRA Form T2038 (IND) does not apply to this credit.

Federal homeowner programs have also wound down. The Canada Greener Homes Grant closed in 2024 and the Greener Homes Loan closed on October 1, 2025, so there is no federal cash incentive for individual homeowners installing solar in 2026. Any site or salesperson promising a 30 percent federal credit on an owner-occupied rooftop system is working from outdated or incorrect information.

The good news for Ontario homes: the Home Renovation Savings Program pays $1,000 per kW of installed solar (capped at $5,000) plus $300 per kWh of battery storage (capped at $5,000, battery must be paired with solar), and net metering credits your surplus generation against your hydro bill. If your solar project is for a rental property or business owned by a corporation, the corporate credit rules below apply instead.

What Equipment Qualifies for the 30% Business Credit?

The table below applies to corporate claimants. Equipment must be new (not used or refurbished), situated in Canada, and generally falls under CCA Class 43.1 or 43.2. The full 30 percent rate requires meeting prevailing wage and apprenticeship labour requirements; otherwise the rate is reduced to 20 percent.

ITC vs. CCA Deduction, What's the Difference?

Businesses installing solar in Ontario can benefit from both the ITC and the CCA Class 43.2 accelerated depreciation. They work together, not as alternatives.

Consult a qualified tax professional for advice specific to your situation. Solar X provides documentation but does not provide tax advice.

How a Business Claims the ITC on Its Corporate Return

The credit is claimed in the tax year the eligible equipment becomes available for use. There is no personal tax return route. Solar X provides all required documentation at project completion for commercial installations.

1. 1

   Confirm your entity qualifies

   Taxable Canadian corporations, including incorporated farms, qualify. Partnerships flow the credit through to their corporate members. Individuals cannot claim it.

2. 2

   Install eligible equipment

   ESA-licensed installation of eligible clean technology property by Solar X at your business property.

3. 3

   Obtain ESA inspection certificate

   Documentation proving the installation meets the Ontario Electrical Safety Code, kept with the corporation's tax records.

4. 4

   Collect Solar X ITC package

   Itemized breakdown of eligible equipment costs plus CCA Class 43.2 confirmation for the corporate claim.

5. 5

   File Schedule 31 with the T2 return

   Calculate the 30 percent refundable credit on the capital cost of eligible additions for the year. Meeting labour requirements preserves the full rate.

6. 6

   Receive the refundable credit

   CRA applies the credit against corporate tax payable and refunds any excess, because the credit is refundable for eligible corporations.

Frequently Asked Questions