Puerto Rico’s 25% solar tax credit: how it works in 2026
Puerto Rico’s Act 174-2019 provides a 25% income tax credit on solar systems — up to $6,000 — that applies in 2026 when the federal credit does not. Here is everything you need to know to claim it correctly.
The most important incentive for Puerto Rico homeowners going solar in 2026 is Puerto Rico’s own income tax credit, established under Act 174-2019. Unlike the federal residential solar tax credit — which expired at the end of 2025 — Puerto Rico’s 25% credit is fully available for 2026 installations. Understanding exactly how it works, what it covers, and how to claim it is essential before you sign any installation contract.
What Act 174-2019 provides
Act 174-2019, signed by Governor Wanda Vázquez Garced in August 2019, created a 25% income tax credit for Puerto Rico residents who install qualifying solar energy systems. The credit is available against your Puerto Rico income tax — not your federal income tax — and reduces what you owe to the Puerto Rico Department of the Treasury dollar-for-dollar.
Key terms:
- Credit rate: 25% of the qualifying system cost
- Maximum credit: $6,000 per installation
- What qualifies: Solar photovoltaic (panel) systems and battery storage systems installed as part of a solar installation
- Who qualifies: Puerto Rico residents filing Puerto Rico income taxes who own the system (leased systems typically do not qualify, as the lessor claims the credit)
- System requirement: Must be installed at your primary or secondary residence in Puerto Rico
How the credit applies to your installation
The 25% credit works straightforwardly on the system cost. Examples:
- 8 kW system at $26,000: 25% = $6,500 → credit capped at $6,000
- 7 kW system at $22,750: 25% = $5,688 → credit is $5,688 (below cap)
- 6 kW system at $19,500: 25% = $4,875 → credit is $4,875 (below cap)
- Solar + two Powerwalls at $50,000 total: 25% = $12,500 → credit capped at $6,000
The cap applies to the combined system. If you install solar and battery storage together, the $6,000 maximum applies to the total installation, not separately to each component. If you are planning a large system that significantly exceeds $24,000 in cost, the credit contribution to your total incentive package is fixed at $6,000 regardless of system size above that threshold.
How to claim the credit
The Puerto Rico solar tax credit is claimed on your annual Puerto Rico income tax return. The specific form and schedule are determined by the Puerto Rico Department of the Treasury — consult their current instructions or a Puerto Rico tax professional for the current year’s filing procedure, as administrative details can change annually even when the underlying credit statute remains constant.
Documentation you will need: a copy of your installation contract, proof of payment, and a certificate of completion from your installer. In some cases, LUMA Energy’s permission to operate (PTO) letter serves as additional documentation of a completed, grid-connected installation.
Important: If your Puerto Rico income tax liability for the year of installation is less than the credit amount, consult a PR tax professional about carryforward provisions. Depending on current PRTD rules, unused credits may be carried forward to subsequent tax years. Do not assume the credit is lost if your 2026 liability is below $6,000.
Stacking the PR tax credit with other incentives
The 25% PR income tax credit stacks with Puerto Rico’s other solar incentives:
- IVU (sales tax) exemption — Solar equipment is exempt from Puerto Rico’s 11.5% IVU. The IVU exemption and the income tax credit are separate, independent incentives that both apply to the same installation.
- Property tax exemption — Solar-added home value is exempt from PR property taxes. Also separate from and stackable with the income tax credit.
- LUMA net metering — Net metering at $0.32/kWh improves your financial return ongoing, independent of the tax credit you claim at installation time.
- Federal credit: not available. The federal residential solar tax credit expired at the end of 2025. There is no federal credit to stack with the PR credit for 2026 installations. Any quote showing a federal credit for 2026 is using outdated information.
Owned vs. leased systems: who gets the credit
This is critical: the tax credit goes to the owner of the system. If you purchase your solar system outright or finance it with a loan (where you own the system and make loan payments), you are the owner and you claim the credit. If you sign a solar lease or PPA (power purchase agreement), the solar company owns the panels and claims the credit — not you. Leases and PPAs may have lower upfront costs but give up the $6,000 PR tax credit. Make sure you understand what you are signing before committing to a lease or PPA structure in Puerto Rico.