What is the SARS solar tax incentive?
Section 12B of the Income Tax Act allows South African taxpayers to deduct 125% of the cost of solar panels in the year of installation. This was introduced in the 2023/24 budget to encourage rooftop solar adoption.
Important: The rebate applies to solar panels only — not inverters, batteries, labour or installation. The panels must be new (not second-hand) and must be used for domestic purposes.
How much can you save?
Let's say solar panels for your system cost R30,000 (out of a total R60,000 installed cost):
- 125% of R30,000 = R37,500 deductible from taxable income
- At the 26% tax bracket: R37,500 × 26% = R9,750 tax saving
- At the 33% tax bracket: R37,500 × 33% = R12,375 tax saving
- At the 41% tax bracket: R37,500 × 41% = R15,375 tax saving
The higher your marginal rate, the more you save. Top earners (45% bracket) can save up to R16,875 on that same panel cost.
What qualifies?
- ✓ Solar photovoltaic (PV) panels — monocrystalline or polycrystalline
- ✓ New panels installed at a South African residential property
- ✓ Must be connected to the grid or used for domestic electricity generation
- ✗ Inverters and hybrid inverters
- ✗ Batteries (lithium or lead-acid)
- ✗ Mounting structures, cables, labour
- ✗ Second-hand panels
How to claim on your ITR12
- Get a tax invoice from your installer that clearly itemises the cost of panels separately from other components.
- Confirm the installation date falls within the correct tax year (1 March to 28 February).
- File your ITR12 on eFiling. Under "Assets and Liabilities" → "Other deductions", enter the 125% amount in the "Section 12B" field.
- Keep all documentation — invoice, CoC (Certificate of Compliance), and proof of payment — for 5 years in case of SARS audit.
Does the rebate affect my solar payback calculation?
Absolutely. The tax rebate effectively reduces your net system cost, improving your payback period. On a R60,000 system where panels cost R30,000, a top-bracket taxpayer nets a R15,375 rebate — reducing effective cost to R44,625 and payback to under 4 years in a high-tariff city.
Always consult a registered tax practitioner for advice specific to your situation.