This credit reduces the amount of tax you will pay in the year you take the credit. Assume you paid $10,000 for a solar system and your total tax bill that year was $6,500. You would get a $3,000 tax credit. So, your final tax bill would be $3,500. Assuming that you paid taxes through withholding from your paycheck or made quarterly estimated tax payments, you would probably get money back in a refund.
Under the same scenario, let’s assume your tax bill was only $2,000. You can only take the tax credit up to zeroing out your tax liability for the year. But, you would be able to roll the remaining credit over to account for your taxes the next year, so you aren’t losing out if you can’t take the entire credit in one year.