Bilevel inverters are replaced by multilevel inverters due to their capability of producing quality output voltage with low total harmonic distortion (THD). On the contrary, increase in number of semiconductor switches has questioned the reliability of the multilevel inverter topologies. To enhance the reliability, this paper proposes a single‐phase five‐level inverter topology with inherent fault‐tolerant feature. The proposed inverter can sustain faults in sources and semiconductor switches by amending the switching combinations. No healthy switch is needed to be bypassed during the fault to ensure the optimum utilization of the switches. An analysis on the basis of reliability, cost, and efficiency is carried out of the proposed inverter and compared with the existing topologies. To prove the claim, the experimental results of the developed hardware model is analyzed and compared with the simulation results of MATLAB/SIMULINK.