Solar rebates and incentives
While the cost of solar has declined significantly over the last decade, it’s still a sizable investment for home and business owners looking to lower their electric bills. In order to encourage the greater adoption of solar, the federal government, state and local governments, and even some utilities offer incentives to help make putting solar on your roof and powering your home with clean energy more affordable and accessible. These energy savings typically take the form of solar rebates, tax benefits, or performance-based incentives, and can reduce the cost you pay for solar from anywhere from 30 to 50 percent!
Major solar rebates and solar incentives
- Investment tax credits
- State tax credits
- Cash rebates
- Solar renewable energy credits (SRECs)
- Performance-based initiatives
- Incentives for businesses
- Subsidized loans
- Tax exemptions
Investment tax credit for solar
The federal investment tax credit (ITC) is far and away the best solar incentive. The ITC gives back 30 percent of what you paid for your solar project on your federal income taxes. Instead of a deduction, which reduces your taxable income (as would happen with any charitable donations you make in a year), a tax credit directly offsets what you would otherwise owe in taxes. In other words, instead of just being taxed on a lower income, the federal ITC offsets what you actually owe in taxes, and can even come back to you as a refund from the IRS. Learn more about the investment tax credit, including FAQs.
State tax credits
Some states offer additional tax credits for installing a solar photovoltaic panel system, functioning much the same way as the federal ITC does but for your state taxes. These amounts vary significantly by state, but, when paired with the federal ITC, can really add up!
Some states, municipalities, and utility companies offer up-front rebates for installing a solar panel system. Solar rebates are generally only available for a limited time and disappear once a certain amount of solar has been installed in your region. Solar rebates typically further reduce your system costs by 10 to 20 percent.
Solar renewable energy certificates
Many states now have renewable portfolio standards, which require utilities to procure or generate a certain percentage of their electricity from renewable resources, including solar power. If you live in one of these states, your solar panels will create solar renewable energy certificates (SRECs) for the amount of electricity produced by your solar panel system. Utilities buy your SRECs as a form of compliance with state-level renewable energy requirements, given that each SREC is representative of the environmental attributes of your solar generation. Selling your SRECs can result in hundreds (or even thousands) of dollars more per year in income, depending on the SREC market in your state.
Another common form of solar incentive program is the performance-based incentive, or PBI, which pays you a per kilowatt-hour credit for the electricity that your system produces. PBI programs are slightly different from SREC programs in one key way: while SRECs represent the environmental attributes of solar generation (i.e., emission reductions), PBI programs provide an incentive for the electricity produced itself (i.e., the kilowatt-hours of production). Unlike SRECs, PBIs don’t have to be sold through a market, and incentive rates are determined when the system is installed. PBIs can both replace or exist alongside net metering policies.
Solar incentives for businesses: accelerated and bonus depreciation
If you’re a business owner looking to install solar, this is the incentive for you! Thanks to accelerated depreciation, businesses can write off the value of their solar energy system through the Modified Accelerated Cost Recovery System (MACRS), which reduces businesses’ tax burden and accelerates the return on investment you’ll see from solar. Qualified solar energy equipment is eligible for a cost recovery period of five years. Accelerated depreciation can reduce net system cost by an additional 30 percent.
Importantly, some states also offer their own MACRS tax benefit to businesses purchasing solar, which can further reduce your tax burden and decrease your payback period.
You may be eligible to finance your solar panel system purchase using a subsidized solar loan with a reduced interest rate. These loans may be offered by your state, a non-government organization, or your utility company, but are usually only available for a limited time.
Some states and municipalities do not include the value of solar panel systems in property taxes assessments. This means that, even though the value of your property has increased by the addition of a solar power system (by four percent on average!), your property tax bill won’t increase – it will remain the same.
In addition, your solar panel system may be exempt from state sales taxes, which can result in significant additional savings depending on your state’s sales tax rate.
Eligibility is dependent on whether you are the owner of your solar panel system or not. If you buy your system upfront or with a solar loan, you’re eligible to receive tax credits, solar rebates, and SRECs for the system. However, if you lease your system, the third-party owner will receive all of the solar incentives.
Guide to solar rebates and incentives by state
No matter where you live, you can take advantage of federal solar programs like the Investment Tax Credit. However, states often have unique incentives only available to their residents. If you’re curious as to what your state offers to help offset the cost of going solar, check out our state rebates and incentives pages. Below is an abridged database of state incentives that may be available to you, pulling from EnergySage and DSIRE.
- Arizona: the Residential Arizona Solar Tax Credit reimburses you 25 percent of the cost of your solar panels, up to $1,000, right off of your personal income tax in the year you install the system.
- California: California offers a net metering program (be sure to lock in current rates for 20 years before they drop significantly in April!) and California’s Disadvantaged Communities - Single-family Solar Homes (DAC-SASH) program provides upfront rebates to income-eligible, single-family homeowners installing solar panels. Homeowners must be customers of Pacific Gas and Electric (PG&E), Southern California Edison (SCE), or San Diego Gas and Electric (SDG&E) to take advantage of the incentive.
- Colorado: the Sales and Use Tax Exemption for Renewable Energy Equipment means that there won’t be any sales tax on the purchase of your system and the Property Tax Exemption for Residential Renewable Energy Equipment keeps you from having to pay any additional taxes on the increased value of your house.
- Connecticut: on top of their solar rebate, the government of Connecticut may also provide you with a loan for your system. Thanks to the Smart-E Loan, eligible families can borrow up to $40,000 for 5-12 years at interest rates between four and seven percent.
- Delaware: thanks to Delaware’s net metering policy, you will be able to sell energy generated by your solar panels back to the grid in exchange for credits on your energy bills.
- Florida: due to Florida’s Property Tax Exclusion for Residential Renewable Energy Property, your solar system will not result in any additional costs on tax day.
- Georgia: under Georgia’s net metering policy, participating utilities will measure the amount of excess solar electricity you put on the grid and pay you a rate determined by Georgia’s Public Service Commission.
- Iowa: for any new solar PV system installed in Iowa, the assessed value of the system is exempt from your property taxes for five years – this means that even though your solar installation adds value to your property, the added value can’t be counted when the property is being assessed for taxes in the first five years of installation.
- Illinois: under the Adjustable Block Program, also known as Illinois Shines, you can earn one solar renewable energy certificate (SREC) for each megawatt-hour (MWh) of electricity your solar system produces over 15 years. For the average residential system, this comes out to more than $10,000 in additional savings.
- Indiana: thanks to the Indiana renewable energy property tax exemption, for any new solar PV system installed in Indiana, the assessed value of the system is exempt from your property taxes – this means that even though your solar installation adds value to your property, the added value can’t be counted when the property is being assessed for taxes.
- Louisiana: the Louisiana Department of Natural Resources offers low-interest home improvement loans to homeowners who go solar or conduct other energy efficiency measures on their property.
- Massachusetts: under the MA renewable income offer, the owner of a renewable energy system gets a 15 percent coverage of the system cost against his or her MA income tax with a $1000 maximum credit amount.
- Maryland: with the MD solar rebate program, if you install a solar energy system, Maryland will pay you $1,000.
- Maine: Maine's Home Energy Loan program allows you to borrow as much as $15,000 for up to 15 years – interest rates are as low as 4.99 percent.
- Michigan: this MI financing option offers homeowners the chance to upgrade their home’s energy efficiency with loans that have APR as low as 4.99 percent, depending on their credit score.
- Minnesota: when you install solar panels on your home in Minnesota, you don’t have to pay any sales tax on your solar purchase: considering that state sales tax is nearly 7 percent, the sales tax exemption means major solar savings.
- Missouri: in addition to getting discounts and rebates on the cost of your solar installation, all solar homeowners in Missouri are exempt from property tax increases that result from installing solar panels on their homes.
- North Carolina: the value that solar adds to a property isn’t included in property tax assessments thanks to this property tax exemption.
- New Hampshire: in the state of New Hampshire, you will be exempt from paying property taxes on the additional value solar adds to your home.
- New Jersey: under the SuSI, or SREC-II program, you can generate one SREC-II for every megawatt-hour (MWh) your solar panel system generates.
- New Mexico: under New Mexico’s solar tax credit, you can reduce your state tax payments by up to $6,000 or 10 percent off your total solar energy expenses (whichever is lower).
- Nevada: Nevada has solar access laws that protect your right to install and generate electricity with solar panels. In Nevada, no contract or other legal document (like homeowner’s association bylaws) can prohibit homeowners from installing solar.
- New York: New York’s Megawatt Block Incentive provides an upfront dollars-per-watt ($/W) rebate for both commercial and residential solar panel systems. The size of your subsidy depends on the size of your system, the current Megawatt block, and your region. As of January 2022, the incentive values range from $0.20/W (ConEdison) to $0.50/W (Upstate).
- Ohio: Ohio has created the Energy Conservation for Ohioans (ECO-Link) Program to make it less expensive for you to finance your solar energy system.
- Oklahoma: Net metering in Oklahoma allows you to sell any excess solar electricity you generate back to the grid in exchange for credits.
- Oregon: Oregon law states that any change in real market value to property due to the installation of a qualifying renewable energy system is exempt from assessment of the property’s value for property tax purposes.
- Pennsylvania: Net metering is strong in Pennsylvania, allowing you to receive credits on the energy generated by your solar panels.
- Rhode Island: this solar grant program gives proud new solar owners a per-watt grant via their installation company. Historically, RI homeowners have typically been able to save more than $5,000 on their installation with this cash rebate offer.
- South Carolina: South Carolina's state tax credit for solar energy allows residents to claim 25 percent of their solar costs as a tax credit – and if you don’t pay enough in taxes to get the full value of the credit in one year, it carries over for up to 10 years.
- Texas: although Texas doesn’t have a statewide net metering policy, many utilities in the state (including El Paso Electric, the City of Brenham, CPS Energy, and Green Mountain Energy) have policies that credit owners of solar energy systems for the electricity that their panels produce.
- Utah: if you install a solar panel system on your home in Utah, the state government will give you a credit towards next year’s income taxes to reduce your solar costs. You can claim 25 percent of your total equipment and installation costs, up to $800.
- Virginia: when you sign up for net metering in Virginia, you get credits on your electricity bill for every extra kilowatt-hour of solar electricity that you send back to the grid.
- Vermont: the Renewable Energy Systems Sales Tax Exemption frees you from paying any sales tax on the purchase of your system, and the Uniform Capacity Tax and Exemption for Solar keeps you from having to pay increased property taxes.
- Washington: solar energy systems 10 kW or less in size are eligible for a 100 percent exemption from sales and use tax. Purchasers of these systems can provide the seller with an exemption certificate to avoid paying the sales and use tax.
- Wisconsin: Wisconsin solar access rights grant homeowners the right to have unrestricted access to the sun, so when you install solar panels, you can rest assured that your neighbors won’t be able to do anything that obstructs your source of solar energy.
- Washington D.C.: the Solar Advantage Plus Program is a first-come, first-served rebate program that provides qualified applications with up to $10,000 to cover the full cost of a 3kW to 4kW solar system.
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