Arkansas solar rebates and incentives: 2024 guide

Solar panel systems in Arkansas are expensive, but incentives from the state and federal governments can help you reduce the upfront cost. Between the federal tax credit and other state-specific incentives, you can save thousands on solar panels, making them well worth the investment. Here's how you can lower the cost of solar if you live in Arkansas.

Arkansas doesn't have any state-specific tax credits or rebates. But, as an Arkansas homeowner, you have access to the federal Residential Clean Energy Tax Credit, which can substantially improve your return on investing in solar panels.

The Residential Clean Energy Credit, formerly known as the federal investment tax credit (ITC), can reduce your solar panel system's cost by 30%. Your entire system qualifies for this incentive, including equipment, labor, permitting, and sales tax.

When you file your federal income taxes, you can claim this incentive as a credit towards your federal tax bill. Just keep in mind that to qualify for the ITC, you need to purchase your system either with cash or a solar loan–if you lease your system, you won't be eligible. 

You also need a high enough tax bill, though you can roll over any remaining credit year-to-year until the end of 2034 when the ITC expires. The only time you might be eligible for a direct payment for the ITC is if you're a tax-exempt entity, like a nonprofit organization.

Unfortunately, Arkansas doesn't offer any sales or property tax exemptions for solar.

If your system is under 25 kW and connected to the grid, you can benefit from net metering, one of the best solar panel incentives available in Arkansas. With net metering, you earn credits when you send excess electricity from your solar panels to the grid. When the sun isn't shining and you need to pull electricity from the grid, your utility will apply the credits to your bill. Net metering makes it so you will owe very little, or even nothing, on your electric bills with solar panels. 

Unfortunately, Arkansas is transitioning away from net metering to net billing this year, which means the credits you earn will be worth a lot less. You still have until September 30, 2024 to install solar panels if you want to lock in net metering for 20 years. If you wait to go solar, you'll receive compensation at the avoided cost rate instead of the retail rate, and you'll miss out on thousands in savings. It's similar to what just happened in California.

Arkansas doesn't offer any state-specific battery incentives. However, all batteries above 3 kWh are eligible for the 30% federal tax credit. Batteries are great for increasing your energy independence and providing protection from blackouts in Arkansas. 

If you don't go solar before Arkansas switches to net billing, you'll want to install a battery with your solar panels. That way, you can store excess solar energy in your battery for use later on instead of sending it to the grid.