Incentives And Rebates For Solar Energy

While solar panels have become much more affordable over the past decade, they are still a big investment for homeowners and business owners hoping to reduce their electricity bills. Putting solar panels on your roof and powering your home with renewable energy is now more affordable and accessible than ever thanks to incentives provided by the federal government, state and municipal governments, and even certain utilities. Solar rebates, tax benefits, and performance-based incentives can lower your solar system’s initial investment by as much as half the whole price!

Financial Incentives And Rebates For Solar Panels

Investment tax credits
State tax credits
Cash rebates
Solar renewable energy credits (SRECs)
Performance-based initiatives
Incentives for businesses
Subsidized loans
Tax exemptions

Incentives For Solar Energy Investments

The federal investment tax credit (ITC) is, by a significant margin, the most beneficial incentive for solar energy. The Investment Tax Credit allows you to deduct 30 percent of the total cost of your solar energy system from your taxable federal income.

A tax credit, as opposed to a deduction, which lowers the amount of income that is subject to taxation (this is the result of any donations of money or goods to charity that you make throughout the course of the year), directly reduces the amount of tax that you would have otherwise owed.

In other words, rather than merely being taxed on a lesser income, the federal ITC offsets what you actually owe in taxes, and it can even come back to you as a refund from the IRS if you’ve overpaid your taxes during the year. However, the federal ITC cannot exceed what you owe in taxes.

State Tax Credits

Some states provide additional tax credits for the installation of a solar photovoltaic panel system. These credits operate in a manner very similar to that of the federal ITC, except they apply to your state taxes rather than your federal taxes.

These sums can be rather substantial, especially when combined with the federal ITC, although they differ substantially from state to state.

Cash Back Incentives

The installation of a solar panel system may qualify for rebates or tax credits from some states, municipalities, and utility companies. Solar rebates are often only offered for a set period of time and are removed from the market once a predetermined volume of solar energy equipment has been installed in a particular region.

In most cases, solar subsidies can further cut the expenses of your system by between 10 and 20 percent.

Certificates For Renewable Solar Energy

A growing number of jurisdictions have recently adopted policies known as “renewable portfolio standards,” which mandate that utilities source or create a set percentage of their electricity from renewable resources such as solar power.

If you live in one of these states, the amount of power generated by your solar panel system will result in the creation of solar renewable energy certificates (SRECs). These certificates can be sold for cash. Given that each SREC is a representation of the environmental qualities generated by your solar power, utilities acquire your SRECs as a means of complying with state-level regulations for renewable energy.

Depending on the SREC market in your state, the sale of your SRECs could result in an increase in annual income of hundreds, or even thousands, of dollars.

Performance-Based Incentives

Another typical kind of solar incentive program is called a performance-based incentive, or PBI for short. This kind of program gives you a credit depending on the amount of electricity that your system generates in kilowatt-hours.

PBI programs are somewhat distinct from SREC programs in one significant respect: whereas SRECs reflect the environmental benefits of solar generating (i.e., emission reductions), PBI programs provide an incentive for the electricity produced itself (i.e., the kilowatt-hours of production).

This is the primary distinction between the two types of programs. PBIs, in contrast to SRECs, are not required to be sold through a market, and incentive rates are decided upon when the system is actually being implemented. PBIs are able to either take the place of net metering rules or coexist with them.

Solar Benefits For Businesses: Accelerated And Additional Depreciation

This incentive is perfect for you if you own a company and are considering installing solar panels on your roof. The Modified Accelerated Cost Recovery System (MACRS) allows businesses to write off the value of their solar energy system thanks to accelerated depreciation.

This minimizes the amount of tax burden that businesses are required to carry and accelerates the return on investment that may be obtained from solar energy. A cost recovery term of up to five years may be available for qualifying photovoltaic (PV) equipment purchases.

An additional 30 percent off of the total net cost of the system can be saved through the use of accelerated depreciation.

It is important to note that certain states also give their own MACRS tax benefit to businesses that purchase solar energy systems. This benefit can further reduce your tax burden and shorten the amount of time it takes for your investment to pay for itself.

Subsidized Loans

It’s possible that you could get a subsidized solar loan with a lower interest rate in order to pay for the purchase of a solar panel system to power your home. Your state, a non-governmental organization, or even the firm that provides your utilities may be the source of these loans; however, in most cases, they are only available for a set period of time.

Tax Exemptions

There are several states and municipalities that do not factor the value of solar panel systems into the overall assessment of a property’s market value. This indicates that even though the installation of a solar power system has improved the value of your property (by an average of four percent! ), your property tax payment will not increase because the value of your property has increased; rather, it will remain the same.

In addition, the solar panel system you purchase might not be subject to the sales tax that your state levies, which, depending on the rate of sales tax in your state, might result in considerable additional cost savings.

Can You Get Solar Incentives Even If You Don't Own Your System?

Your eligibility will be determined by whether or not you own the solar panel system that is installed on your property. You may be eligible to get tax credits, solar rebates, and SRECs for the solar energy system you install if you buy it outright or finance it through a solar loan. On the other hand, if you lease your system, the third-party owner will be eligible for all of the financial benefits associated with solar energy.

Rebates And Incentives For Solar Energy, Organized By State

Arizona: In the state of Arizona, if you qualify for the Residential Arizona Solar Tax Credit, you can deduct up to one thousand dollars worth of the cost of your solar panels directly on your personal income tax return in the same year that you install the system.
California: Net metering is an option available to residents of California through the state's Department of Consumer Affairs (be sure to lock in current rates for 20 years before they drop dramatically in April!). Moreover, the Disadvantaged Communities - Single-family Solar Homes (DAC-SASH) program in the state of California offers up-front incentives to income-qualified residents of single-family homes who install solar panels. In order to take advantage of the incentive, homeowners need to be customers of either Pacific Gas and Electric (PG&E), Southern California Edison (SCE), or San Diego Gas and Electric (SDG&E).
Colorado: Because of Colorado's Sales and Use Tax Exemption for Renewable Energy Equipment, you won't have to pay any sales tax when you buy your system, and because of the Property Tax Exemption for Residential Renewable Energy Equipment, you won't have to pay any additional taxes on the increased value of your home. These two exemptions combine to ensure that you won't have to pay any additional taxes.
Connecticut: In the state of Connecticut, in addition to offering a solar rebate, the government may also be able to assist you in obtaining a financing for your solar energy system. Families that qualify for the Smart-E Loan have the opportunity to borrow up to $40,000 for a term ranging from 5 to 12 years at interest rates ranging from 4% to 7%.
Delaware: You will be able to sell energy generated by your solar panels back to the grid in exchange for credits on your energy bills if Delaware's net metering regulation allows you to do so.
Florida: Your solar energy system will not result in any additional fees when it comes time to file your taxes if you live in Florida because of the state's Property Tax Exclusion for Residential Renewable Energy Property.
Georgia: Under Georgia's net metering policy, participating utilities will measure the amount of surplus solar electricity you put on the grid and pay you at a rate specified by Georgia's Public Service Commission. This policy applies only to residents of Georgia.
Iowa: The assessed value of any new solar photovoltaic system installed in Iowa is exempt from your property taxes for a period of five years. This means that even if your solar installation increases the value of your property, the increased value cannot be counted when the property is being assessed for taxes in the first five years after installation.
Illinois: You can earn one solar renewable energy certificate (SREC) under the Adjustable Block Program in Illinois, which is also known as Illinois Shines. This allows you to receive one certificate for every megawatt-hour (MWh) of power that your solar system produces over a period of 15 years. This results in extra savings of more than $10,000 for the typical residential heating and cooling system.
Indiana: The assessed value of any new solar PV system installed in Indiana is exempt from your property taxes thanks to the Indiana renewable energy property tax exemption. This means that even though your solar installation adds value to your property, the additional value cannot be counted when the property is being assessed for taxes.
Louisiana: Homeowners in Louisiana who install solar panels or take other steps to improve their property's energy efficiency may be eligible for low-interest home improvement loans via the Louisiana Department of Natural Resources.
Massachusetts: In the state of Massachusetts, residents who own renewable energy systems can take advantage of the state's "renewable income offer," which allows them to deduct up to $1000 of the cost of their system from their state income taxes in exchange for a 15% credit on that cost.
Maryland: If you live in Maryland and build a solar energy system as part of the Maryland Solar Rebate Program, the state will give you a check for $1,000.
Maine: The Home Energy Loan program in Maine will allow you to borrow up to $15,000 for a period of up to 15 years at interest rates as low as 4.99 percent.
Michigan: This financing option in Michigan gives homeowners the opportunity to improve the energy efficiency of their homes with loans that have an annual percentage rate (APR) as low as 4.99 percent, depending on the homeowner's credit score.
Minnesota: In the state of Minnesota, if you buy solar panels and install them on your home, you won't have to pay any sales tax on those panels. Considering that the state sales tax is around 7 percent, this sales tax exemption results in significant savings for homeowners who switch to solar energy.
Missouri: In the state of Missouri, in addition to receiving reductions and rebates on the cost of your solar installation, all homeowners who have solar panels installed on their homes are excluded from the increase in property taxes that would otherwise follow from having such panels installed.
North Carolina: Because of this property tax exemption in North Carolina, the value that solar panels add to a home is not taken into account when determining the property's taxable value.
New Hampshire: In the state of New Hampshire, if you install solar panels on your home, you won't have to pay any more property taxes on the increased value your home will have as a result of having solar panels installed.
New Jersey: In the state of New Jersey, if you participate in a program called SuSI or SREC-II, you have the opportunity to earn one SREC-II for every megawatt-hour (MWh) that your solar panel system generates.
New Mexico: You are eligible for a reduction in the amount of state taxes you owe of up to $6,000 or 10% of your total solar energy costs, whichever is smaller, if you live in New Mexico and take advantage of the state's solar tax credit.
Nevada: The state of Nevada has enacted solar access legislation that protect your right to install solar panels and use them to generate power. In the state of Nevada, homeowners cannot be prevented from installing solar panels by a contract or other legal instrument (such as the bylaws of a homeowner's association).
New York: The Megawatt Block Incentive in the state of New York offers an upfront payment calculated in dollars per watt ($/W) for solar panel systems used in commercial and residential buildings. The size of your system, the current megawatt block, and your region all play a role in determining how much of a subsidy you are eligible for. The value of the incentives will range from $0.20/W (for ConEdison) to $0.50/W (for Upstate) as of January 2022.
Ohio: You will find it easier and more affordable to finance the installation of your solar energy system thanks to the Energy Conservation for Ohioans (ECO-Link) Program that has been established in the state of Ohio.
Oklahoma: You are able to sell any extra solar electricity that you generate back to the grid in exchange for credits in the state of Oklahoma thanks to a policy known as net metering.
Oregon: The legislation in Oregon says that any change in a property's actual market value that is attributable to the installation of a qualifying renewable energy system is exempt from the assessment of the property's value for the purposes of determining the amount of property tax to be paid on the property.
Pennsylvania: You are able to obtain credits for the energy generated by your solar panels if you live in Pennsylvania because the state has a robust net metering system.
Rhode Island: This solar grant program in Rhode Island provides pleased new solar owners with a per-watt grant, which is distributed through the installation provider. By taking advantage of this cash refund offer, Rhode Island residents have historically been able to save an average of more than $5,000 on the cost of their installation.
South Carolina: If you don't pay enough in taxes in one year to earn the full value of the credit, it carries over for up to ten years after that. This is thanks to South Carolina's state tax credit for solar energy, which enables people to claim a tax credit equal to 25 percent of the cost of installing solar panels on their homes.
Texas: Although Texas does not have a statewide net metering policy, numerous utilities in the state (such as El Paso Electric, the City of Brenham, CPS Energy, and Green Mountain Energy) have policies in place that pay homeowners of solar energy systems for the electricity that their panels produce. This is known as "net metering."
Utah: The state government of Utah will give you a credit towards next year's income taxes if you install a solar panel system on your property in Utah. This credit can help lower the cost of installing solar panels. You are eligible to deduct up to $800, which is equal to 25 percent of the entire cost of your equipment and installation.
Virginia: When you sign up for net metering in the state of Virginia, you are eligible to receive credits on your electricity bill for every additional kilowatt-hour of solar electricity that you send back to the grid. In other words, you pay less for the electricity you generate from the sun.
Vermont: Both the Renewable Energy Systems Sales Tax Exemption and the Uniform Capacity Tax and Exemption for Solar in Vermont exclude you from paying any sales tax on the purchase of your system. Additionally, the Uniform Capacity Tax and Exemption for Solar ensures that your property taxes will not be raised as a result of installing a solar energy system.
Washington: Solar energy systems in the state of Washington with a capacity of 10 kW or less are eligible for a complete exemption from the state's sales and use taxes. Buyers of these systems have the option of presenting the vendor with an exemption certificate in order to avoid having to pay any applicable sales or use taxes.
Wisconsin: If you live in Wisconsin, you have the right to have unlimited access to the sun according to the Wisconsin solar access rights law. This means that if you decide to put solar panels on your property, you can be confident that your neighbors will not be able to interfere with your ability to generate electricity from the sun.
Washington D.C.: The Solar Advantage Plus Program is a first-come, first-served rebate program that offers qualified applicants up to $10,000 to cover the complete cost of installing a solar power system with a capacity of 3kW to 4kW. The program is located in Washington, District of Columbia.

Conclusion

Incentives and rebates for solar energy have proven to be effective in promoting the adoption of solar power. Governments, utility companies, and other organizations offer a range of financial incentives to encourage homeowners and businesses to invest in solar energy systems.

These incentives not only help offset the upfront costs of solar installations but also reduce energy bills, increase property values, and contribute to a more sustainable future. As solar technology continues to improve and the demand for renewable energy grows, it is likely that incentives and rebates for solar energy will become even more prevalent and accessible to a wider range of consumers.

At Sun Services USA, we take care of every step of the process, from the initial site survey through the engineering design, utility applications, and installation! Even if there are no major developments, we will continue to check in with you once a week to ensure that you are kept in the loop. Please do not hesitate to get in touch with our staff if you have any questions or require assistance.