Table of contentsThe gaps in solar incentive awareness Financial savings from solar incentives Solar energy by state
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More than a quarter of American homeowners are unaware of solar incentives, according to a YouGov survey commissioned by SaveOnEnergy.com®. This survey asked 655 American adult homeowners about their awareness of solar incentives in the U.S.
The results were surprising: 55% of participants said they have a good understanding of how much residential solar panels cost. However, 26% of the participants said they aren’t aware of any solar incentives, while 57% have heard of solar incentives but don’t know much about them.
It’s interesting that more than half of the participants in this survey reported a good understanding of the cost of residential solar panels, and yet a combined 83% of respondents either don’t know about solar incentives at all or don’t feel like they know much about them.
Why does this matter? Solar incentives are tied directly to the final cost of a home solar system. The cost of solar panels has decreased by 90% in the last decade, leading to a residential solar boom in recent years. However, investing in solar panels is still a big financial commitment. Solar incentives exist to bring the total cost of solar panels down and make it more affordable for homeowners.
The gaps in solar incentive awareness
The survey findings revealed connections between the participants’ income and education levels and their awareness of solar incentives. Only 11% of homeowners that earned under $40,000 annually reported they have a good understanding of solar incentives. Meanwhile, 21% of respondents earning more than $80,000 per year reported they have a good understanding of solar incentives.
There is also an education gap when it comes to solar incentive awareness. The survey showed 10% of American homeowners with a high school level of education or lower reported an awareness of solar incentives. Twice as many participants with at least some college-level education (20%) reported an awareness of solar incentives.
The gap in education and income levels indicates an accessibility issue regarding information about solar incentives. Solar panels have become more affordable in the last 10 years and many states are implementing new solar incentives, tax credits, and rebates. Spreading awareness of available solar incentives and rebates and closing this knowledge gap can help make solar energy more accessible for a wider range of households.
Financial savings from solar incentives
Depending on the location, there are several solar incentives available to help bring down the total cost of a home solar system. The federal solar tax credit (ITC) is offered in all 50 states and, through the end of 2022 will credit 26% of the cost of a solar system back to the consumer on their annual federal tax return.
In 2022, the average cost of a 5 kW solar system is $3-$5 per watt, which totals to between $15,000 and $25,000. However, the solar ITC will credit 26% of that cost back when you file a federal tax return. That means the average total cost of a home solar system ends up being between $11,300 and $18,500. The solar ITC alone can be worth between $3,900 and $6,500, or more depending on the system cost.
Using an average cost of a 5 kW solar system, here’s a breakdown of how the solar ITC could impact the cost of a solar system:
|Solar Panel System Cost||5 kW (5,000 watts) X $4.00 per watt||$20,000|
|Federal Solar Tax Credit||26% X $20,000||$5,200 in tax credits|
|Total Cost After Tax Credit||$20,000 - $5,200||$14,800|
The solar ITC is available to a wide variety of consumers who purchase solar panels and offers a large credit back when you file your annual tax return. It is currently set at 26% through the end of 2022, but will lower to 22% in 2023. Visit our federal solar tax credit guide for a detailed explanation of who qualifies for the ITC, the requirements to claim it, and how to apply during tax season.
The federal tax credit isn’t the only solar incentive available. There are also a number of state and local solar incentives that you can combine with the solar ITC. For example, in California there is the Self-Generation Incentive Program, which offers rebates to homes and businesses that install solar systems. And in many states, you will be exempt from a property tax increase if you purchase solar panels.
It is important to know about the available solar incentives in your area if you are considering residential solar panels. Whether it is the federal tax credit or state solar programs, solar incentives can make solar panels less expensive.