Table of contentsState solar incentives and rebates Types of solar incentives and rebates Are you eligible for solar incentives? Solar energy by state
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The cost of solar panels has decreased by 90% in the last 10 years, but buying a solar system is still a big purchase. State solar incentives and rebates help to make solar panels more affordable for consumers.
Many state and local governments offer solar incentives to encourage consumers to adopt solar power. These incentives can be in the form of tax credits, rebates, and additional perks like net metering programs. This SaveOnEnergy guide will walk you through solar incentives by state and how much they could help you save on solar panels.
State solar incentives and rebates
Solar incentives differ by state and can even vary by city. In some states, the solar incentives and rebates can help cut the upfront cost of solar panels dramatically.
Arizona, for example, offers the Residential Arizona Solar Tax Credit, which credits back 25% of the cost of a home solar system. And while Texas doesn’t have any statewide solar credits, the state does offer a renewable energy property tax exemption. This means that even if your solar panels increase your property value, you will not have an increase in property taxes.
Several states also offer net metering programs, which allow you to send excess energy generated by your solar system back to the power grid in exchange for credits to your electricity bill. Many consumers who invest in solar panels consider net metering an important incentive in their state.
Find your state on the map below or visit your state’s solar page to learn more about the solar incentives and rebates in your area.
Federal solar incentive tax credit
Regardless of state solar incentives, if you purchase a solar system you are eligible for the federal solar incentive tax credit (ITC). In 2022, the solar ITC will credit 26% of the total cost of your solar panels back.
For a detailed explanation of the federal solar tax credit, visit our solar ITC guide.
Types of solar incentives and rebates
There are several types of state solar incentives and rebates available across the country. Here is an explanation of the most common types:
- Rebates – An amount of money refunded to the consumer who purchases solar panels after they buy the system.
- Tax credits – An amount of money that is deducted from the amount you pay in taxes in a year. The federal ITC, for example, is a tax credit that lowers your taxes by 26% of the cost of your solar system.
- Net metering – A very popular solar incentive in many states which allows you to send extra electricity that your panels generate back to the grid. In turn, you will receive a credit for any power that you use from the grid.
- Property tax exemption programs – Some states exempt solar systems from property taxes. While solar systems normally increase your property value, you will not have to pay higher property taxes.
- Solar Renewable Energy Certificates – Often referred to as SRECs, these certificates are credits for the electricity that your solar panels generate. Consumers can sell SRECs to utility companies in some areas.
- Performance-based incentives – In states that offer performance-based incentives (PBIs), consumers can claim a flat-rate payout for every kilowatt-hour (kWh) that the solar system produces.
- Low-interest loans – To help make solar systems more affordable, some states offer consumers loans with lower interest rates that apply specifically to purchasing a solar system.
- Business solar incentives – There are also business solar credits and rebates aimed at incentivizing a switch to solar. The Modified Accelerated Cost Recovery System (MACRS) lowers the amount a business pays in taxes for five years after it purchases a commercial solar system. There are also a variety of state solar incentives for businesses.
Are you eligible for solar incentives?
Each state’s solar incentives will come with their own criteria for eligibility, so it’s important to research whether you are eligible for a specific rebate or incentive in your state. However, there are some common criteria that many (although certainly not all) incentives require.
- Your solar system must be installed on your primary or secondary place of residence.
- The solar system must be installed before a certain date. For example, the solar ITC will only apply to systems installed before December 31, 2023.
- You own the solar system and do not lease it or have a solar power purchase agreement (PPA).
- The system must be new. This means if you purchase a house with solar panels already installed, you may not qualify for some state solar programs.
- Some solar incentives require you live in a specific service area or are enrolled in an energy plan with a certain electricity provider.
Again, the criteria above are some of the most common factors, but they will not be a requirement for every state solar incentive. You should thoroughly research which state solar incentives and rebates you are eligible for in your area so you know how much a solar system will cost when you factor in potential savings. Visit your state page to find details about solar incentives and rebates near you.
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