What Incentives and Rebates Are Available to Solar Customers?

Tax credits, Incentives, and Rebates Available for Solar Customers

The federal and state governments are motivated to get more people to use sustainable energy. The power grid has become overloaded to the point that utility companies are mandating rolling blackouts and planned power shortages to keep most of the lights on.

Switching to solar helps to take some of the burden off of the power grid, especially during peak usage hours. The government has offered tax credits in recent years to persuade more homeowners to install solar panels on their homes.

Some states, municipalities, and utility companies offer up-front rebates for installing a solar panel system, and there may be additional incentives offered through your state or other organizations. Keeping all of these offers straight can get confusing, so let’s dive into each of these types and then discuss how you can find out if they are applicable to your home and solar panel system.

Tax Credits

Since the Energy Policy Act of 2005 was passed, the federal government has offered tax credits for residential solar installations. This credit was implemented to motivate more homeowners across the country to turn to renewable energy, and the results have been huge.

The Solar Energy Industries Association states that “The Solar Tax Credit has helped the U.S. solar industry grow by more than 10,000% percent since it was implemented in 2006.”

Over the past 17 years, Congress has adjusted the amount claimable on this solar tax credit. Here’s how the amount has been adjusted recently:

• From 2016 to 2019, 30 percent of the cost of the system was claimable
• In December 2020 the amount was adjusted down to 26 percent 
• In August 2022 the Inflation Reduction Act increased the Residential Clean Energy Credit to 30% and extended it until the end of 2032 

Incentives

A variety of solar incentives are currently available. States that have the highest amount of solar incentives include California, Texas, Minnesota, and New York. One of the biggest incentives for installing solar is tax exemptions.

25 states offer sales tax exemptions for solar energy, and 36 states offer property tax exemptions for solar energy. These tax exemptions can help put you at ease if you’re looking into purchasing a solar panel system but are worried about extra taxes and fees that may be hidden in the cost.

Another great state-level solar incentive is a Solar Renewable Energy Certificate (SREC). When you have solar installed and registered, the state authorities can track your system’s energy production and occasionally offer SRECs. These credits can be sold to your local utility company, or another buyer, in exchange for payment. 

Rebates

Rebates are most often offered by the local utility company, but occasionally some rebates or grants can be found from other organizations. Rebates typically reduce your system costs by 10 or 20 percent, and they’re generally only available for a limited time and disappear once a certain amount of solar has been installed in your region.

Some local utility companies offer rebates based on how much power your solar panels produce, and other rebate programs provide one-time subsidies for installation. 

Where you can look to find these rebates and incentives?

Now that you know the difference between tax credits, incentives, and rebates, it’s time to figure out where to find them. While some of these programs may be difficult to find, you’ll find that the application process can be simple and straightforward.

Here are a few places to look to find incentives and rebates for your home’s solar panel system:

• Your state’s website
• Ask your local municipality
• Contact your utility company

The most comprehensive and helpful site for finding solar incentives and rebate programs is the Database of State Incentives for Renewables & Efficiency. This website is a collection of the incentives and rebates available in each state, and it links to each application or website for the rebate or incentive.

Examples of Credits, Rebates, and Incentives:

Florida:

• Florida Keys Electric Cooperative (Solar Loan Program)
• Residential Energy Conservation Subsidy Exclusion (Personal Tax Exemption)
• Orlando Utilities Commission Residential Energy Efficiency (Rebate Program)
  
  

California:

• Property Tax Exclusion for Solar Energy Systems and Solar Plus Storage System (Property Tax Incentive)
• Residential Renewable Energy Tax Credit (Personal Tax Credit)
• USDA High Energy Cost (Grant Program)
  

New York

• Energy Conservation Improvements Property Tax Exemption (Property Tax Incentive)
• NY-Sun PV Residential, Low-Income, and Small Business (Rebate Program)
• New York City - Residential Solar (Sales Tax Incentive)
  

Texas:

• City of Houston - Property Tax Abatement for Green Commercial Buildings (Property Tax Incentive)
• Austin Energy - Commercial Energy Management (Rebate Program)
• CPS Energy - Solar PV (Rebate Program)

Make Your Power Personal with Lumio

Now is a great time to take your power into your own hands. With great incentives available on the federal, state, and local levels, you can save money while you start to produce your own power from the rooftop of your own home. Give us a ring and let's see what programs are available in your area.