The government is invested in promoting the adoption of clean energy in American homes through solar energy incentives. Federal and local governments have introduced several tax incentives and rebates to encourage more homeowners to install solar energy systems.
While federal incentives apply to everyone regardless of location, state incentives offered by a local solar company may vary by region. Here is more information about state and federal tax incentives and rebates for solar power:
State and Local Tax Incentives
Many state and local governments offer a variety of tax incentives and rebates to encourage residents to install solar systems. Florida, Arizona, Wisconsin, New Mexico, Iowa, Minnesota, Colorado, and Indiana offer property and sales tax exemptions for solar panels.
States like New York and Washington offer sales tax exemptions only. Texas and California offer homeowners property tax exemptions only. Some states provide no tax exemptions but may offer Solar Renewable Energy Credits (SRECs), grants, income tax credits, and other incentives.
Consult your local solar company for detailed information on your state’s solar tax incentives and rebates.
Property and Sales Tax Exemptions
Installing a solar system on your property can help increase its value. If your state offers property tax exemptions, they exclude the added value of the solar panels from your property taxes.
States like Arizona and Florida waive sales taxes on solar panels, batteries, and other solar equipment purchases. This tax exemption reduces the purchasing cost of solar equipment. This helps make solar more affordable for businesses and homeowners.
Stolar renewable energy certificates, orSRECs, are a form of local solar incentive available in Pennsylvania, Delaware, Maryland, New Jersey, and Illinois. State governments grant solar system owners one SREC for every unit of electricity their solar power systems generate.
The state allows utility companies to purchase these SRECs. This allows home and business owners to earn income from their solar power systems.
States like Maryland offer grants to offset the initial cost of purchasing and installing a solar energy system. These grants aim to make solar more affordable for low-income earners. Most states’ eligibility criteria for solar installation grants are based on household income.
The Federal Investment Tax Credit
The federal investment tax credit, or ITC, is a federal solar tax credit equal to a percentage of the cost of installing a solar energy system in your home. A 26% solar tax credit is available for businesses and homeowners who installed solar systems from 2020 to 2021.
In August 2022, Congress extended the ITC to 30% for solar systems installed between 2022 and 2023. Businesses and homeowners who installed solar systems on or before December 31, 2019 are also eligible for the 30% tax credit.
The ITC covers various expenses associated with installing a solar power system. This includes the costs of acquiring solar panels and labor fees for site preparation and installation. It also covers the cost of energy storage devices and sales taxes on qualifying expenses.
The ITC will remain valid until December 31, 2034. You can only claim the solar tax credit on a new solar system or one you are using for the first time. If you buy a home with previously installed solar panels, you might not be eligible for the same solar incentives the original installer qualified for.
Contact Your Local Solar Company
As the federal and state governments continue to prioritize renewable energy, they are likely to implement more solar power incentives and rebates. You may benefit from property and sales tax exemptions and receive state grants when you install a solar power system in your residence.
A solar energy system also helps reduce your electricity bills and contributes to environmental sustainability. If you are considering solar energy for your home or business, consult your local solar company today. They can give you further information on the state and federal incentives and rebates you are eligible for.