What are solar incentives?
If you’re considering installing a solar photovoltaic (PV) system on your property, there are a wide range of solar energy tax credits and rebates that you’ll want to be aware of. Many of these incentives—available at the federal, state, and local levels—can significantly reduce your system’s initial and overall costs and increase the rate of return on your investment.
Federal tax credits
Both homeowners and businesses may qualify for tax credits via the federal government’s solar tax credit program—known as the investment tax credit (ITC). This program allows property owners to deduct a portion of the cost of their solar PV system from their federal taxes. The ITC deduction can be taken as a single deduction or on an amortized schedule for multiple years. However, this program is currently set to end on December 31, 2022, so you’ll want to act quickly to capture the maximum tax credit available.
State tax credits
Many states currently offer additional tax credits to property owners that install a solar PV system. Similar to the federal tax credits, state solar tax credits allow the property owner to deduct a portion of the cost of their solar PV system from their taxes at the end of the year. Each state’s tax credit requires a different set of qualifying standards, and offers a varying amount that can be taken as a write-off.
State and local incentives and rebates
Some states, local governments, and even a few utility companies offer incentives and rebates for property owners who install a solar PV system. Generally, qualifying systems must meet a minimum size requirement and usually fall into one of two categories—performance-based or cash-based. Performance-based rebates pay solar PV system owners a per kilowatt-hour credit for the electricity that their system produces. Cash-based rebates generally pay out at the time of the system installation. Rebates can include a single flat rate for any qualifying systems or a sliding scale based on projected system size and performance. In both cases, these funds are generally limited and based on a first-come, first-serve basis.
To learn more about what tax policies and incentives are available, you can use a resource such as the SEIA partner Solar-Estimate website which has a page that allows you to search for local rebates and incentives that might be available to you.
To learn more about solar rebates, read our eBook on Solar Incentives.
Download our eBook, Solar Incentives & Rebates, to get a better understanding of what financial incentives are related to you and how you can take advantage of them before you install solar.