2024 Solar Incentives and Rebates by States

Remarkably, the cost associated with solar power has decreased by over 70% in the last decade. Furthermore, an array of solar rebates and incentives remains available, poised to diminish your installation costs even more substantially.

The cornerstone of these incentives is the federal solar tax credit, which offers a substantial return of 30% on the cost of solar panel installation via your income taxes in the subsequent year following installation.

For many homeowners, the primary motivation behind adopting solar panels is the significant reduction in escalating electricity expenses. However, the initial investment required for solar panel installation can appear daunting at first glance. Nevertheless, an assortment of solar incentives and rebates exists to render the transition to solar energy a more economically feasible option.

This guide aims to elucidate the various solar incentives available and highlight the top eight states offering the most advantageous solar incentives.

What Solar Incentives Are Available in 2024?

Solar incentives are accessible to all U.S. residents who opt for solar panel installation, though specific incentives or rebates may vary by state, city, or municipality.

Here are the most prevalent solar incentives across the U.S.:

Federal solar tax credit

The federal solar tax credit, also known as the investment tax credit (ITC), lets you knock off a chunk of your solar installation costs right from your federal taxes. This cool deal started back in 2005, letting folks shave off 30% of their solar costs, but it was set up to shrink over time.

Then, in 2022, things got a bit brighter. Thanks to the Inflation Reduction Act that kicked in under President Biden, that 30% savings made a comeback. And there's more good news – they threw in an extra perk for people adding solar batteries to their setup.

So, what does this mean for the average people? Well, if you're looking to get solar panels, you could see about $8,991 back in tax credits, given the average setup costs around $29,970.

Here's the scoop on the ITC as it stands now:

• You get to deduct 30% of your solar system's cost if you install between 2022 and 2032.

• If you install in 2033, you'll get a 26% break.

• For systems put in during 2034, it drops to 22%.

• And after 2034? Well, unless Congress decides to keep the party going, that deal's off the table.

State Tax Credits: 

State tax credits stand out as a significant mechanism for reducing individual taxable income in the year 2024. These incentives operate by directly subtracting the cost of solar panel installation from the total amount of state taxes owed by the taxpayer, effectively translating into a dollar-for-dollar reduction. The premise is straightforward yet impactful: by opting for solar energy solutions, taxpayers not only contribute to environmental sustainability but also receive financial recognition from the state, essentially being rewarded for their green investment. The magnitude of these credits can vary widely across different jurisdictions, with some states offering reductions as substantial as 25% of the entire cost associated with the solar installation project. 

Net Metering:

Net metering policies introduce an intriguing dimension to the utilization of solar panels, elevating them from mere sources of renewable energy to potential revenue generators for households. This system allows homeowners to feed surplus electricity—generated by their solar panels but not consumed by the household—back into the electrical grid. Compensation for this excess power is often at the full retail electricity rate, depending on the regulatory framework governing the specific region in which the homeowner resides. This arrangement effectively positions the solar panel system as a miniature power generation facility, capable of producing financial returns in addition to environmental benefits.

Property Tax Exemptions:

The installation of solar panels is generally recognized as a value-adding home improvement, potentially increasing the market value of a property. Recognizing the paradox that increased property values typically lead to higher property taxes—which could deter homeowners from making such environmentally beneficial upgrades—many states have instituted property tax exemptions for solar installations. These exemptions ensure that the added value attributed to solar panels does not result in an increased property tax burden for the homeowner. This policy reflects a growing acknowledgment among state governments of the importance of incentivizing sustainable home improvements. By decoupling the financial benefits of solar adoption from the traditional penalties associated with property value increases, states are effectively removing a significant barrier to the widespread adoption of solar energy solutions.

Sales Tax Exemptions:

In the quest to make solar accessible to all, numerous states have waived sales taxes on solar installations. Given that sales tax can hover around 4-7%, this exemption can save you a pretty penny, lowering the upfront cost of going solar. It's a clear signal from the state: "We want you to go solar."

Solar Rebates:

Who doesn't love a good rebate? Various states and utilities offer rebates that discount the initial cost of your solar installation. This mechanism serves not only as an effective promotional tool for solar energy but also as a critical component of state and local strategies to encourage renewable energy uptake, contributing to the reduction of carbon footprints and the promotion of sustainable living practices.

Solar Renewable Energy Certificates (SRECs):

Solar Renewable Energy Certificates (SRECs) represent a novel and compelling approach to incentivizing solar energy production. By generating clean, renewable energy, solar panel owners are awarded certificates that can subsequently be sold on an open market. This system not only provides a financial return on the environmental investment made by individuals and businesses but also supports the broader regulatory framework aimed at increasing the proportion of renewable energy in the state's energy mix. In jurisdictions with Renewable Portfolio Standards (RPS), utilities may purchase SRECs to comply with mandated clean energy targets, thereby creating a market-driven approach to environmental conservation. This symbiotic relationship between solar producers and utilities underpins a dynamic ecosystem that rewards the generation of renewable energy, fosters a greener energy landscape, and contributes to the overarching goal of sustainable development..

Performance-Based Incentives (PBIs):

Last but not least, PBIs pay you for the electricity your solar system produces, regardless of whether you use it or send it back to the grid. These incentives provide a steady income stream for the energy your system generates, making the economics of going solar even more attractive.

Top 8 States for Solar Energy Tax Incentives

Arizona Solar Incentives

Arizona stands as a prime locale for solar energy adoption. The state is thriving rooftop solar industry is further sweetened by a variety of state and local incentives, making the transition to solar not just appealing but financially advantageous.

• Arizona State Residential Solar Income Tax Credit: Picture this – you install solar panels, and the state slashes your tax bill by 25% of the installation costs, up to a cool $1,000. It's like Arizona is giving you a high-five for going green.

• Solar Sales Tax Exemption: Arizona steps it up by saying no to sales tax on your solar and battery tech purchases. That's right, 100% exemption. It's like the state's way of saying, "We've got your back."

• Solar Property Tax Exemption: Adding solar panels boosts your home's value, but Arizona ensures this doesn't bump up your property taxes. The state offers a 100% property tax exemption for the value your solar setup adds. Smart, huh?

• Net Billing: Got excess solar power? In Arizona, you can sell it back to the grid and get compensated based on the Resource Comparison Proxy (RCP), which is about half the retail rate. It's like turning your home into a mini power station.

• Mohave Electric Cooperative SunWatts Renewable Energy Incentive Program: Join the program, and you could get a rebate worth 5 cents per watt of solar capacity installed, up to $2,500. It's a sweet deal that makes going solar even sweeter.

California Solar Incentives

In California, the synergy of high energy costs and abundant sunshine creates an ideal environment for solar energy adoption. While the state's solar market is already competitive, making solar installations often more cost-effective than traditional utility power, California still offers enticing incentives to further encourage solar uptake.

Key incentives include:

• The Self-Generation Incentive Program (SGIP): Administered by the California Public Utilities Commission (CPUC), SGIP offers rebates for installing battery storage systems, with incentives reaching up to $1,000 per kWh of capacity. It's a game-changer for homeowners looking to maximize their solar investment.

• Property Assessed Clean Energy (PACE) Financing: This innovative program allows Californians to finance solar installations through property tax assessments, spreading the cost over time and making solar more accessible.

• Solar Rebates and Stipends: Local initiatives like the Rancho Mirage Energy Authority and Sacramento Municipal Utility District (SMUD) offer direct rebates and stipends ($500 and $150, respectively) to reduce the upfront cost of solar installations.

• DAC-SASH Program: Managed by GRID Alternatives, this program targets low-income households in disadvantaged communities, offering no-cost or significantly discounted solar installations.

These incentives not only make solar more affordable for Californians but also underscore the state's commitment to a sustainable and renewable energy future.

Colorado Solar Incentives

In Colorado, the push towards a greener future is evident through its comprehensive suite of solar incentives, bolstered by the 2023 clean energy bill that streamlined the permitting process for local solar projects. This legislative move, aimed at accelerating solar adoption, complements an array of state and local incentives designed to make solar energy both accessible and appealing to Coloradans.

Key incentives include:

• Solar Sales and Property Tax Exemptions: Colorado offers a full exemption from sales and use taxes on solar and battery technologies, alongside a property tax exemption for the added value from solar installations. This double incentive significantly reduces the financial barriers to solar adoption.

• Residential Energy Upgrade (RENU) Loan: Through this program, homeowners can access low-cost, long-term financing for solar projects, with loans reaching up to $75,000, making solar upgrades more feasible for a broader audience.

• Weatherization Assistance Program (WAP): Administered by the Colorado Energy Office, this program provides no-cost solar installations to qualifying applicants, targeting energy efficiency and cost savings for Colorado's most vulnerable households.

• Local Rebates and Incentives: From the Energy Smart Colorado Renewable Energy Rebate offering 25% back on solar project costs to Boulder's unique rebate for city sales and use tax on solar materials and permits, local initiatives further sweeten the deal for solar adopters.

• Utility-Based Incentives: Programs like Xcel Energy's Solar Rewards, offering an upfront rebate of $1 per watt of installed solar capacity, demonstrate the utility sector's support for Colorado's solar transition.

Together, these incentives not only underscore Colorado's commitment to renewable energy but also offer tangible benefits to residents, making solar a smart and sustainable choice for the state's energy future.

Florida Solar Incentives

Florida isn’t called the “Sunshine state” for no reason, atleast, one thing is obvious, there is abundant sun there. And that could only mean positive for anyone looking to invest in solar. The state offers a suite of incentives that make solar installations not just appealing but financially savvy.

Key Florida solar incentives include:

• Property Tax Exemption: Florida offers a full exemption from property taxes on the added value from solar and battery storage installations. This means upgrading to solar boosts your home's value without increasing your property taxes.

• Sales Tax Exemption: Purchasing solar energy systems in Florida comes with a sales tax exemption, reducing the upfront costs and making solar installations more accessible to homeowners.

• Property Assessed Clean Energy (PACE) Financing: This program allows for solar financing through property tax assessments, offering a flexible repayment plan that's tied to the property, not the individual.

• Net Metering: Florida rewards solar energy surplus by compensating homeowners at retail utility rates for excess power generated, effectively turning your solar system into a mini power plant.

• Local Rebates: Programs like the Boynton Beach Energy Edge Rebate and the Dunedin Solar Energy Grant Program offer enticing rebates and grants, encouraging local residents to adopt solar by offsetting installation costs.

These incentives, tailored to Florida's unique environment and energy needs, not only make solar energy more attainable but also underscore the state's commitment to renewable energy and sustainability.

Maryland Solar Incentives

In Maryland, the landscape for solar and battery technology adoption is particularly favorable, thanks to a robust suite of incentives designed to lower installation costs and enhance the financial benefits of switching to renewable energy.

Here's a closer look at Maryland's solar incentives:

• Sales Tax Exemption: Maryland offers a full exemption from state sales tax for all solar panel purchases, making the initial investment in solar technology significantly more affordable for homeowners.

• Property Tax Exemption: To encourage solar adoption, the state provides a 100% property tax exemption for the additional home value attributed to installed solar energy systems. This means upgrading to solar boosts your home's value without increasing your property taxes.

• Residential Clean Energy Rebate: Homeowners looking to install solar panels can take advantage of a state rebate, currently valued at up to $1,000. There's potential for this rebate to increase to $5,000, pending legislative approval, further sweetening the deal for prospective solar users.

• Net Metering: Maryland rewards residential solar owners for their surplus energy production by compensating them at retail electricity rates. This not only offsets the cost of electricity but can also turn a profit during peak production times.

• Energy Storage Income Tax Credit: To support the integration of battery storage with solar systems, Maryland offers a state income tax credit worth 30% of the total cost of the battery system, capped at $5,000, enhancing the viability and efficiency of solar energy storage.

• Solar Renewable Energy Credits (SRECs): In Maryland, SRECs can be a lucrative incentive, with each 1,000 kWh of solar production valued at $57 as of December 2023. For an average system producing 7,000 kWh annually, this could mean an extra $400 in your pocket each year.

Maryland's comprehensive incentive program not only reduces the cost of solar installations but also maximizes the ongoing savings and earnings for solar energy users, making it an attractive option for homeowners across the state.

New York Solar Incentives

In New York, the solar incentive landscape is rich, offering homeowners a golden opportunity to significantly offset the costs of solar installations. With a variety of programs, New York stands out as a leader in encouraging solar energy adoption.

Key incentives include:

• NY State Tax Credit: Homeowners can tap into a generous state tax credit, claiming 25% of their solar installation costs, up to a maximum of $5,000. This substantial credit makes solar projects much more financially accessible.

• Solar Program (NY-Sun) by NYSERDA: The New York State Energy Research and Development Authority (NYSERDA) offers up to 20 cents per watt of installed solar capacity, further reducing the net cost of solar energy systems.

• Sales Tax Exemption: New York State exempts solar equipment from state sales tax, lowering the upfront costs of solar installations and making solar energy systems more affordable for residents.

• Property Tax Exemption: Solar installations can increase home values, but in New York, homeowners won't see their property taxes rise as a result. The state offers a 15-year property tax exemption for the added value that solar brings to your home.

• Net Metering: New York provides two net metering options, allowing homeowners to either stick with the traditional Phase One plus Customer Benefit Contribution (CBC) or opt for the Value of Distributed Energy Resources (VDER) or Value Stack, compensating solar energy producers for the electricity they contribute back to the grid.

• PSEG Long Island Battery Storage Rewards: For Long Island residents, PSEG offers incentives for discharging battery storage during peak electricity demand periods in the summer, enhancing the efficiency and value of solar energy systems.

Texas Solar Incentives

While Texas doesn't have a one-size-fits-all state-level incentive program, the real gold is found in local and utility-specific incentives that make solar installations increasingly attractive.

State and Local Government Solar Incentives:

• Property Tax Exemption: Recognized by the Texas Comptroller, this exemption shields homeowners from property tax increases due to the added value from their solar energy systems. It's a significant financial relief that encourages solar adoption.

• City of Sunset Valley’s Solar Energy Conservation Rebate: For residents of Sunset Valley, the city offers a generous $1.00 per watt rebate for solar installations, capping at $3,000. It's a substantial incentive for making the switch to solar.

Utility-Based Solar Incentives:

Texas shines with utility-based incentives, tailored to encourage solar energy use across various regions:

• Austin Energy Rebate: Austin Energy customers can avail themselves of a rebate up to $2,500, making solar more accessible.

• San Marcos Electric Utility (SMTX) Solar PV Rebate: Offering a similar rebate up to $2,500, SMTX supports its customers in transitioning to solar.

• AEP Texas Programs: Both the North and Central companies offer rebates up to $6,000 and $5,000, respectively, under the SMART Source Solar PV Program, one of the most lucrative incentives in the state.

• Oncor Residential Solar Program: Oncor provides rebates for eligible solar and battery projects, further reducing the cost barrier for homeowners.

• Garland Power & Light and Denton Municipal Electric (DME): These utilities not only offer buyback programs for excess solar production but also rebates with average awards of $4,000, rewarding energy-conscious residents.

• New Braunfels Utilities: Completing the incentive landscape, they offer a solar rebate worth up to $3,000, making solar installations a smart financial decision for residents.

South Carolina Solar Incentives

The Palmetto State offers a compelling mix of federal and state tax incentives, robust net metering policies, and additional local benefits that together create a highly favorable environment for solar adoption.

• Federal Tax Credit: South Carolinians are eligible for the federal solar tax credit, which can significantly reduce the cost of solar system installation. On average, residents might see a credit of approximately $10,791, positioning South Carolina above the national average in terms of financial incentives for solar conversion.

• State Tax Credit: The South Carolina Solar Energy Tax Credit is among the most generous in the nation, offering a 25% credit on your system's cost, up to a staggering $35,000 over ten years. This could mean an average saving of $8,992, dramatically lowering the effective cost of solar installation.

• Property Tax Exemption: Additionally, solar energy systems in South Carolina are exempt from property taxes, ensuring that the increase in home value due to solar installation doesn't result in higher property taxes.

• Net Metering: South Carolina's net metering policy, mandated for all major power providers, allows homeowners to earn credits for excess power generated, further offsetting energy costs. With a cap at 2% for residential generation, early adoption is key to maximizing benefits.

• Local Incentives: On top of statewide incentives, certain South Carolina residents may qualify for local perks, such as the Santee Cooper Rooftop Solar Rebate program and renewable energy resource loans, enhancing the appeal of solar investment.

How Does IRS Verify Solar Credit?

When you're ready to claim your solar tax credit, the IRS has a straightforward process to make sure you get what's coming to you. Here's the lowdown on how it works:

First off, you'll need to fill out IRS Form 5695 as part of your tax return. This form calculates the credit for energy-efficient home improvements, including your solar PV system. You'll enter the total cost of your solar project, including equipment and installation, to figure out your credit amount.

Documentation is key. Keep all your receipts and contracts from your solar installation. The IRS might not ask for these upfront, but having them handy if they do is smart. This includes proof of payment and a breakdown of the work done.

The deadline? It's tied to your tax return. So, you'll claim the credit for the year your system was installed and operational. If you're filing late, consider an extension to ensure you don't miss out on the credit.

Lastly, if your credit exceeds what you owe in taxes for the year, the IRS lets you carry over the remaining credit to the next tax year, ensuring you benefit fully from your solar investment.

The landscape of solar incentives in 2024 is rich with opportunities for savings, earnings, and environmental contributions. By understanding and leveraging these incentives, you're not just investing in solar panels; you're investing in a sustainable future for our planet and a financially savvy future for yourself. Don't let these opportunities pass you by. Contact us today for a free solar quote, and let's embark on this solar journey together. The future is bright, and it's powered by the sun.

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