Residential households are considering investing in solar energy more and more as the years go on. Of course, this has to do with the fact that energy prices are skyrocketing. The average cost of residential energy bills has risen by about 3% per month for the past several years. These high energy costs are forcing people to turn to alternative sources of energy.
There is also the fact that solar energy is green and clean. Unfortunately, most of the energy we use is not clean, as most of it comes from coal. However, as people become more environmentally conscious, solar energy is becoming more popular. Yet, people do have concerns about the costs of installing solar panel arrays on their homes.
If you live in the US and plan to install a solar array, you have good news. There is no mistaking the fact that solar panels used to be extremely expensive. However, in the last decade, the prices of solar arrays have come down by up to 80%. This in itself is a massive incentive to invest in solar power.
You also need to consider that there are financial incentives to install solar panels on your home. In addition, there is a federal rebate program in place. Moreover, many states also offer their own incentives. Let’s talk about these solar incentives and rebates and determine how costly and viable solar energy in the US is.
The Federal Investment Tax Credit
The rebates and incentives you get will depend on the state you live in. However, something that applies to all states in the US is the federal investment tax credit. This is also known as the federal solar tax credit.
This is a credit or rebate that anyone who installs a solar panel system is eligible for. At this time, this federal solar tax credit sits at 26%. This means that right out of the gate, you only pay 74% of the actual cost of a solar panel array.
With that being said, the reality is that this federal solar tax credit is not going to last forever. As it stands, the credit sits at 26% until the end of 2022. However, after 2022, until 2023, it will be 22%.
However, after 2023, this credit will drop to 0%. Therefore, if you want to install solar panels and save a quarter of the cost, now is the time to do it.
At this time, there is no news of this federal solar tax credit being renewed past 2023. That said, solar energy is becoming more popular as the years go on. Therefore, it does serve to reason that the US government will renew this credit in some way at some point.
Solar Incentives By State
Many, but not all, states in the US offer their own incentives for installing solar systems. So, let’s look at the biggest solar power states in the US and what kind of incentives they offer.
Arizona
- Arizona has a residential solar energy tax credit. This allows you to deduct 25% of the total cost from your income taxes. This is valid for up to $1,000.
- Arizona also has an energy equipment property tax exemption. This means that your property taxes will not go up due to installing solar panels.
- Arizona does not charge any sales taxes on solar panels.
California
- California offers rebates on solar batteries. This rebate can be as high as $200 per kWh.
- If you install solar panels on your home, property taxes will not go up until 2024.
- Low-income households can save $3000 for every kilowatt of solar panels installed.
- There are also some local rebates available. For instance, in San Francisco, you can get anywhere from $100 to $2000 per kilowatt of solar panels installed. This is valid for systems up to 4 kW.
Colorado
- Property taxes will not go up due to the installation of solar panels.
- There is a 2.9% state tax exemption for solar panel purchases.
- There are other incentives for rooftop solar panels installed.
- Some incentives provide you with compensation per kWh produced.
Connecticut
- There is a property tax exemption on the added home value or solar panel installations.
- There is a 6.35% home solar system sales tax exemption.
- There is a 42.6 cent upfront cost reduction per installed watt. The maximum size is 10 kW.
- Low-income households have access to Connecticut solar energy through a power purchase agreement.
Florida
- There is a 6% home solar system state sales tax exemption.
- There is a property tax exemption on the added home value from a solar system.
Hawaii
- This state offers a 35% tax credit of up to $5,000.
- There are financing systems in place for low- and moderate-income homeowners.
- There is a property tax exemption on the added home value from a rooftop solar panel system.
Illinois
- Low-income households can get funding to install solar panels.
- There is a property tax exemption for the added home value for a solar panel system.
- Illinois also features compensation per kWh produced by the system.
Massachusetts
- Massachusetts offers a 15% solar tax credit of up to $1,000.
- Massachusetts offers compensation per kWh produced.
- There is a property tax exemption for the added value from a solar system.
- There is a 6.25% home solar system state sales tax exemption.
- Low-income homeowners have access to low-interest loans for solar panel installations.
Maryland
- Marylanders can get compensation per kilowatt-hours produced private system.
- There is a property tax exemption that excludes the added value of an installed solar panel system.
- There is a 6% home solar system state sales tax exemption.
- Marylanders can get a $1,000 rebate for purchasing a solar system.
Nevada
People in Nevada can get a discount if they add a new home battery to their solar panel system.
New Hampshire
- There is a $1,000 cash incentive for buying new solar panels.
- Some municipalities offer property tax exemptions that exclude the added value of the solar panel system.
New Jersey
- There is cap compensation per kWh produced by the system.
- There is a property tax exemption on the added home value from the rooftop system.
- There is also a state sales tax exemption in place.
New Mexico
- There is a 10% state solar tax credit in place up to $6,000.
- There is a property tax exemption on the added value of a solar system.
- There is a 5.125% home solar system state sales tax exemption.
- There is also a tax credit for new homes constructed with solar panels.
New York
- There is a 25% state solar tax credit up to $5,000.
- There is an incentive of up to $1,000 for every kilowatt of solar panels installed.
- There is a 4% home solar tax exemption.
- There is a property tax exemption on the added home value from a solar system.
Pennsylvania
- Residents of Philadelphia will get a $200 rebate for every kWh of panels installed.
- There is compensation for every kWh of power produced by the system.
Rhode Island
- There is a special system in place that offers up to $7,000 for eligible small-scale residential arrays.
- There is a property tax exemption from the added value of a solar installation.
- There is a 7% home solar system sales tax exemption.
South Carolina
- There is a 25% solar tax credit of up to $3,500.
- Eligible customers can get a cash incentive for kilowatts produced. The maximum rebate is $1,200.
Texas
- Some utility companies offer reductions on the upfront costs.
- There is a property tax exemption for the added home value of a solar system.
Vermont
- There is a property tax exemption that excludes value added to the home by a solar system.
- There is a 6% state sales tax exemption.
- There is a special program for people who enroll that can provide a $10,500 credit towards purchasing a new battery.
Wisconsin
- Homeowners can get a $500 credit for the installation of solar panels.
- There’s a 5% sales tax exemption on solar panels.
- There is also a property tax exemption for added value to a home.
Final Thoughts
The states we have listed provide fantastic incentives for the purchase of solar panels. However, according to our research, the states we have not listed do not offer any such incentives for solar panel installations.
However, the current 26% federal tax credit is a huge bonus. There is also the fact that solar panel installations add to the resale value of a home. Finally, let’s not forget that you can save thousands of dollars over many years thanks to solar panels.