Solar Incentives by State 2022

Solar power is energy converted from the sun to thermal or electrical energy. Solar power is a renewable power source that is clean, inexpensive, and readily available everywhere in the world. Because solar energy comes from the sun, it represents an infinite source of energy.

The most common way solar energy is captured is by using photovoltaic (PV) solar panels. PV panels generate electricity directly from sunlight using semiconductors. When the silicon photovoltaic solar cell absorbs solar radiation, photons strike and ionize semiconductor material on the solar panel, causing electrons to break free of their atomic bonds. Electrons are forced to flow in one direction, creating a flow of electrical current. Only some of the light spectrum is absorbed, while other parts of the spectrum are reflected, too weak (infrared), or create heat instead of electricity (ultraviolet).

The first PV device was introduced in 1954 by Bell Labs in the United States. Interest in using solar energy increased during the 1970s because of the energy crisis. However, the cost of the implementation of these devices made large-scale adoption of solar devices impractical. Today, the price of PV devices has dropped dramatically, falling more than 59% over the last decade. Additionally, solar panels can be financed.

Solar power has several benefits such as eliminating electrical bills and avoiding utility inflation. The use of solar panels also protects the environment, creates jobs, and helps the U.S. become energy-independent. Additionally, many states offer tax incentives, rebates, and credits for installing solar panels on homes.

Solar Energy Incentives by State

State solar incentives are in addition to the Solar Investment Tax Credit that allows solar panel owners to recoup 26% of their equipment and installation costs for an unlimited amount. In addition to rebates, credits, and exemptions, states may offer net metering credits. Net metering credits solar electric users, reducing their electric bill because of the electricity they add to the grid. This helps to lower the electric bill and is a bonus for many homes using solar energy.

Some states also offer Solar Renewable Energy Certificates (SRECs) that are issued for every megawatt hour of energy produced. These act as vouchers that can be exchanged for energy savings on homeowner’s electric bills.

Alabama

  • Alabama does not currently have any policies to provide renewable energy tax credits, has no sales tax exemptions for solar, and no property tax exemptions

Alaska

  • Because Alaska does not have a state income tax, it does not offer state tax credits.
  • Alaska has net metering programs from specific utilities

Arizona

  • The Residential Arizona Solar Tax Credit reimburses you 25% of the cost of your solar panels, up to $1,000, off of that year’s personal income tax statement.
  • There is no sales tax on solar panel equipment.
  • There is no additional property tax for the value solar panels add to your home.

Arkansas

  • Arkansas has a net metering program that can be used by electric energy providers

California

  • California has an extensive solar rebate program through the California Solar Initiative (CSI). Local solar rebates can range from $500 to $0.95 per watt of installed capacity.
  • California has a Property Assessed Clean Energy (PACE) financing program that allows homeowners to finance their solar panels and pay them back through their property taxes. Additionally, California offers property tax exemptions for solar installation.
  • California guarantees access to solar installation and energy, so groups like homeowners associations (HOAs) cannot stop residents from installing solar energy systems

Colorado

  • Colorado offers a tax credit of 15% of the solar system’s purchase price up to $1,000
  • Colorado offers Solar Power Performance Payments, which is paid at a rate of $0.005 to $0.0375 per kilowatt-hour depending on the system.
  • Colorado offers both state sales tax and property tax exemptions for installed solar systems.

Connecticut

  • Connecticut has solar power rebates for systems up to 10kW in size.
  • Connecticut has a net metering program
  • There are no state income tax credits but the state has offered property tax exemptions for installed systems since 1977.
  • Connecticut offers state sales tax exemptions.

Delaware

  • Utilities in Delaware offer many rebate programs.
  • Because Delaware does not have a state income tax, there is no need for a sales tax exemption.
  • Delaware offers a net metering program
  • Rebates of $700 per kilowatt hour up to $6,000 are available

District of Columbia

  • The District of Columbia has a strong district-wide energy rebate program.
  • There is a property tax exemption.
  • D.C. has never metering and a low-income residential solar program (Solar Advantage Plus)
  • D.C. offered the highest payment for SRECs in 2021 ranging from $365-$435 per megawatt

Florida

  • Because there is no state income tax in Florida, there is no need for state income tax credits.
  • Florida offers both state sales and property tax exemptions for installed solar systems.
  • Florida also has net metering programs in place

Georgia

  • Georgia offers a net metering program
  • There are also low-interest loans to help small businesses purchase and install solar energy systems

Hawaii

  • Hawaii offers a tax credit of 35% of the solar system’s price up to a maximum of $5,000
  • Low-interest loans are available to help low-income homeowners install solar energy systems
  • Honolulu offers a property tax exemption, but the rest of the state does not

Idaho

  • Idaho does offer state income tax credits, which allow you to deduct 40% of the cost of the solar power project when you file income taxes. You can then get a credit of 20% of the price for the following three years, with a $5,000 maximum credit per year
  • Idaho has a State Energy Loan program that provides low-interest loans

Illinois

  • Illinois offers state rebate programs for solar system installation through ComEd and Ameren.
  • Illinois Shines gives SRECs to solar energy users for each megawatt of electricity generated for 15 years
  • Illinois offers a property tax exemption for installed solar systems.
  • Solar easement laws help to ensure sunlight can reach the system by allowing for the removal of trees and other obstructions

Indiana

  • Indiana has solar easement laws
  • Indiana offers both property tax and state sales exemptions.
  • Net metering is available for systems under one megawatt

Iowa

  • Iowa offers state income tax credits, which allow you to deduct 50% of the federal 26% tax credit.
  • There are both sales tax and property tax exemptions on solar panel installations. The property tax exemption last for five years after installation
  • Iowa offers net metering for systems under 500 kilowatt

Kansas

  • Kansas offers property tax exemptions for installed solar systems.

Kentucky

  • Kentucky offers income tax credits, such as a $500 local tax credit and an additional $6,500 from initial expenses.

Louisiana

  • Louisiana offers property tax exemptions but does not offer state sales tax exemptions.
  • The Home Energy Loan Program offers low-interest loans to assist with purchase and installation costs

Maine

  • Maine provides net metering
  • There is a Home Energy Loan that offers low-interest loans

Maryland

  • Maryland offers solar power rebates of $1,000
  • Maryland has first come, first served state income tax credits for solar panel installations. They offer a credit of 30% of the cost up to $5,000
  • There are both sales tax and property tax exemptions.
  • Maryland issues SRECs for each megawatt produced

Massachusetts

  • Massachusetts has solar rebates that vary by locale.
  • Massachusetts has an income tax credit that covers 15% of the cost of a solar system at a maximum of $1,000.
  • Property tax exemptions are offered for up to 20 years.
  • State sales tax exemptions are offered.
  • The Solar Massachusetts Renewable Target (SMART) incentive offers cost-effective programs to help develop solar energy usage in the state

Michigan

  • There is a property tax exemption.
  • Michigan Saves offers loans to increase home efficiency, including the installation of solar energy systems

Minnesota

  • Minnesota offers sales tax exemption on solar system equipment.
  • Minnesota offers solar rebates through seven different utilities.
  • There are property tax exemptions for installed systems.
  • Net metering is used in Minnesota

Mississippi

  • There are no state rebates, credits, or exemptions available in Mississippi for solar; however, the state offers rebates to Tennessee Valley Authority customers.

Missouri

  • Missouri offers state rebates for solar systems through three electric utilities.
  • Missouri does not offer state income tax credits or sales tax exemptions but does offer property tax exemptions.

Montana

  • Property tax exemptions are in place for 10 years

Nebraska

  • Nebraska has a net metering program that runs on a first-come, first-served model

Nevada

  • Nevada has a utility-based rebate program for solar. NV Energy and Valley Electric Association customers receive a 75% retail rate credit for their excess production of solar energy
  • Because there is no state income tax in Nevada, there is no state income tax credit.
  • Property tax exemptions are only offered for solar farms.
  • Solar access and solar easement laws make it easier for residents to install and use solar energy

New Hampshire

  • New Hampshire has solar power rebates for systems up to 10kW in size.
  • Because there is no state income tax and no state sales tax, there are no income tax credits and no sales tax exemptions.
  • New Hampshire offers property tax exemptions for solar installations. Net metering is available for systems up to on megawatt There is a low-income energy assistance program statewide

New Jersey

  • New Jersey offers rebates for qualified homes and systems.
  • Solar systems in New Jersey are sales tax-exempt and property tax-exempt.
  • New Jersey’s SRECs were worth about $90 in 2021

New Mexico

  • New Mexico offers sustainable building efforts credit that can allow taxpayers a credit of $6.50 per square foot of their residence
  • New Mexico offers both state sales tax and property tax exemptions on solar systems.
  • New Mexico has net metering incentives that vary by locale.

New York

  • New York offers state income tax credits of 25% of the purchase capped at $5,000.
  • Solar rebates of up to $1,000 per kilowatt installed are available
  • Affordable Solar helps low-income residents install solar energy systems
  • Solar panel installations are exempt from both state sales tax and property tax.

North Carolina

  • Rebates for solar differ in North Carolina. Duke Energy Progress offers a rebate of $250/kW and Tennessee Valley Authority (TVA) offers a $1,000 payment after installation.
  • North Carolina does not offer sales tax exemptions but does offer property tax exemptions.

North Dakota

  • North Dakota has solar easement laws that ensure homeowners have access to solar energy
  • North Dakota offers both state sales tax and property tax exemptions.

Ohio

  • State sales tax and property tax are exempt for solar installations.
  • SRECs in Ohio were worth $10 each in 2021
  • Ohio residents can get up to a 3% reduction on bank loans taken out for the purchase and installation of solar energy systems

Oklahoma

  • Because there is no state income tax, Oklahoma does not offer an income tax credit for solar.
  • Oklahoma allows local jurisdictions to provide net metering incentives

Oregon

  • Oregon offers state rebates through two utility providers. Portland General Electric customers receive a rebate of $1,200 and Pacific Power customers receive a rebate of $900.
  • Solar installations are exempt from property tax but not state sales tax.

Pennsylvania

  • PennsylvaniaSRECs were valued at $24-$41 in 2021
  • Pennsylvania offers net metering

Rhode Island

  • Rhode Island provides solar grants up to $5,000
  • Rhode Island does not offer a state income tax credit.
  • The Renewable Energy Growth program pays $0.2875 per kWh for 15 years.
  • Both sales tax and property tax are exempt for solar installations.

South Carolina

  • South Carolina offers an income tax credit of up to 25% of solar costs. In a single year, up to $3,500 or 50% of one’s state liability (whichever is less) can be applied.
  • South Carolina offers a solar rebate through Santee Cooper, which offers $1.05 per watt up to $6,300.

South Dakota

  • Solar installations are exempt from property tax.
  • Because there is no state income tax in South Dakota, there is no state income tax credit offered.
  • Solar equipment up to $50,000 is exempt from property taxes

Tennessee

  • Tennessee offers state solar rebates.
  • Because there is no state income tax, there is no tax credit offered for solar.
  • Tennessee does not offer property tax exemptions for solar but offers state sales exemptions.
  • Tennessee limits the property tax increase to 12.5% of the system’s value

Texas

  • Texas does not offer state solar rebates but many utilities and local governments do.
  • Because there is no state income tax, no tax credits are offered.
  • Sales tax is not exempt for solar installations but property tax is.
  • Texas does have solar rights laws to protect residents

Utah

  • There are local rebate programs for solar installations.
  • Utah does not offer a production incentive or property tax exemptions.
  • PV systems with a capacity of 2 megawatts or greater are exempt from sales tax.

Vermont

  • Both sales and property tax are exempt for solar installations.
  • Vermont offers net metering programs

Virginia

  • Virginia does not have state solar rebates but the Tennessee Valley Authority offers a $1,000 payment after installation.
  • There is a property tax exemption for solar installations.
  • SRECs are issued in Virginia

Washington

  • There is no state income tax in Washington, so no tax credit is offered.
  • Solar installations are not exempt from property tax but are exempt from state sales tax.
  • Washington has production incentive payments that range from $0.08 to $0.12 per kWh depending on the size and type of equipment.

West Virginia

  • West Virginia does not offer state solar rebates, state income tax credits, production incentive payments, property tax exemptions, or state sales tax exemptions.
  • West Virginia Solar Rights protect the residents’ rights to install and use solar energy systems

Wisconsin

  • Wisconsin offers solar rebates of $500 through the Focus on Energy Program.
  • Wisconsin has both state sales tax and property tax exemptions for solar installations.
  • Wisconsin protects solar access rights

Wyoming

  • Wyoming does not offer a state rebate, a Solar Power Performance Payment program, property tax exemptions, or sales tax exemptions.
  • Because there is no state income tax, there is no tax credit.

Solar Incentives by State 2022

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