A home solar energy system is one of the best ways to reduce your carbon footprint, increase your home value, and lower your electricity costs for decades to come. In recognition of the many benefits that solar offers for homeowners and the environment, many organizations – including the federal government, states and towns, and electric utilities – have established incentive and rebate programs to lower the cost of solar. Income tax credits, rebates, and tax exemptions are just a few of the incentives that could be available where you live.
State and Federal Income Tax Credits are a Significant Incentive
If you’ve spent any time researching solar, you probably know about the federal investment tax credit for solar. This nationwide incentive, which was recently extended through 2019, allows homeowners to deduct 30 percent of the gross cost of installing solar from their federal income tax. In effect, that means a 30 percent savings off of the list price.
What you may not know, however, is that some states also offer income tax credits for solar. The state solar tax credit is one of Arizona's best solar incentives, and a diverse set of other states across the country, including New York, Oregon, South Carolina and Utah have similar programs.
Your Local Utility May Offer Rebates
Even if your state doesn’t have a tax credit, you may be able to get cash back on your solar investment with rebates through your electric utility. Many local and municipal utilities across the country, including two of the country’s biggest states for solar, California and Texas, offer solar rebate programs to their ratepayers.
Some of the utility solar rebates in California can reduce your solar costs by 25% or more. Silicon Valley Power’s rebate program, for example, currently offers a $1.25/watt rebate. Just how significant is a $1.25/watt rebate? EnergySage Solar Marketplace customers in California paid an average of $3.62/watt for their solar PV system, which means that a $1.25/watt rebate can cut their solar costs by more than a third.
In Texas, solar rebate programs from utilities are one of the Lone Star State’s biggest solar incentives. Austin Energy, CPS Energy, and other municipal utilities and electric cooperatives will provide rebates if their customers install solar on their homes and businesses.
Sales Tax and Property Tax Exemptions Offer an Additional Savings Opportunity
In addition to its environmental benefits, solar energy is a great way to increase your home's value by tens of thousands of dollars. However, higher property values come with a higher property tax bill. To combat this issue, many states have enacted legislation that prevents solar from being included in appraisals for property taxes. In addition, solar energy equipment is often exempt from sales tax, which can be a significant cost saver in states with high sales tax rates. Tax exemptions are one of the main incentives for solar in Florida.
Certain States Have SREC Programs That Can Put Extra Cash in your Pocket
Tax credits, rebates, and tax exemptions are three of the most popular policies that states and local governments use to encourage the adoption of solar. However, a few select states take it a step further – solar system owners can actually make money by selling the solar renewable energy certificates (SRECs) associated with the electricity their panels produce. SRECs are one of the main New Jersey solar rebates and incentives, and can help you save thousands of dollars over the lifetime of your solar panels.
Use a Custom Solar Calculator to Find Out What Solar Will Cost for You
If you’re curious about how much you can save with the financial incentives for solar that are available in your area, use the custom solar calculator at EnergySage. This one-of-a-kind calculator incorporates local utility electricity rates, available incentives, and price data from the EnergySage Solar Marketplace to give you a customized estimate of your 20-year solar savings.
Vikram Aggarwal is the founder and chief executive of EnergySage, the online solar marketplace. EnergySage simplifies the process of researching and shopping for solar. By offering shoppers more choices and unprecedented levels of transparency, EnergySage allows consumers to select the solar installation quote that provides the best value for them, quickly and easily. Read all of Vikram's posts here.
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