According to a year-end report by the Solar Energy Industries Association, Americans installed enough solar panels to power 24 million homes in the U.S. This is thanks in part to solar panel incentives such as the solar panel rebate and the solar tax credit. These add up to some substantial solar panel savings.
The solar investment tax credit was originally set at 26% and was set to drop down to 22% at the end of 2022. However, with the signing of the Inflation Reduction Act by President Biden, this has now been boosted to 30% through the year 2025.
There are also solar tax incentives available on a state-by-state basis. These solar tax incentives vary depending on which state you live in. To learn more about these solar tax incentives by state, keep reading below to find the top 10 states with the best solar tax incentives.
1. New York
New York offers one of the best solar tax incentives by state. In addition to the federal tax incentive, residents can take advantage of the NY-Sun Megawatt Block incentive. This allows both commercial and residential solar customers to claim a dollars-per-watt ($/W) cash rebate for their systems.
New York residents also have the Solar Energy System Equipment Credit. It allows residents to deduct up to 25% or $5,000 of their total solar energy expenses from their taxes (whichever is lower). This solar tax credit is available to homeowners who choose to lease a solar panel system, as well as those with new systems installed.
New York residents do not have to pay the state’s 4% sales tax on solar equipment. They can also avail themselves of the Net Metering program that allows them to turn any excess generated solar power to be fed back into the grid in exchange for utility bill credits.
2. Rhode Island
Rhode Island has a robust system of homeowner tax credits. The CommerceRI’s Renewable Energy Fund grant program gives homeowners a rebate of $0.85 per watt, for a maximum of $7,000, with a new system installation. This amounts to solar panel savings of around $4,000 to $5,000 for a typical setup.
Rhode Island allows for one of the most unique solar tax incentives by state with its Property Tax Exemption. This means that even if your property values rise as a result of solar panel installation, your property taxes will not rise. Rhode Island residents also do not have to pay the 7% sales tax when purchasing a new solar panel setup.
RI residents may also use net metering to funnel their excess solar power back into the solar grid for utility credits. The Renewable Energy Growth program ensures a payout of 29.65 cents per kilowatt-hour fed back to the grid over a 15-year span.
Iowa does not currently have any statewide solar rebates. But like Rhode Island, residents of Iowa can take advantage of the Property Tax Exemption, which won’t raise their property taxes in correlation with rising property values through the use of solar panels.
Similar to other solar tax incentives by state, Iowa residents do not have to pay the 6% state sales tax when purchasing equipment to install their new solar panel system. They can also take advantage of net metering credits which must be cashed out annually.
Connecticut offers a Renewable Energy Solutions program. Customers can sell power generated for renewable energy certificates (RECs) back to participating utility companies through this program.
Connecticut also has its Energy Conservation Loan Program. Residents can get low-interest loans from the state government to purchase a solar panel setup. For example, these residents can borrow up to $25,000 for 10 years with interest rates between 0-6%.
Like other solar tax incentives by state, Connecticut participates in the sales tax exemption and the property tax exemption. Residents of Connecticut aren’t required to pay the 6.35% state sales tax on new solar equipment and they don’t have to worry about raising property taxes.
Maryland residents can get a solar panel rebate of $1,000 through the Residential Clean Energy Rebate program when they install a new solar panel system or solar shingles at their main residence.
Maryland homeowners may also receive a Solar Renewable Energy Certificate for each megawatt-hour of clean solar energy generated through their system. These credits can be sold on the SREC market.
As with the majority of other solar tax incentives by state, Maryland residents receive property tax exemption as well as exemption from the state’s 6% sales tax on solar equipment. Net metering is also an option to exchange excess solar power for utility credits.
6. New Mexico
Under the Sustainable Building Tax Credit, New Mexico credits up to $6.50 per square foot on income taxes for the installation of solar panels. To qualify for this solar tax credit, your home must receive certification from the U.S. Green Building Council.
Through the Solar Market Development Tax Credit, New Mexico taxpayers can also get a 10% tax credit towards their total solar energy expenses up to $6,000.
In line with many other solar tax incentives by state, New Mexico homeowners don’t pay property taxes on their increased home value thanks to property tax exemption. They can also sell their excess energy back to the grid through net metering.
Although Colorado does not have a statewide solar tax rebate program, there may be local rebates offered through major utility companies.
Residents who are not homeowners can take advantage of community solar efforts. They can subscribe to get their energy from an off-site community solar garden setup.
Colorado does not tax the physical equipment of solar panels or solar systems nor does it increase property taxes. Colorado homeowners can also take advantage of selling excess energy to utility companies just as other solar tax incentives by state.
With the Residential Energy Credit, Massachusetts residents can get a solar tax credit for their solar unit cost. They receive 15% of the total cost for a maximum credit of $1,000.
The Massachusetts Department of Energy Resources created the Solar Massachusetts Renewable Target Program. The SMART program provides credits to customers of investor-owned utility companies.
Net metering allows customers of regulated electric companies to sell back excess energy. Massachusetts residents also enjoy property tax exemption and sales tax exemption.
9. New Hampshire
The Renewable Electrical Generation Rebate Program gives New Hampshire residents a solar tax credit in the form of a rebate. There is a cash-back incentive of $200 per kW installed. The solar tax rebate can total $1,000 or 30% of your entire system costs, whichever is lower.
New Hampshire residents in select counties are exempt from increased property taxes incurred by their solar units. New Hampshire also has a statewide net metering program that gives residents back money for utilities for excess energy.
10. New Jersey
New Jersey utilizes solar panel incentives with Transition Renewable Energy Certificates (TRECs). Residents with solar units can earn these certificates with clean generated energy to sell back to utility companies. New Jersey homeowners can also combine net metering to sell excess energy back to the grid for credits.
New Jersey residents receive property tax exemptions relating to residential solar equipment. Residents are exempt from paying the state’s 6.625% sales tax in relation to solar equipment and installation.
Find More About Solar Tax Incentives by State and Solar Savings at WiseMoneyLife.com
If you’re wondering “How much do solar panels save?” you need to look into solar tax incentives by state. Depending on where you live, you could cash in on major solar panel savings while also reducing your energy costs.
Saving money and managing your finances can be easy with the right resources. Turn to WiseMoneyLife.com today for more great financial advice and information.
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