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Solar Incentives

On February 17, 2009, President Obama signed “The American Recovery and Reinvestment Act of 2009”. With the signing of this stimulus bill, you can now take advantage of increased tax credits on two super energy saving features.

Solar Panels are a Smart Investment

Available tax credits may nearly cover the entire cost of adding solar panels to your home. Solar panel tax credits currently available are:

  • Federal Solar Tax Credit – 30% (no dollar limit)*
  • State Solar Rebate or Tax Credit = Up to 50% (availability and amount varies by state)
  • Other incentives, like property tax exemption, sales tax exemption, net metering, and utility discounts may also be available.

Solar panels can save you up to 50%, or more, on your monthly energy bills. This means an immediate payback to you every month. Installing solar panels minimizes the effects of rising energy costs. It is like insurance against future energy cost increases. Adding solar panels may also increase the resale value of your home.  *Note: Tax credits are subject to your income tax liability.

Frequently Asked Questions about Solar Incentives:

  • What federal tax credits are available for solar panels?

There is a federal tax credit available for up to 30% of the system’s cost. Expenditures include labor costs for onsite preparation, system installing, and wiring to interconnect the system to the home.

Example: If a solar panel system costs you $24,000 with all eligible expenses, your maximum federal tax credit amount would be $7,200 or 30%.

  • Is there a maximum federal tax credit amount for eligible systems?

No. With the signing of the American Recovery and Reinvestment Act of 2009, the maximum credit amount of $2,000 was lifted. Currently, there is no maximum credit amount on either solar panels or solar water heating systems.

  • What incentives are available at the state level?

Solar incentives are available in many states but differ in each. State incentives range from tax credits or rebates, to property tax exemptions and utility rate discounts. Tax credits and rebates can be as much as 50% of the system’s cost. See the table below for a summary of incentives currently available in your state. Specific details on available state incentives can be found by visiting the website www.dsireusa.org.

State
Federal Tax Credit
State Tax Credit or Rebate
Net Metering
Property Tax Exemption
Utility Discount or Rebate
Sales Tax Exemption or Rebate
AZ
AL
          
AR
        
CO
DE
      
FL
GA
    
IA
ID
    
IL
    
IN
      
KS
        
KY
      
LA
    
MD
  
MI
      
MN
MO
      
MS
          
MT
    
NC
  
ND
    
NE
        
NM
      
NV
    
NY
OH
    
OK
        
PA
        
SC
      
SD
        
TN
        
TX
    
UT
    
VA
      
WI
WV
        
WY
      

We have provided this information for general guidance only. All information is believed to be accurate at the time of publication, but is in no way a guarantee of completeness, accuracy, or timeliness. This does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind nor should it be construed as such. Prior to making any decision or taking any action based on this information, you should consult a qualified professional adviser to whom you have provided all of the facts applicable to your particular situation or question. None of the tax information in this publication is intended to be used nor can it be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer.

  • What if the tax credit exceeds your tax liability?

If a tax credit exceeds your tax liability, that additional amount can usually be carried forward to the succeeding taxable year.

Example: You paid $24,000 for a solar panel system. Your maximum tax credit amount is $7,200 or 30% of the system’s $24,000 cost. If your tax liability is $5,000, you can only claim a maximum of $5,000 on your 2009 taxes. The additional $2,200 tax credit can usually be claimed on the following year’s taxes.

  • Is a tax credit the same as a tax deduction?

No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit, would pay nothing.