*Updated November 2020*
Getting a grasp of the many solar incentives can be overwhelming. We've broken them down so you can easily determine which ones may be relevant to you.
Federal Investment Tax Credit
Every American homeowner or business is eligible for this incentive. A Federal Investment Tax Credit lowers your Federal tax bill by 26% of the cost of your solar purchase. For example, if you buy a $60,000 solar array, you’ll pay $15,600 less on your Federal taxes that year. If you owe the Federal government less than $15,600 in taxes, don’t worry. For residential projects, the excess can be rolled over to the following year. For commercial projects, the excess amount from your credit will roll over for 20 years.
Individual states also offer tax incentives. These incentives can be claimed in addition to the Federal tax credit. When you combine your Federal incentives with your state incentives, you’re saving a large portion of the cost of your array. For some customers, nearly all of their array is covered. In years to come, the Federal tax credit will diminish in value. The sooner you claim it, the more money you’ll save.
As of 2020, the Solar Tax Credit has begun to phase out, or "sunset" which is a term often used to describe the gradual closing period for a public policy.
Accelerated Depreciation for Businesses
Solar investments depreciate by the MACRS schedule, which allows an array to depreciate over five years. Also, the array can be depreciated by 50% in the first year, and the remaining 50% can then be depreciated via the typical schedule.
State Incentives
Iowa State Tax Incentives
The state of Iowa offers a 15% tax credit, which means your state taxes will be reduced by 15% of the cost of your array. Since it’s combined with the Federal tax credit, this means you’re already saving 41% of the cost of your solar purchase. e.g. If your solar array costs $10,000, you can reduce your state taxes by $1,500—providing you with a total reduction of $4,100 on your 2020 taxes.
*Note there is a price cap on the Iowa state tax credit:
$5,000 for residential customers and $20,000 for commercial customers.
Additionally, only $5 million is awarded annually for this program, so it is available on a first come, first serve basis.
Watch our informative Iowa Tax Credit Webinar.
Illinois Shines Adjustable Block Program
In Illinois, there’s an incentive available which is paid for by the utility companies. It’s called the Illinois Shines Adjustable Block Program and it typically covers 50%-60% of the cost of your array. The amount of payment is based upon the amount of solar energy a customer’s array is expected to produce. These payments are provided in addition to the Federal Investment Tax Credit and savings on energy bills. In some cases, the entire cost of the solar array can be paid for with the Federal tax credit and Adjustable Block Program payments. As more solar systems are installed in Illinois, the amount of incentive decreases. For this reason, it’s best to install as soon as possible in Illinois. The program began accepting applications on January 15, 2019, and is still active.
Check out the Adjustable Block Program Webinar for more info.
Missouri Solar Rebate Program
Depending on the utility provider, Missouri solar customers may be eligible for substantial rebate payments. The amount of these rebate payments varies depending on the size of the system installed. The rebates save some customers an additional 20-30% on the cost of the array. One of our Renewable Energy Consultants will be happy to analyze your potential savings if you request a free quote from us.
Learn more about Missouri Solar rebates.
Wisconsin 'Focus on Energy'
Focus on Energy is a state-funded organization that partners with select Wisconsin utilities to encourage renewable energy generation and reduce fossil fuel usage. Current utilities partnered with Focus on Energy are WE Energy, Alliant Energy, and Madison Gas and Electric.
Renewable Energy Competitive Incentive Program (RECIP)
This program provides a payout for renewable energy systems installed at Wisconsin businesses. Eligible businesses must apply via a Request for Proposals (RFP) process. This RFP will occur three times per year over the next four years (2019-2022).
While the total payment percentage will depend on the specifics of the solar array, this payment should amount for 10-20% of the cost of the system.
Prescriptive Renewable Incentives
The Wisconsin Focus on Energy program offers non-RECIP incentives of up to $4,000 for installing a solar array. This incentive is for commercial properties and cannot be used alongside the RECIP incentive.
Don’t See Your State Listed?
Don’t worry! There are still plenty of incentives available outside of these states. If you don’t see your state listed but want to know if there are any programs to help you go solar, you can reach out to us to see what is available in your state.
Note: While we do our best to keep this page updated, we can’t promise that every program listed will apply to your exact situation or will be available should you decide to install solar. A Simpleray Renewable Energy Consultant will be able to provide details on everything you may qualify for. Contact us to see how much you could save!
