STATE SOLAR INCENTIVES

So you want to go solar because you heard it could save you money on your electricity bills? The great news is that going solar is also good for the environment. That makes the federal government pretty interested in helping homeowners go green with solar energy. Some states even offer their own benefits for going solar, from state tax incentives to net metering, to property tax exemptions and more.

If you’re curious about solar incentives and you’re a homeowner in the United States, you’ve come to the right place. We’re about to go over all the incredible incentives (and benefits) available for going solar, and which states offer them. Here’s what we’ll cover:

• What is the federal solar tax credit?
• What states have solar incentives?
• Which states get free solar panels?
• What type of state solar incentives are available?
• What are the top states for solar incentives?
• Which states have net metering?
• Are state solar incentives going away?

1. What is the federal solar tax credit?

Probably the best incentive for going solar is one that is offered nationwide. The federal solar Investment Tax Credit (ITC) was renewed and improved in 2022. This solar incentive is a credit on your federal income taxes after you go solar.

If it’s applicable to you, you’ll receive 30% credit of your entire system including a solar backup battery that can be applied to your federal taxes.* Keep in mind this tax credit can only be applied if you have money due on your federal income taxes. However you can also carryover any unused credit to the next year. In other words, this is a nonrefundable tax credit, meaning you will not get a tax refund for the amount of the solar tax credit that exceeds your tax liability.

The other requirements for the federal solar tax credit are:

• You must own the system outright (not lease it)
• The system must be located in the United States
• The system must be located at your primary or secondary U.S. residence or for an off-site community solar project

2. What states have solar incentives?

In addition to the federal tax incentive, many states and Puerto Rico offer incentives for going solar as well⁽¹⁾.

Each state has different incentives and requirements, so it’s best to search for incentives in your region. Below you’ll find a list of states that have solar incentives:

Even if your state isn’t listed here, you could still be eligible for the 30% Federal Solar Tax Credit.

To fully understand the solar incentives available to you, it’s a good idea to speak with a qualified ADT Solar Energy Specialist. We can help you customize the look of solar on your home, show you exactly how much you could save** and empower you with everything you need to know. Call (866) 450-1012 or get a customized solar estimate.

3. What type of state solar incentives are available?

Now that we covered which states have solar incentives, let’s find out what all those incentives are. Here’s some information about each type of solar incentive and what it could mean for you, depending on your eligibility.

State tax credits

State credits are similar to the Federal Solar Tax Credit, but the credit is instead applied to your state taxes. Most often homeowners would be able to apply this to their taxes the year after their solar panel system was installed. State tax credit amounts vary widely state to state.

Sales tax exemption

Some states offer an exemption on the purchase of your solar panel system equipment. This means you’d pay zero sales tax on your system and depending on the size of your system could add up to a pretty substantial discount. Some of the states that offer this are Texas, Florida, California and New Mexico.

Property tax exemption

This exemption means your property taxes will not increase when you have a solar panel system installed on your home. As this is considered a home upgrade, your property taxes could increase like any other home construction project. However, not in the states with this exemption. Some of the states that offer this are Texas, Florida and Arizona.

Net metering

Net metering allows you to receive credits on your utility bills for sending your unused solar energy back to the grid. It’s a pretty important incentive for going solar. We’ll get into net metering in more depth further down this article.

State government rebates

State government rebates are when you can receive a rebate upfront during the year your solar panel system was installed. Most of these state rebates are available only for limited amounts and once the funds are used for a year, the state will stop offering them. A good idea is to get ahead of the crowd by researching rebates for your state and applying well before the deadline. Some allow you to only apply after your system has been installed, so it’s smart to plan this out ahead of time.

Solar Renewable Energy Credits (SREC)

Solar Renewable Energy Credits, or more commonly known as SRECS, are offered by some state governments. This incentive is a certificate of the benefits your solar system provides to the environment. It works like this: one SREC is generated for every megawatt-hour (MWh), or 1,000 kilowatt hours (kWh) of solar electricity a solar panel system generates(2).

In the states where SRECS are in effect, utility companies will purchase SRECs under the state’s Renewable Energy Portfolio (RPS) standards, which require utilities to generate a portion of their energy from renewable sources. This standard is determined by the state governments and varies depending on your state.

The states that currently offer SRECs are: New Jersey, Massachusetts, Pennsylvania, Maryland, Washington D.C, Delaware and Ohio. New Jersey and Massachusetts are not currently accepting new applications for this program.

4. What are the top states for solar energy incentives?

According to an article by EcoWatch(3), they rated their favorite top ten states for solar incentives. Here’s the list they came up with.

1. New York
2. Rhode Island
3. Iowa
4. Connecticut
5. Maryland
6. New Mexico
7. Colorado
8. Massachusetts
9. New Hampshire
10. New Jersey

5. What states have net metering?

Net metering is an arrangement between you and your electricity company. It allows you to receive credit towards your utility bill when your solar energy system produces more power than your home consumes. It’s one of the great factors of solar energy, there’s so much energy to go around!

Here are the states that currently offer net metering:

Even though not every state has net metering, it’s changing quickly. For example, Mississippi is on its way to cleaner energy with new net metering rules as of January 2022. These new rules will expand their current net metering program, improve total compensation rates for solar customers and prioritize solar adoption for low-to-moderate income (LMI) customers. Solar in Mississippi has been slowly growing the last couple of years, and with this plan the state is hoping to boost its solar growth even more.

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6. Are solar incentives going away?

Even though solar is great for the environment and all homeowners should have a choice in the type of energy their home uses, there has been some pushback against solar incentives, such as net metering. This pushback has most recently occurred in states like California and Florida.

The truth is that the more people use solar energy, the less reliance on other types of energy we’ll need. And that means less business for the big oil companies. Therefore, some states are running into roadblocks when it comes to powering their home with clean solar energy.