Solar incentives

A 30% federal tax credit is available to those who purchase a solar system.

Government agencies (both local and federal), organizations, and other entities offer various types of incentives and rebates to help make solar more affordable.

Types of incentives

There are four main categories of solar incentive:

  • 30 percent Federal Investment Tax Credit
  • Solar Renewable Energy Credits (SRECs)
  • Property Assessed Clean Energy (PACE)
  • State-specific incentives

Thirty percent federal investment tax credit

The federal government offers residential and commercial solar owners a federal tax credit for 30 percent of their system cost with no cap on the amount. This is a one-time tax credit that you receive the first year you own your solar system.

This tax credit was originally set to end in 2016, but it was extended until 2021 and will decrease over time:

The 30 percent federal tax credit will decrease over time and will not be available for residential projects after 2023. Source: solarpowerrocks.com.

We are not tax experts, so we cannot give you tax advice. But generally, the installer will give you a receipt for the total cost of your system after it is installed. You can then give this receipt to your accountant and receive a tax credit of 30 percent off the total cost of your system. If you cannot realize the full value of your credit in the first year, you may be able to roll it forward to reduce your tax burden in subsequent years. Please consult with a tax expert or your accountant.

Solar renewable energy credits (SRECs)

When you generate solar electricity from your system you also generate an associated “green value” for your electricity. This is known as a Solar Renewable Energy Credit (SREC). Every time your system produces 1,000 kWh (1 MWh) of electricity, you earn one SREC. The value of SRECs varies over time, much like a stock.

SRECs can be the most confusing part of going solar. However, they are important to understand. Depending on what state you live in, they could be worth a significant amount of money over the life of your system. Learn more about SRECs.

Property assessed clean energy (PACE)

The PACE model is designed to expand access to energy upgrades by creating access to low cost, long-term project financing. PACE-financed projects can include energy efficiency improvements, renewable energy systems, or a combination of the two. Here’s how PACE financing works: A building or homeowner contacts their local PACE administrator, who secures financing for the project. The building owner then repays that financing over a period of multiple years through a special assessment on the owner’s property tax bill or utility bill. Learn more about PACE.

State incentives

Some states opt to offer state- or county-level incentives to residents. These can take a variety of forms, from grants to waiting permitting fees, to offering additional assistance to low-income homeowners going solar.

Resources

Learn more about solar incentives in your state

  • D.C.

    D.C.

  • Florida

    Florida

  • Maryland

    Maryland

  • Minnesota

    Minnesota

  • New Jersey

    New Jersey

  • Ohio

    Ohio

  • Pennsylvania

    Pennsylvania

  • Virginia

    Virginia

  • West Virginia

    West Virginia

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