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Solar panel incentives, rebates & tax breaks
Solar energy not only benefits the homeowner economically but also benefits our natural world as it decreases our dependency on fossil fuels. The production of solar energy decreases a country’s dependence on foreign nations for energy-producing resources. In the United States, the solar industry provides more jobs than the coal, oil, and natural gas industries.
The government, utility companies, and other entities recognize these many advantages and offer financial incentives such as tax breaks and rebates to encourage the growth of solar production. Incentives can help mitigate upfront costs, effectively making your solar panel installation more affordable. Rebates and tax breaks can reduce the net cost of your system from 26 to 50 percent depending on what is available to you.
Some of the solar incentives available for homeowners & businesses within the United States are listed below:
Investment Tax Credit
Offered by the United States government, the investment tax credit (ITC) allows solar panel users to deduct a set amount of their installation costs from their federal taxes. Homeowners and businesses alike can take advantage of a credit equal to 26 percent of the solar panel’s cost, after first subtracting rebates.
State Tax Credit
Depending on which state you reside in, state tax credits may be offered to help offset the cost of a new solar panel system. This credit allows for homeowners or business owners to deduct a set amount of their installation costs from their state taxes, much like the federal ITC. The amount that you can deduct varies from state to state.
It’s important to check with your state government, municipality, utility companies, and other companies for rebates. The company selling your solar panels in your area will likely have a good idea of what’s available. Rebates may be time-sensitive or even limited to the amount of electricity that your system produces. Rebates may help reduce your costs by anywhere from 10 to 20 percent.
Solar Renewable Energy Certificates
Some states force utility companies to generate a set percentage of their electricity from solar power through legislation. If you happen to reside in one of these states, then your solar panels may generate solar renewable energy certificates (SRECs) dependent on how much electricity is produced by your panels. Utility companies will then purchase your SRECs to help them reach their annual percentage goal. In this case, your solar panels turn into an asset that can net you hundreds or thousands of dollars per year.
Similarly, states may offer performance-based incentives (PBIs). PBIs are offered on a per-kilowatt-hour basis in the form of credit based on how much electricity your solar panels produce. PBI programs may require you to purchase solar panels from local companies to qualify. PBIs differ from SRECs in that they are paid out directly rather than depending on a utility company to purchase the credits. The incentive rate is commonly a fixed rate that is determined when your solar panels are first installed. Depending on your state, PBI’s may work in tandem with net metering.