Maryland Solar Tax Credit, Incentives & Rebates Explained (2022)

Renewable Energy
A maintenance person uses a ladder and harnesses to install equipment around a solar panel array on the roof of a house to stop birds nesting underneath

Looking to claim a Maryland solar tax credit? While there’s no state-specific tax credit for solar panels, there are a number of other Maryland solar incentives available to help residents save on the cost of solar panels. In this article, we’ll help you understand the top solar incentives available in the Free State and break down what types of projects are eligible to claim them.  

With the federal solar tax credit, state solar rebate program, tax exemptions, and more, Maryland residents can offset their total solar installation costs by well over 30 to 40%. If you’re ready to start getting free quotes from the best solar companies in Maryland, you can do so by using this tool or filling out the form below. 

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Maryland Solar Renewable Energy Certificates (SRECs)

In 2019, Maryland aggressively raised its Renewable Portfolio Standard (RPS) target from 25% to 50% by 2030. This means the state has a goal to generate 50% of its energy through renewables by 2030. Under the RPS standard, both Maryland’s government and its utility companies are being held to these goals.

As part of its plan to achieve this target, Maryland is rewarding property owners who contribute to the state’s RPS by installing solar. For each megawatt-hour (or 1,000 kilowatt-hours) of clean energy generated by your home solar system, you can earn one solar renewable energy credit (SREC).

SRECs are a complex yet effective solar incentive. Maryland residents can sell their certificates on the SREC market or sell them to power companies. The value of these certificates typically ranges from about $70 to $80 in Maryland, and many homeowners use the extra cash to help offset the cost of solar.

Other Maryland Solar Incentives

As one of the top states for solar incentives, Maryland has a number of additional incentives and rebate programs that have allowed the Free State to quadruple its solar capacity since 2015. Here’s an overview of current programs:

Maryland Solar IncentiveMaryland Solar Incentive Overview
Residential Clean Energy Rebate ProgramThrough Maryland’s Residential Clean Energy Rebate Program, homeowners are eligible for a $1,000 payment after installing a solar energy system of at least 1 kW. For installing solar water heating systems, homeowners can claim a $500 rebate.
Sales and Property Tax ExemptionsSolar energy projects in Maryland are exempt from the state’s sales tax, and the value added to your home by the solar installation will not raise your property taxes. 
Maryland Net MeteringMaryland has a statewide net metering program that allows you to sell excess solar energy back to the grid in exchange for credits that can go toward any future utility bills.
Maryland Energy Storage Income Tax Credit One of the only states to offer standalone incentives for solar batteries, Maryland offers a 30% tax credit on qualifying storage technology. 

Maryland Residential Clean Energy Rebate Program

Maryland has one of the most simple solar incentives in the nation to understand. The state will pay you a flat $1,000 if you install a residential solar energy system of at least 1 kW. There are no strings attached to this incentive — just keep in mind that the solar project must take place at your primary residence and be completed by an installer certified by the North American Board of Certified Energy Practitioners (NABCEP). 

Maryland Solar Sales and Property Tax Exemptions

It’s been proven that solar panels increase property value. However, the increase in property value usually means a hike in property taxes. Luckily, in Maryland (and in many other states), the added value from your solar installation is exempt from property tax increases. 

Maryland residents are also exempt from paying the 6% sales tax on solar power systems. Though 6% seems small, sales tax can cost over $1,000 for a medium- to large-scale solar system. 

Maryland Net Metering

Net metering is an incentive that credits solar customers for the excess electricity generated by their panels during the day.  Most solar arrays produce more energy than one home can consume at any given time when the sun is up. Think of net metering like a backup battery – it’s a way to store the excess energy your system produces so none goes to waste.

In Maryland, if you route the excess electricity back to the local electric grid, you can receive compensation for that power at the full retail rate, offsetting a huge chunk of your electric bills.

Contrary to most states, wherein individual electric companies set their own net metering rates (often for less than the retail price of electricity), Maryland has a robust net metering program that reimburses customers dollar-for-dollar on the excess electricity they return. This is part of why solar power is such a popular option for Maryland homeowners.

Maryland Energy Storage Tax Credit

Officials in the state of Maryland understand that installing solar panels alone is not the key to hitting its 50% RPS target by 2050. Rather, the key is to efficiently store the energy they produce. 

To help residents afford storage technology, Maryland instituted a statewide energy storage tax credit. Residents can claim up to 30% of the cost of an energy storage system on their state returns. ​​The state caps this credit at $5,000 for residential properties (for context, some of the best solar batteries cost around $10,000). Commercial solar installations, however, can claim a credit up to $150,000, depending on the size of the solar panel system. 

Funds for this Maryland solar tax credit are limited and available on a first-come, first-served basis. Funds were capped at $750,000 in 2021.

Other Maryland Solar Incentives

Outside of statewide incentives, some Maryland municipalities have adopted their own local incentives, such as solar financing solutions, rebate programs for solar-powered electric vehicle chargers, energy efficiency packages, solar carport rebates and more. 

For example, Anne Arundel County offers solar and geothermal equipment property tax credits to its residents. There are also incentives available for other renewable energy investments beyond solar — the  Maryland Energy Administration (MEA), for instance, offers grants for clean-burning wood stoves.

Available incentives will vary based on your county, utility provider and type of solar project. This is why it’s important to research any additional solar incentives that may be available in your area.

If you want someone else to do the research for you, we recommend reaching out to a local solar company. The best solar companies will be able to give you a free solar quote that factors in all of the incentives available in your area. To get connected with a certified installer near you, you can use this tool or fill out the form below.

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Federal Solar Tax Credit

Though there is no Maryland solar tax credit for installing panels, all taxpayers are eligible for the federal solar investment tax credit (ITC). Intended to reduce the initial cost of solar, this incentive allows you to claim a tax credit currently worth 26% of the total cost of your solar project. 

Keep in mind that this credit only applies to systems that are installed and turned on in 2022. If you sign a contract in December 2022 but the installation doesn’t take place until 2023, you’ll be able to claim a 22% credit. Congress set the ITC to end after 2023, but the credit could be extended with the passage of the Build Back Better Act. 

FAQ: Maryland Solar Tax Credits, Rebates & Incentives

Does Maryland have a solar tax credit?

There is no Maryland solar tax credit for panel installations, but there is a tax credit available for installing a solar storage system such as a solar battery. Additionally, all U.S. homeowners are eligible to receive the federal solar tax credit, worth 26% of total installation costs.

How do I claim my Maryland storage tax credit?

If you are a Maryland resident and you install a solar battery or other energy storage product, you can claim a state tax credit worth 30% of storage system costs (up to $5,000). The state uses an online application portal called Jotform. You can begin your application by clicking here

How much does it cost to install solar panels in Maryland? 

Through market research and data from top solar companies, we found the average cost of solar in Maryland to be $2.77 per watt. This means a 5-kW system would cost $13,867 ($10,261 after the federal tax credit), and a 10-kW system would cost $27,733 ($20,523 after the tax credit). These figures do not include the $1,000 residential clean energy rebate offered by the state of Maryland. 

Keep in mind that these are averages, and you’ll need to connect with a solar installation company to get an accurate estimate of how much it would cost to put solar on your roof.

Karsten Neumeister is a solar energy specialist with a background in writing and the humanities. Before joining EcoWatch, Karsten worked in the renewable energy sector of New Orleans, focusing on solar energy policy and technology. A lover of music and the outdoors, Karsten might be found rock climbing, canoeing or writing songs when away from the workplace.

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