2025 Solar Incentives Guide for Bessemer, AL - Tax Credits & Rebates

What Solar Tax Credits, Incentives, and Rebates are Available in Bessemer?

Source: https://www.dsireusa.org/

The term "solar incentives" broadly refers to financial incentives put in place by solar companies and the government to encourage people to use renewable energy by making the installation and use of solar panels more affordable. Incentives may include things like discounts, cash back or credit towards your monthly utility bill. Some incentives are offered federally, while others are handled by the Alabama government or your utility company, county or municipality. Types of solar incentives might include:

• Rebates: Solar companies may help you claim a rebate, or partial refund of your purchase, for your solar system. Counties or states will also sometimes offer limited-time rebates. If you receive a rebate, that amount will usually come off your total price before tax credits are calculated.
• Tax Credits: Unlike tax deductions, tax credits reduce, dollar-for-dollar, the amount of income tax that you owe the federal government.
• Tax Exemptions: These can come in the form of property tax exemptions, which let you exclude the value of your solar system when paying property tax on your house. You may also qualify for an exemption on sales tax at the time of purchase.
• Net Metering: Don't forget to talk with your Bessemer utility company about signing a net metering agreement. This allows you to get a credit towards your utility bill every month for the value of excess energy your solar panels generate. You might receive either a dollar-for-dollar credit or a percentage of the value.

Federal Solar Incentives

When thinking about solar incentives, federal incentives are likely the first thing that comes to mind. The Federal Solar Investment Tax Credit, or ITC, is probably the best-known federal solar incentive. The ITC allows you to claim a tax credit for a predetermined percentage of the cost of your solar system.

The ITC can be applied to solar panels installed after January 1, 2006, on a primary or secondary residence that you own in the United States. Initially, the credit applied to 30% of the total cost – for panels, equipment, accessories and labor – although that amount may range from 26-30%, depending on when your solar system was installed. There is no cap on the amount you can claim.

Your local Bessemer solar panel installation expert can give you more information about the ITC and how it may apply to your situation.

The ITC was both renewed and expanded by the passage of the Inflation Reduction Act in August 2022. It's also now called the Clean Energy Credit. For solar systems installed between January 1, 2022, and December 31, 2032, homeowners can apply for a credit equal to 30% of the total cost. The percentage will then decrease annually until the Clean Energy Credit ends in 2035. Starting in 2023, the expansion will also make it easier to get credit for energy storage systems.

More information about the new Inflation Reduction Act can be found here. Your local Bessemer solar panel installer can answer any questions you have and explain how the new Clean Energy Credit will apply to you.

State & Local Solar Incentives

Tax credits, rebates and more can be provided at multiple levels. In addition to federal solar incentives, there are often state and local ones, too. Some incentives are ongoing, while others might only be available for a limited time. They may be given by the Alabama government, or by your county or municipality.

Next Steps for Installing Solar in Bessemer

The large number of available solar incentives has contributed greatly to the increase in the nationwide adoption of solar energy over the last 15 years. You can get solar incentives from the Alabama government, the federal government or your local utility company. Getting in touch with your local Bessemer solar panel installation company is the right first step towards getting all the incentives you qualify for when you switch to solar energy.