2025 Solar Incentives Guide for Birmingham, AL - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Birmingham.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2024 and beyond)
- Ways to optimize your solar investment
Solar installers are experts in maximizing your solar tax credits and rebates.
Get a free quote from one of our trusted Birmingham solar installers to see how much you can save.
Please enter a valid 5-digit zip code!
Why you can trust EcoWatch
What Solar Tax Credits, Incentives, and Rebates are Available in Birmingham?
Local Option- Property Tax Exemption for Renewable Energy Faclities
Alabama Power - Residential Heat Pump Loan Program
Federal Residential Renewable Energy Tax Credit
Source: https://www.dsireusa.org/
Solar incentives are designed to mitigate the cost of installing a solar panel system on your home. These financial incentives are in place to encourage more homeowners to switch to renewable energy. You may be eligible for various kinds of incentives, such as discounts, cash back or credit towards your monthly utility bill, depending on your situation. Some incentives come from your specific utility company, county or municipality, some from the Alabama government and others from the federal government. Some broad categories of solar incentives include:
- Rebates: A rebate is a partial refund credited to your account after you've paid for your solar system. These might be offered by your local utility company, your state or your county. The rebates are usually applied before calculating tax credits.
- Tax Credits: Different from tax deductions, tax credits are dollar-for-dollar reductions in the amount of income tax that you owe the federal government.
- Tax Exemptions: Sales tax exemptions are applied at the point of sale for your solar panels. Property tax exemptions allow you to ignore the value that your solar panels add when you're calculating how much property tax you need to pay on your home.
- Net Metering: Net metering is an incentive you can get after your solar panels are up and running. If you have a net metering agreement in place with your Birmingham utility company, the company will subtract the value of the excess energy your solar system produces from your utility bill each month. In some areas, this credit is dollar-for-dollar, while in others you might be refunded a percentage of the value.
Federal Solar Incentives
Federal solar incentives are probably the first thing that comes to mind when thinking about solar incentives. One of the incentives many people are probably familiar with is the Federal Solar Investment Tax Credit (ITC). The ITC is a tax credit for a given percentage of the cost of your solar system.
The ITC was originally for 30% of the cost of solar panel installation, and has fluctuated slightly over the last few years between 26-30%. The installation date of your solar system will determine what percentage you qualify for. The cost of installation includes the panels themselves as well as the cost of accessories, equipment and labor. There is no maximum claim amount. The ITC applies to solar panels installed after January 1, 2006, on your primary or secondary residence. The residence must be owned by you and in the United States.
Wondering how the ITC applies to your specific situation? Contact your local Birmingham solar panel installation expert to get more information.
In August 2022, the Inflation Reduction Act expanded and extended the ITC, now titled the Clean Energy Credit. For solar system installations that begin after January 1, 2022, and are completed by the end of 2032, homeowners can receive a credit equal to 30% of the total cost. The percentage will then decrease annually until the Clean Energy Credit ends in 2035. Beginning in 2023, it will also be easier to claim credits for energy storage systems under the new laws.
More information about the new Inflation Reduction Act can be found here. Your local Birmingham 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
Some solar incentives may be provided at the state and local level. Like with federal incentives, these might include tax credits, rebates and more. These solar incentives — which may be handled by your county or municipality, or by the state of Alabama — might be offered on an ongoing basis, or for only a limited time.
Next Steps for Installing Solar in Birmingham
The expanding number of available solar incentives has helped tremendously increase the use of solar power nationwide over the last 15 years. You might qualify for solar incentives from the Alabama government, the federal government or your local utility company. Contact your local solar panel installation expert today to discover more about the various programs and to save the most money possible on a solar system for your Birmingham home.
EcoWatch's Birmingham, AL Solar Incentives FAQs
Who installs solar panel systems near me?
To find the top solar panel installers near you, take a look at our article on the top solar companies in Birmingham.
What are the environmental benefits of switching to solar energy?
You can lower your carbon footprint by 450 pounds of CO2 annually when you install solar panels. This adds up to around 9,000 pounds in 20 years. Solar is also a renewable energy source, meaning that making the switch reduces the drain on our planet's resources.
If I change out my appliances for ones that can utilize solar energy, are there any incentives I can claim?
The recently passed Inflation Reduction Act introduces multiple incentives designed to reward homeowners who make eco-friendly upgrades. Some incentives include rebates and tax credits for installing new electric appliances. You can find more details about these incentives here.
Can I claim incentives both towards the initial cost of solar panels, and later as reimbursement?
Yes, you can claim both tax credits and rebates towards the cost of your solar panels. Depending on which incentives you are applying for, they may apply in a different order. Be sure to talk to your solar installer or a local tax professional to ensure that you are claiming the correct incentives and getting the most money possible.
What if I want to add solar panels to a rental property, vacation home or commercial property? Can I still qualify for incentives?
Many solar incentives apply to a property located within the United States that you own, and most secondary residences fall under this distinction. Other solar incentives may be available for commercial properties, depending on the details. We recommend reaching out to your local solar installer and/or tax professional to better understand what incentives will apply to your specific situation.
Our goal is to reach as many people as we can with sensible solutions like solar energy. Our team of full-time local researchers collects solar price and installation data for every city in America then compiles it to create these digestible city guides. If you want to read our solar expert's opinion on the top solar companies featured here, follow this link.