2023 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 2023 and beyond)
- Ways to optimize your solar investment
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What Solar Tax Credits, Incentives, and Rebates are Available in Birmingham?
Wood-Burning Heating System Deduction
Local Option- Property Tax Exemption for Renewable Energy Faclities
Alabama Power - Residential Heat Pump Loan Program
Federal Residential Renewable Energy Tax Credit
Solar incentives are designed to mitigate the cost of installing a solar panel system on your home. These financial incentives are intended to encourage more Americans to make the switch to renewable energy. You might qualify for different kinds of incentives, including cash back, discounts or credit towards your monthly utility bill, depending on your situation. Certain incentives come from your specific utility company, county or municipality, some from the state of Alabama and others from the federal government. Categories of solar incentives include:
- Tax Exemptions: Sales tax exemptions are effective at the point of sale for your solar system. Property tax exemptions let you exclude the value that your solar panels add when calculating the amount of property tax you need to pay on your house.
- Tax Credits: Tax credits are dollar-for-dollar reductions in the amount of income tax that you owe the federal government. (This is different from a tax deduction.)
- Net Metering: You can sign a net metering contract with your Birmingham utility company that will apply to all or a percentage of the excess electricity that is generated by your solar panels. They will then subtract this value from your utility bill each month.
- Rebates: Rebates, or cash back after a purchase, are usually given prior to any solar tax credits being calculated. Solar rebates can be given by your local utility company, by your county or by your state.
Federal Solar Incentives
Federal incentives are the type of incentives that you are most likely to have some familiarity with. The solar incentive that you're most familiar with is probably the Federal Solar Investment Tax Credit (ITC), which provides a credit on your taxes equal to a certain percentage of your solar system's cost.
The ITC was originally for 30% of the total cost of solar system 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 total installation cost includes the panels themselves as well as the cost of equipment, labor and accessories. There is no maximum claim amount. The ITC can be applied 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? Reach out to your local Birmingham solar panel installer to get more information.
In August 2022, the Inflation Reduction Act made revisions to the ITC, now referred to as the Clean Energy Credit. The Clean Energy Credit lasts until 2035. Any solar installation project that is completed between January 1, 2022 and December 31, 2032 may qualify for a 30% tax credit. This amount will decrease slightly on a yearly basis until the current program ends. The program expansion also makes credits for energy storage systems even easier to claim, beginning in 2023.
More information about the new Inflation Reduction Act can be found here. Your local Birmingham solar panel installation experts can answer your questions and explain how the new Clean Energy Credit will apply to you.
State & Local Solar Incentives
Federal solar incentives are not your only option; tax credits, rebates and more may be offered at the local or state level. Some incentives are ongoing, while others are offered for only a limited time. These local incentives may come from your county or municipality, or from the Alabama government.
Next Steps for Installing Solar in Birmingham
You can qualify for solar incentives from the Alabama government and the federal government, as well as from your local utility company. The growing availability of solar initiatives in the past 15 years has helped increase solar adoption nationwide. If you're ready to make the switch to solar energy, getting in touch with your local Birmingham solar panel installation expert is an excellent place to start.
EcoWatch's Birmingham, AL Solar Incentives FAQs
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.