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
Solar installers are experts in maximizing your solar tax credits and rebates.
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Updated September 15, 2023
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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 mitigate the cost of installing a solar panel system on your home. This category of financial incentives is intended to encourage more homeowners to make the switch to renewable energy. You might qualify for several kinds of incentives, including cash back, discounts 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:
- 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.
- Tax Exemptions: Your solar system could qualify for both sales tax and property tax exemptions. Sales tax exemptions are applied at the time of purchase. Property tax exemptions let you ignore the value added by your solar panels when you are calculating property taxes on your house.
- Rebates: Rebates, or partial refunds after a purchase, are usually applied before any solar tax credits are calculated. Rebates might be given by your local utility company, by your state or by your county.
- Tax Credits: Tax credits are dollar-for-dollar reductions (not deductions) in how much in taxes you owe the government.
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Federal Solar Incentives
When someone says "solar incentives," you probably think of federal incentives first. The solar incentive that you may be most familiar with is the Federal Solar Investment Tax Credit (ITC), which gives you a credit on your taxes equal to a percentage of your solar system's cost.
The ITC can be credited towards the value of solar panels installed on your primary or secondary residence in the United States. The solar system must have been installed on a property you own after January 1, 2006 for you to be eligible for the credit. The ITC originally paid out 30% of all costs (panels, accessories, equipment and labor), although the covered amount has fluctuated slightly over time between 26-30%. The amount you qualify for will depend on when your solar system was installed. There is no cap on the claim amount.
To better understand how the ITC will apply to you, contact your local Birmingham solar panel installer and request more information.
The Inflation Reduction Act, passed in August 2022, made some changes to the ITC (as well as renaming it to the Clean Energy Credit). The Clean Energy Credit has increased the current credit up to 30% for solar installations undertaken between January 1, 2022 and December 31, 2032. At this point, the percentage will decrease slightly each year until the program expires in 2035. Beginning in 2023, it will also be easier to claim credits for energy storage systems under this new program.
Click here to learn more about the new Inflation Reduction Act. Your local Birmingham solar panel installer can answer your questions and explain how the new Clean Energy Credit will apply to you.
State & Local Solar Incentives
In addition to federal solar incentives, there are often also state ones. Tax credits, rebates and more might be available at a more local level. The incentives — which may be handled by the state of Alabama, or by your county or municipality — could be offered on an ongoing basis, or for only a limited time.
Next Steps for Installing Solar in Birmingham
You can qualify for solar incentives from the federal government and the Alabama government, as well as from your local utility company. Growing availability of solar initiatives in the past 15 years has helped greatly increase nationwide adoption of solar energy. Speak with your local solar panel installation expert today to discover more about the various programs and to save as much money as possible on solar panels for your Birmingham home.
EcoWatch's Birmingham, AL Solar Incentives FAQs
What if I add a solar system to a vacation home, rental property or commercial property? Will I still qualify for incentives?
While we recommend talking to your local solar installer and/or tax professional to best understand what solar incentives apply to you, many will apply to a second home, so long as that home is in the United States and owned by you. There may be other incentives available for commercial properties specifically, depending on the specifics.
My home already has solar panels installed. Are there any incentives that I qualify for?
If your solar panels were installed after January 1, 2022, you may qualify for the recently increased 30% tax credit under the Inflation Reduction Act. If you had your system installed between 2006 and 2021, you might qualify for a tax credit between 26% and 30%, depending on the year it was installed. Speaking with a representative from the company that installed your system, or any local Birmingham solar installer, can help you understand what incentives you qualify for.
Who installs solar panels near me?
To find a top-rated solar panel installer, check out our guide to the top solar companies in Birmingham.
What are some environmental benefits of installing solar panels on my home?
You can decrease your carbon footprint by 450 pounds of CO2 a year by installing solar panels. This adds up to approximately 9,000 pounds over 20 years. Solar is also a renewable energy source, meaning that switching your home over lessens the drain on our planet's resources.
Can I use a combination of solar and another type of renewable energy to power my home?
Yes, you can use multiple types of renewable energy to power your home — for example, a combination of solar and geothermal. You can also combine renewable energy generation with a backup source of non-renewable energy. Make sure that you discuss your plan with your local Birmingham solar installation expert, to make sure you know what you'll need and what types of incentives you may or may not qualify for.
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.
Solar incentive research was conducted by Melissa Smith and Karsten Neumeister. Local data analysis was conducted by James Savino. See something we missed or could do better? Email the editor.