2024 Solar Incentives Guide for Madison, AL - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Madison.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2024 and beyond)
- Ways to optimize your solar investment
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What Solar Tax Credits, Incentives, and Rebates are Available in Madison?
Local Option- Property Tax Exemption for Renewable Energy Faclities
Federal Residential Renewable Energy Tax Credit
Source: https://www.dsireusa.org/
Solar incentives are designed to encourage people to switch their home over to renewable energy by providing financial incentives meant to lower the burden of solar panel installation and use. Incentives may include things like discounts, cash back or monthly utility bill credits. Some incentives are provided by the federal government, while others are offered by the state of Alabama or your specific utility company, county or municipality. Some solar incentives you might qualify for are:
- Net Metering: Net metering factors in once your solar panels are up and running. If you've signed a net metering agreement with your Madison utility company, the company will subtract the value of the excess energy produced by your solar system from your utility bill each month. In some areas, this credit is dollar-for-dollar, while in other places you may receive a refund equivalent to a percentage of the value.
- Tax Exemptions: These may come in the form of property tax exemptions, which allow you to exclude the value added by your solar panels when paying taxes on your house. You could also look for exemptions on sales tax at the time of purchase.
- Tax Credits: Tax credits are dollar-for-dollar reductions in the amount of income tax that you owe the government. (A tax credit is different from a tax deduction.)
- Rebates: Rebates, or cash back after a purchase, are typically given prior to any solar tax credits being calculated. Solar rebates may be given by your local utility company, by your state or by your county.
Federal Solar Incentives
Federal incentives are the kind of incentives that you are most likely to have some familiarity with. 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 certain percentage of your solar system's cost.
The ITC can be applied to solar panels installed on your primary or secondary residence in the United States. The solar panels have to have been installed on a property you own after January 1, 2006, for you to claim the credit. The ITC initially covered 30% of all installation costs (panels, equipment, labor and accessories), although the total amount has fluctuated slightly over the years between 26-30%. The installation date of your solar system will determine what percentage you are eligible for. There is no cap on the amount you can claim.
Your local Madison solar panel installer can offer more information about the ITC and how it might apply to your situation.
In August 2022, the ITC (now called the Clean Energy Credit) was bolstered by the passing of the Inflation Reduction Act. Now, solar installation projects begun after January 1, 2022, and finished by December 31, 2032, may be eligible for a 30% tax credit. This percentage will then decrease slightly each year until the current Clean Energy Credit expires in 2035. The expansion also makes credits for energy storage systems even easier to claim, beginning in 2023.
Click here to learn more about the new Inflation Reduction Act. Your local Madison solar panel installation expert is the best person to answer your questions regarding the new Clean Energy Credit and how it may apply to you.
State & Local Solar Incentives
Some solar incentives may be provided by state and local governments. Like with federal incentives, these may include rebates, tax credits and more. The incentives — which may be given by your county or municipality, or by the state of Alabama — might be offered for only a limited time, or on an ongoing basis.
Next Steps for Installing Solar in Madison
The nationwide use of solar energy has significantly increased in the last 15 years, in part thanks to the proliferation of solar incentives. You might receive these incentives from the Alabama government, the federal government or your local utility company. Reaching out to your local Madison solar panel installation expert is a great first step towards getting the most money possible when you switch to solar energy.
EcoWatch's Madison, AL Solar Incentives FAQs
If I installed solar panels on my house a few years ago, can I still claim incentives?
Your best bet is to talk to the company that installed your system – or call a local Madison solar installer — to learn about which incentives you might qualify for. If your solar panels were installed after January 1, 2022, you likely qualify for the newly increased 30% tax credit under the Inflation Reduction Act. Solar systems installed between 2006 and 2021 may qualify for a tax credit of 26-30%.
How much will solar panels save me on my electric bill in Madison annually?
On average, Madison homeowners who install solar panels save around $581.50 per year, or about $11,630.07 over 20 years after they make the switch.
Can I apply for incentives both towards the up-front cost of solar panels, and later as reimbursement?
Yes, you can receive both rebates and tax credits towards the cost of your solar panels. Depending on which incentives you are claiming, they may apply in a different order. Make sure that you speak with your solar installer or a local tax professional to confirm that you are claiming incentives correctly and getting the most money possible.
What if I want to add a solar system to a rental property, vacation home or commercial property? Do I still qualify for incentives?
Many solar incentives are intended to apply to a property located within the United States that you own; most secondary residences will fall into this category. There may be other solar incentives available for commercial properties, depending on the specifics. We recommend speaking with your local solar installer and/or tax professional to best understand what incentives 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.
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.