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/
The term "solar incentives" refers broadly to financial incentives implemented by the government and by solar companies to encourage people to use renewable energy by making solar panels more affordable. You may be eligible for different 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 state of Alabama and others from the federal government. You might qualify for any of the following types of solar incentives:
- Net Metering: Be sure to speak to your Madison utility company about signing a net metering contract. This allows you to get a credit towards your monthly utility bill for the value of excess energy generated by your solar panels. You might receive either a dollar-for-dollar credit or a percentage of the value.
- Tax Exemptions: These might come in the form of property tax exemptions, which would allow you to ignore the value of your solar system when calculating the taxes you pay on your house. They may also include exemptions on sales tax at the time of purchase.
- Tax Credits: These credits are dollar-for-dollar reductions (not deductions) in how much in taxes you owe the government.
- Rebates: A rebate is a partial refund credited to your account after you've paid for your solar system. Rebates may be offered by your local utility company, your county or your state. The cash back that you get from the rebates is normally applied before tax credits are calculated.
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Federal Solar Incentives
Federal solar incentives are likely the first thing that you think of when thinking about solar incentives. The Federal Solar Investment Tax Credit, or ITC, is probably the most commonly known federal solar incentive. The ITC provides a tax credit for a set 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 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 equipment, accessories and labor. 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 in the United States and owned by you.
To better understand how the ITC might apply to your situation, speak to your local Madison solar panel installer and request more information.
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 system installations that begin after January 1, 2022, and are completed by the end of 2032, homeowners can receive a credit for 30% of the total cost. The percentage will then decrease annually until the Clean Energy Credit expires in 2035. The expansion also makes claiming credit for energy storage systems easier than ever before, starting in 2023.
Click here to learn more about the new Inflation Reduction Act. To best understand how the new Clean Energy Credit will apply to you, talk to your local Madison solar installers.
State & Local Solar Incentives
Some solar incentives are often also offered at the local or state level. Like with federal incentives, these could include tax credits, rebates and more. Certain incentives are ongoing, while others might only be available for a limited time. These incentives might be given by the Alabama government, or by your county or municipality.
Next Steps for Installing Solar in Madison
The large number of available solar incentives has contributed greatly to the increase in the adoption of solar energy nationwide 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 Madison solar panel installation company is the right first step towards making sure you get all the incentives you qualify for when you switch to solar energy.
EcoWatch's Madison, AL Solar Incentives FAQs
I already have solar panels installed. Does my system qualify for any incentives?
If your solar system was installed after January 1, 2022, you may qualify for the newly increased 30% tax credit under the Inflation Reduction Act. If you installed your system between 2006 and 2021, you may qualify for a tax credit between 26% and 30%, depending on the exact installation date. Speaking with the company that installed your system, or any local Madison solar installer, can help you learn more about what incentives you might want to apply for.
How much can I save on my electric bill annually if I install solar panels on my Madison home?
After adding solar panels to your house in Madison, you can anticipate savings of about $581.50 per year, or about $11,630.07 over 20 years.
When does the federal solar tax credit end?
The Clean Energy Credit (formerly named the federal solar tax credit, or ITC), currently ends on January 1, 2035. Currently set at 30%, the credit will drop to 26% in 2033 and to 22% in 2034.
Can I apply for 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 precisely which incentives you are receiving, 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 incentives correctly and that you're getting the most money you can.
Can I receive any incentives when I add solar panels to a vacation home, rental property or commercial property?
While we recommend speaking with your local solar installer and/or tax professional to better understand what solar incentives apply to you, many apply to a second home, provided that it is in the United States and owned by you. There may be additional incentives available for commercial properties specifically, depending on the details.
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.