2023 Solar Incentives Guide for Montgomery, AL - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Montgomery.
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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By EcoWatch Local Advisors
Data Analysis: James Savino
Ranking Methodology: Karsten Neumeister
Updated May 04, 2023
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What Solar Tax Credits, Incentives, and Rebates are Available in Montgomery?
Wood-Burning Heating System Deduction
Local Option- Property Tax Exemption for Renewable Energy Faclities
Alabama Power - Residential Heat Pump Loan Program
Dixie Electric Cooperative - Residential Energy Efficiency Rebate Program
Central Alabama Electric Cooperative - Residential Energy Efficiency Rebate Program
Dual Fuel or Mini-Split Heat pumps: $300- $350/ton
Converting furnace to heat pump in new manufactured homes: $400-$700
Converting furnace to heat pump in existing manufactured homes: $400/ton
Federal Residential Renewable Energy Tax Credit
The term "solar incentives" refers to a range of financial incentives implemented to make installing and using solar panels more affordable. This is done to encourage people to switch to renewable energy. Different types of incentives, such as discounts, cash back or monthly utility bill credits, may be available to you. Some incentives may be handled by the state of Alabama, by your utility company or by county or municipality, while others are federal. Types of solar incentives might include:
- Rebates: Solar rebates can be offered by your local utility company, or by your county or state. These rebates are essentially cash back that is applied after your purchase of a solar system and before tax credits are calculated.
- Tax Credits: Tax credits reduce, dollar-for-dollar, the amount of income tax you owe the federal government. Tax credits are different from tax deductions.
- Net Metering: Net metering becomes relevant once your solar panels are up and running. If you have in place a net metering agreement with your Montgomery utility company, the company will subtract the value of the excess energy produced by your solar system from your monthly utility bill. In some places, this is a dollar-for-dollar credit, while in other areas you might make back a percentage of the value.
- Tax Exemptions: Sales tax exemptions go into effect at the point of sale for your solar system. Property tax exemptions let you exclude the value added by your solar system when you calculate how much property tax you need to pay on your house.
Federal Solar Incentives
When you hear the term "solar incentives," federal incentives are likely the first thing that comes to mind. It's likely that you've heard of the Federal Solar Investment Tax Credit, or ITC. This is a tax credit that reduces your taxes by a certain percentage of the money you spend installing solar panels.
The ITC applies to solar panels installed on your primary or secondary residence in the United States. The solar panels have to have been installed after January 1, 2006 on a property you own for you to be eligible for the credit. The ITC originally paid out 30% of all system costs (panels, accessories, equipment and labor), although this 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.
Contacting your local Montgomery solar panel installer is the best way to understand how the ITC applies to you.
The Inflation Reduction Act, passed in August 2022, made some changes to the ITC (as well as renaming it to the Clean Energy Credit). For solar systems installed between January 1, 2022 and December 31, 2032, homeowners can receive a credit for 30% of the total cost. The percentage will then decrease annually until the Clean Energy Credit ends in 2035. The expansion also makes it easier to get credit for energy storage systems, starting in 2023.
More information about the new Inflation Reduction Act can be found here. The easiest way to fully understand how the new Clean Energy Credit might apply to you is to reach out to your local Montgomery solar panel company with your questions.
State & Local Solar Incentives
Some solar incentives may be provided by state and local governments. As with federal incentives, these might include tax credits, rebates and more. These incentives might be offered by the Alabama government, or by your county or municipality. Some incentives may be available for a limited time, while others are ongoing.
Next Steps for Installing Solar in Montgomery
You can apply for solar incentives from the Alabama government and the federal government, as well as from your local utility company. This increase in availability of solar initiatives over the last 15 years has helped increase solar adoption nationwide. Your local Montgomery solar panel installation company can provide you with more details about which incentives you can apply for, and get you started on the path to switching to renewable energy today.
- Price-match guarantee
- Sleek, efficient, and durable solar panels
- Best solar battery on the market
- Some reported issues with customer service
- Customer service varies by local dealer
EcoWatch's Montgomery, AL Solar Incentives FAQs
How much can I save annually on my electric bill if I add solar panels to my Montgomery home?
After adding solar panels to your Montgomery home, you can anticipate savings of approximately $1,145.95 per year, or approximately $21,773.00 over the next 20 years.
What are some of the environmental benefits of switching to solar?
You can decrease your carbon footprint by 450 pounds of CO2 annually by switching to solar panels. This adds up to roughly 9,000 pounds in 20 years. In addition, solar power is a renewable energy source, meaning that making the switch reduces the drain on our planet's resources.
How long until the federal solar tax credit ends?
The federal solar tax credit, formerly called the ITC and now named the Clean Energy Credit, is set to end on January 1, 2035. The current 30% credit will end in 2032, replaced by a 26% credit in 2033 and a 22% credit in 2034.
I want to trade in my old appliances for ones that are more energy-efficient. Are there any benefits I can get?
The new Inflation Reduction Act includes provisions for several incentives that reward homeowners for making 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 qualify for incentives both towards the up-front cost of solar panels, and later as reimbursement?
Yes, you can claim both rebates and tax credits 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 that you're getting the most money possible.
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.