2025 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 2024 and beyond)
- Ways to optimize your solar investment
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What Solar Tax Credits, Incentives, and Rebates are Available in Montgomery?
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
Source: https://www.dsireusa.org/
Solar incentives are designed to make renewable energy usage more affordable through financial incentives for those who install solar panels on their homes. Incentives may include things like discounts, cash back or credit on your utility bill each month. Some incentives are offered by the federal government, while others are offered by the state of Alabama or your specific utility company, county or municipality. Categories of solar incentives include:
- Tax Exemptions: Your solar panel system may qualify for exemptions on both sales and property tax. Sales tax exemptions are applied at the time of purchase. Property tax exemptions allow you to ignore the value added by your solar panels when calculating property taxes on your house.
- Net Metering: You can sign a net metering agreement with your Montgomery utility company that will apply to all or a percentage of the excess electricity that is generated by your solar panels. Your utility company will then deduct this value from your monthly utility bill.
- Tax Credits: Tax credits are dollar-for-dollar reductions that lower the amount of income tax you owe the federal government. (This is different from a tax deduction.)
- Rebates: Solar rebates may be offered by your state or county, or by your local utility company. These rebates work as cash back that is applied after you pay for solar panels and before tax credits are calculated.
Federal Solar Incentives
When you think about solar incentives, you probably think of federal incentives first. The Federal Solar Investment Tax Credit, or ITC, is probably the most commonly known federal solar incentive. The ITC provides you with a tax credit for a set percentage of your solar system's cost.
The ITC can be applied to solar panels installed after January 1, 2006, on a primary or secondary residence that you own in the United States. The credit initially covered 30% of the total cost – for panels, accessories, labor and equipment – although that amount may range from 26-30%, depending on when your solar system was installed. There is no cap on the amount you can claim.
Reaching out to your local Montgomery solar panel installation expert is the best way to learn more about how the ITC applies to you.
The Inflation Reduction Act, passed in August 2022, expanded and extended the ITC (as well as renaming it to the Clean Energy Credit). Homeowners can now qualify for a credit of 30% of the total costs of solar system installation for projects started after January 1, 2022, and completed before the end of 2032. The credit percentage will then decrease yearly until the Clean Energy Credit expires 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. To understand how the new Clean Energy Credit will apply to you, get in touch with your local Montgomery solar installation expert.
State & Local Solar Incentives
Some solar incentives are often also offered at the local or state level. As with federal incentives, these may include rebates, tax credits and more. These incentives — which might 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 Montgomery
There are a variety of solar incentives: those given by local utility companies, those given by the federal government and those offered by the Alabama government, to name a few. Solar energy use has grown enormously in the last 15 years, partially due to these incentives. Your local Montgomery solar panel installation company can help you learn more about which incentives you might qualify for, and get you started on the path to switching to renewable energy today.
EcoWatch's Montgomery, AL Solar Incentives FAQs
How can I find out if I qualify for different solar incentives?
It's best to speak with your local Montgomery solar installer for a better understanding of which incentives your project will qualify for. Typically, solar incentives apply to new solar systems installed on property you own (in the U.S.) between the dates specified by the incentive. Some incentives, such as those provided by the Alabama government, might have other requirements.
Who installs solar panel systems near me?
To find a top-rated solar panel installer, check out our guide to Montgomery's best solar panel companies.
What are some of the environmental benefits of switching to solar energy?
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.
How long until the federal solar tax credit ends?
The federal solar tax credit, formerly called the ITC and now titled the Clean Energy Credit, is scheduled 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.
Can I claim incentives both towards the initial cost of solar panels, and later as reimbursement?
Yes, you can receive both tax credits and rebates towards the cost of your solar panels. Depending on precisely which incentives you are applying for, they may apply in a different order. Be sure to speak with your solar installer or a local tax professional to verify that you are claiming the correct incentives and that you're getting the most money you can.
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