2025 Solar Incentives Guide for Rainbow City, AL - Tax Credits & Rebates

In this guide, we'll cover the latest solar incentives and rebates available in Rainbow City.

You'll learn about:

  • Local & State Solar Incentives
  • Federal Tax Credits (Updated for 2024 and beyond)
  • Ways to optimize your solar investment

Solar installers are experts in maximizing your solar tax credits and rebates.
Get a free quote from one of our trusted Rainbow City solar installers to see how much you can save.

By EcoWatch Local Advisors

Data Analysis: James Savino

Ranking Methodology: Karsten Neumeister

Updated January 24, 2025

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We work with a panel of solar experts to create unbiased reviews that empower you to make the right choice for your home. No other site has covered renewables as long as us, which means we have more data and insider information than other sites. Our rankings are never affected by revenue or partnerships.

What Solar Tax Credits, Incentives, and Rebates are Available in Rainbow City?

Wood-Burning Heating System Deduction

Incentive Type:
Personal Tax Deduction

Local Option- Property Tax Exemption for Renewable Energy Faclities

Incentive Type:
Property Tax Incentive

Alabama Power - Residential Heat Pump Loan Program

Incentive Type:
Loan Program
Varies, up to 100% of project cost for qualifying customers

Federal Residential Renewable Energy Tax Credit

Incentive Type:
Personal Tax Credit
30% federal tax credit for systems placed in service after 12/31/2021 and before 01/01/2033. Good for: solar water heat, solar photovoltaics, biomass, geothermal heat pumps, wind (small), fuel cells using renewable fuels.

Source: https://www.dsireusa.org/


Solar incentives are intended to make renewable energy usage more affordable via financial incentives for those who install solar panels on their homes. The incentives could include cash back, upfront discounts or monthly credits towards your utility bill. Some incentives are handled by the federal government, some by the Alabama government and some by your utility company, county or municipality. Some solar incentives you might qualify for are:

  • Tax Credits: Tax credits lower, dollar-for-dollar, the amount of income tax you owe the government. These differ from tax deductions.
  • Tax Exemptions: These could come in the form of property tax exemptions, which can let you ignore the value of your solar system when paying taxes on your house. You could also look for exemptions on sales tax at the time of purchase.
  • Net Metering: Net metering is an incentive you can get after your solar system is up and running. If you've signed a net metering agreement with your Rainbow City utility company, the company will subtract the value of the excess energy your solar system produces from your utility bill each month. In some locations, this is a dollar-for-dollar credit, while in other areas you might make back a percentage of the value.
  • Rebates: Rebates, or cash back after a purchase, are typically applied before any solar tax credits are calculated. Solar rebates may be given by your local utility company, by your state or by your county.
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Federal Solar Incentives

Federal incentives are the type of incentives that you are most likely to have some knowledge of. You've likely heard of the Federal Solar Investment Tax Credit, or ITC. The ITC is a tax credit that reduces your taxes by a certain percentage of the money you spend on your solar system.

The ITC applies to solar panels installed after January 1, 2006, on a primary or secondary residence that you own in the United States. Originally, the tax credit was for 30% of the total cost – for panels, accessories, equipment and labor – although it may range from 26-30%, depending on when your solar project was undertaken. There is no cap on the amount you can claim.

Contacting your local Rainbow City solar panel installer is the best way to learn more about how the ITC applies to your situation.

The Inflation Reduction Act, passed in August 2022, added more provisions 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 systems installed between 2022 and 2032. After 2032, the percentage will see a slight decrease annually until the program expires in 2035. Starting in 2023, the expansion to the program will also make credits for energy storage systems even easier to claim.

More information about the new Inflation Reduction Act can be found here. Your local Rainbow City 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 offered at the local or state level. As with federal incentives, these can include rebates, tax credits and more. Certain incentives are ongoing, while others may only be available for a limited time. Incentives might be offered by the Alabama government, or by your county or municipality.

Next Steps for Installing Solar in Rainbow City

Solar incentives might be provided by the federal government, the Alabama government or your local utility company. The growing number of available solar incentives has contributed to a large increase in solar energy use in the last 15 years. It is a good idea to talk to your local Rainbow City solar installation expert for more information about these incentives and to ensure that you're getting the most money possible for your solar system.

EcoWatch's Rainbow City, AL Solar Incentives FAQs

How can I find out if I qualify for different solar incentives?

In most cases, solar incentives apply to:

  1. a new solar system
  2. installed on property that you own
  3. within the U.S.
  4. within the date range specified by a particular incentive.

Specific incentives, including those run by the Alabama government or by your county/municipality, might have additional qualifications. Talk to your local Rainbow City solar installer to find out what incentives your project will qualify for.

If I already have a solar system installed on my house, can I still claim incentives?

Your best bet is to talk to a representative from the company that installed your solar system – or speak to a local Rainbow City solar installer — to clarify which incentives you might qualify for. If your solar panels were installed after January 1, 2022, you likely qualify for the recently 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%.

What are some environmental benefits of adding solar panels to my home?

Solar energy is renewable — by changing where you get your energy, you help reduce the strain on our planet's resources. You can also reduce your home's CO2 emissions by 450 pounds annually, or around 9,000 pounds in 20 years.

I want to trade in my old appliances for ones that are more energy-efficient. Are there any benefits I can claim?

The new Inflation Reduction Act creates a number of new financial incentives to encourage you to make eco-friendly improvements to your home. More details about these incentives, including information about incentives for purchasing new appliances, can be found here.

Can I claim incentives for adding solar panels to a vacation home, rental property or commercial property?

Many solar incentives are intended to apply to a property located within the United States that you own, and most secondary residences fall into this category. There may be other solar incentives available for commercial properties, depending on the details. We recommend getting in touch with your local solar installer and/or tax professional to best understand what incentives may 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.

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