2023 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 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 Rainbow City?
Wood-Burning Heating System Deduction
Local Option- Property Tax Exemption for Renewable Energy Faclities
Alabama Power - Residential Heat Pump Loan Program
Federal Residential Renewable Energy Tax Credit
Solar incentives are meant to encourage people to switch their home over to renewable energy by offering incentives that lower the financial burden of solar panel installation and use. Different kinds of incentives, including cash back, discounts or credit towards your monthly utility bill, might be available to you. Some incentives may be provided via the Alabama government, by your utility company or by county or municipality, while other incentives are federal. Types of solar incentives might include:
- Rebates: Rebates, or cash back after a purchase, are usually applied before any solar tax credits are calculated. These rebates can be provided by your local utility company, by your county or by your state.
- Tax Credits: Different from tax deductions, tax credits reduce, dollar-for-dollar, the amount of income tax that you owe the government.
- Tax Exemptions: Sales tax exemptions go into effect at the point of sale for your solar panels. Property tax exemptions let you exclude the added value of your solar system when you calculate how much property tax you need to pay.
- 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 Rainbow City utility company, it will subtract the value of the excess energy produced by your solar system from your monthly utility bill. In some locations, this is a dollar-for-dollar credit, while in others you may make back a percentage of the value.
Federal Solar Incentives
Federal incentives are the type of incentives that you are most likely to have heard of. The Federal Solar Investment Tax Credit, or ITC, is probably the best-known federal solar incentive. The ITC offers a tax credit for a predetermined percentage of the cost of your solar system.
The ITC is applied to the total cost of solar system installation, including the panels themselves as well as equipment, accessories and labor. You can claim this credit for panels installed after January 1, 2006 on a primary or secondary residence located in the United States that you own. The tax credit ranges from 26-30% of total costs depending on when your project was completed. There is no maximum claim amount.
Curious how the ITC might apply to your specific situation? Get in touch with your local Rainbow City solar panel installation expert to get more information.
In August 2022, the Inflation Reduction Act laid out new provisions for the ITC, 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 apply for a credit equal to 30% of the total cost. The percentage will then decrease annually until the Clean Energy Credit ends in 2035. The expansion to the program also makes credits for energy storage systems even easier to claim, beginning in 2023.
More information about the new Inflation Reduction Act can be found here. Your local Rainbow City solar panel installation experts can answer any questions you have and explain how the new Clean Energy Credit applies to you.
State & Local Solar Incentives
Federal solar incentives are not your only option; tax credits, rebates and more are often offered at the local or state level. These incentives — which may be provided by your county or municipality, or by the state of Alabama — could be offered for only a limited time, or on an ongoing basis.
Next Steps for Installing Solar in Rainbow City
Solar energy use nationwide has increased enormously in the last 15 years, in part due to the growth in the number of solar incentives. You may get these incentives from the Alabama government, the federal government or your local utility company. Reach out to your local solar panel installer today to learn more and to save as much money as possible on solar panels for your Rainbow City home.
- 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 Rainbow City, AL Solar Incentives FAQs
Can I claim incentives for adding solar panels to a rental property, vacation home 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 will fall under this distinction. Other solar incentives may be 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 will apply to your specific situation.
If my house already has solar panels, can I still claim incentives?
An excellent idea would be to talk to someone from the company that installed your system — or call a local Rainbow City solar installer — to better understand which incentives you may qualify for. If your system was 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%.
What are the top solar panel installation companies near me?
To discover the top solar panel installers near you, read our article on Rainbow City's top solar panel companies.
How long until the federal solar tax credit ends?
The federal solar tax credit, formerly known as the ITC and now titled 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.
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 solar panels. Depending on precisely which incentives you are receiving, 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 that you're getting the most money you can.
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.