2024 Solar Incentives Guide for Selma, AL - Tax Credits & Rebates

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

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Solar incentives are designed to encourage people to switch their home over to renewable energy by providing incentives meant to lower the financial burden of solar panel installation and use. Different kinds of incentives, including discounts, cash back or monthly utility bill credits, may be available to you. Certain incentives may be offered by the Alabama government, by your utility company or by county or municipality, while others are federal. Categories of solar incentives include:

• Tax Exemptions: Your solar system could qualify for exemptions on both sales and property tax. Sales tax exemptions are effective at the time of purchase. Property tax exemptions allow you to ignore the value that solar panels add when you are calculating property taxes on your house.
• Tax Credits: Tax credits are dollar-for-dollar reductions that lower the amount of income tax you owe the government. (A tax credit is different from a tax deduction.)
• Rebates: A rebate is a partial refund credited to your account after you've paid for your solar system. Rebates might 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.
• Net Metering: You may be able to sign a net metering contract with your Selma utility company. This agreement may 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 utility bill each month.

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Federal Solar Incentives

When someone says "solar incentives," you probably think of federal incentives first. The Federal Solar Investment Tax Credit, or ITC, is likely the most commonly known federal solar incentive. The ITC allows you to claim a tax credit for a set percentage of the cost of your solar system.

The ITC covers solar systems installed after January 1, 2006, and under this program you can deduct from your taxes a percentage of the total cost of solar panels, accessories, equipment and labor. This credit can be claimed on a solar panel system installed on a primary or secondary residence that you own in the United States. The original amount you could claim was 30% of the total cost, although the amount you can claim may range between 26-30%. There is no maximum amount you can claim.

Your local Selma solar panel installation expert can provide more information about the ITC and how it might apply to your situation.

The ITC has been renewed and expanded following the passage of the Inflation Reduction Act in August 2022. It's also now called the Clean Energy Credit. The Clean Energy Credit runs until 2035. Any solar installation project that is completed between January 1, 2022, and December 31, 2032, may qualify for a 30% tax credit; this amount will then decrease slightly each year until the current program ends. Starting in 2023, the expansion to the program will also make it easier to get credit for energy storage systems.

Click here to learn more about the new Inflation Reduction Act. Your local Selma solar panel company is the best resource for answering your questions regarding the new Clean Energy Credit and how it will apply to you.

State & Local Solar Incentives

Tax credits, rebates and more can be claimed at multiple levels. In addition to federal solar incentives, there are often state and local ones as well. Certain incentives are ongoing, while others are offered for only a limited time. Local solar incentives might come from your county or municipality, or from the Alabama government.

Next Steps for Installing Solar in Selma

There are a variety of solar incentives: those provided by local utility companies, those offered by the federal government and those given by the Alabama government, to name a few. The use of solar energy has grown tremendously in the last 15 years, partially thanks to these incentives. When you're ready to make the switch to solar energy, talking to your local Selma solar panel installation expert is a great first step.