2023 Solar Incentives Guide for Tuscaloosa, AL - Tax Credits & Rebates

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

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.
Get a free quote from one of our trusted Tuscaloosa solar installers to see how much you can save.

By EcoWatch Local Advisors

Data Analysis: James Savino

Ranking Methodology: Karsten Neumeister

Updated January 20, 2023

Why you can trust EcoWatch

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 Tuscaloosa?

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 meant to help mitigate the cost of installing solar panels on your home. These financial incentives are in place to encourage more people to switch to renewable energy. Various types of incentives, like cash back, discounts or monthly utility bill credits, may be available to you. Certain incentives may be handled by the Alabama government, by your utility company or by county or municipality, while others are federal. Some broad categories of solar incentives include:

  • Net Metering: You may be able to sign a net metering contract with your Tuscaloosa 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 subtract this value from your monthly utility bill.
  • Rebates: A rebate is a partial refund credited to your account after you've paid for your solar system. Rebates may be offered by your local utility company, your county or your state. The discount that rebates offer is normally applied to the price of solar panels before calculating tax credits.
  • Tax Credits: Unlike tax deductions, tax credits are dollar-for-dollar reductions in the amount of income tax that you owe the government.
  • Tax Exemptions: Tax exemptions may come in two forms. First, there is sales tax exemption, which is applied at the time you purchase your solar panels. The second is property tax exemption. This allows you to exclude the value added by your solar system when calculating property tax for your house.

Federal Solar Incentives

Federal incentives are the kind of incentives that you are most likely to have some familiarity with. The solar incentive that you're most familiar with is probably the Federal Solar Investment Tax Credit (ITC), which provides a credit on your taxes equal to a predetermined percentage of your solar system's cost.

The ITC can be applied to solar panels installed on your primary or secondary residence in the United States. The solar system must have been installed on a property you own after January 1, 2006 for you to claim the credit. The ITC initially covered 30% of all installation costs (panels, equipment, accessories and labor), although the covered amount has fluctuated slightly over time between 26-30%. The installation date of your solar system will determine what percentage you are eligible for. There is no cap on the amount you can claim.

Your local Tuscaloosa solar panel installation expert can offer more information about the ITC and how it applies to your situation.

In August 2022, the Inflation Reduction Act made revisions to the ITC, now called the Clean Energy Credit. The Clean Energy Credit bolsters the current credit, increasing it up to 30% for solar systems installed between 2022 and 2032. At this point, the percentage will see a slight decrease annually until the program expires in 2035. Starting in 2023, it will also be easier to get credits for energy storage systems with the new act.

More information about the new Inflation Reduction Act can be found here. Your local Tuscaloosa solar panel company is the best resource for answering your questions regarding the new Clean Energy Credit and how it applies to you.

State & Local Solar Incentives

There are often state solar incentives available in addition to federal ones. Rebates, tax credits and more can be offered at a more local level. Some incentives are offered for only a limited time, while others are ongoing. Your local solar incentives may come from the Alabama government, or from your specific county or municipality.

Next Steps for Installing Solar in Tuscaloosa

There are a number of different solar incentives: those offered by local utility companies, those offered by the federal government and those offered by the Alabama government, to name a few. Solar energy use has grown tremendously in the last 15 years, partially due to these incentives. Call your local solar panel installation company today to discover more about the various programs and to save as much money as possible on a solar system for your Tuscaloosa home.

Best National Provider

SunPower

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  • Most efficient panels on the market
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Best Technology

Tesla Energy

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  • Price-match guarantee
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EcoWatch's Tuscaloosa, AL Solar Incentives FAQs

How much can I save on my electric bill annually if I install solar panels on my Tuscaloosa home?

On average, Tuscaloosa homeowners who install solar panels save about $1,102.56 per year, or about $20,948.69 over 20 years after they make the switch.

What are some environmental benefits of installing solar panels on my home?

You can reduce your carbon footprint by 450 pounds of CO2 annually when you install solar panels. This adds up to around 9,000 pounds in 20 years. Solar is also a renewable energy source, meaning that making the switch reduces the drain on our planet's resources.

When does the federal solar tax credit end?

The federal solar tax credit, formerly known as the ITC and now called the Clean Energy Credit, is slated 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 up-front 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 which incentives you are receiving, 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 getting the most money possible.

Can I use multiple types of renewable energy to power my home?

Yes, you can employ multiple types of renewable energy to power your home, such as a combination of wind and solar. You can also combine renewable energy generation with a non-renewable backup source of energy. Make sure that you discuss your proposed plan with your local Tuscaloosa solar installation expert, to get an understanding of what will be needed and what incentives you might or might not qualify for.

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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