2022 Arkansas Solar Tax Credits, Rebates & Other Incentives

Here’s a quick look at the solar incentives in Arkansas:

  • Federal Tax Credit
  • Net Metering
  • PACE Financing
  • Additional City & Utility Rebates
Ecowatch Author Karsten Neumeister

By Karsten Neumeister, Solar Expert

Updated 9/19/2022

Why You Can Trust EcoWatch

Our solar experts have sifted through hundreds of local governments’ and utility companies’ websites to find accurate information about current solar incentives in each state. We’ve also unbiasedly ranked and reviewed hundreds of solar installers to empower you to make the right choice for your home.

How Much Can You Save With Solar Incentives in Arkansas?

In this article, we’ll discuss the solar incentives and rebates available to Arkansas homeowners. When you’re ready to speak with a qualified professional, follow the links below. Each of these companies can help you identify and apply for incentives available in Arkansas.

Jump to Section:

  1. Current Solar Rebates, Tax Credits and Incentive Programs in Arkansas
  2. Federal Solar Tax Credit
  3. Net Metering in Arkansas
  4. FAQs: Arkansas Solar Incentives
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SunPower

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  • Con icon Expensive
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ADT Solar

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Seal Solar

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Disclaimer: This article is for informational purposes only. It should not be relied on for and is not intended to provide accounting, legal or tax advice.

Arkansas is not one of the top states for solar, but residents are seemingly warming up to the idea of installing home solar power systems. Data from the Solar Energy Industries Association shows there’s been a steady increase in residential installations since 2016.1 

A reason solar might not be taking off as quickly in Arkansas compared to other states is because the state doesn’t offer much when it comes to solar incentives, aside from a pretty solid net metering program that can help lower residents’ electric bills. However, Arkansas is still a pretty attractive state for solar, because sunshine is abundant and the cost of solar panels in Arkansas is relatively low and continually dropping.2 Those facts, coupled with rising standard electricity rates, could incentivize more Arkansans to switch to renewable energy sources.3

You may be installing solar panels to capitalize on these energy savings, or perhaps you’re seeking energy independence from utility companies. Whatever your reason for going solar, we want to make sure you’re taking advantage of all the solar incentives available to Arkansas residents.

Watch Below: See how solar energy is gaining momentum in Central Arkansas

Current Solar Rebates, Tax Credits and Incentive Programs in Arkansas

Here are the solar rebates and incentives Arkansas residents can take advantage of in 2022:

Arkansas Solar Incentive Description
Federal Solar Tax Credit (ITC) The federal solar investment tax credit, or ITC, allows homeowners to claim 30% of their system costs as a credit against the federal taxes they owe. The credit was previously set to expire in 2024, but it was extended under the Inflation Reduction Act in 2020. U.S. homeowners now qualify for the 30% tax credit through 2032. The credit will decrease to 26% in 2033 and 22% in 2034.4
Net Metering Arkansas has solid net metering policies, which enable homeowners to send the excess energy their solar energy system generates back to the local power grid in exchange for credits from their utility companies.5 These credits can be put toward future utility bills.
PACE Financing Property Assessed Clean Energy (PACE) financing allows property owners to cover the upfront costs of energy improvements.6 While it may not reduce the price of your solar system, it will provide you more time to pay them off so you can use some of the savings from your electricity bills to pay for your system.

See also: See how much you can save by going solar with the EcoWatch Solar Calculator

Federal Solar Tax Credit

man installing solar panels on roof

Arkansas homeowners who install solar panels or solar batteries are eligible for the federal solar investment tax credit, or ITC. You can claim the ITC on your federal tax filing, and it deducts 30% of the total cost of the system from the taxes you owe.

With the average cost of a solar panel system in Arkansas at about $27,940, the federal tax credit can lead to a savings of about $8,382.

The ITC was first developed through the Energy Policy Act of 2005, under the Bush administration. Initially, it was set to last for just two years, but due to its success has continually been extended for solar panel installations.

The tax credit was extended under the Inflation Reduction Act in 2020. U.S. homeowners are now eligible for the 30% tax credit through 2032. The credit will decrease to 26% in 2033 and 22% in 2034 before being phased out in 2035.

To be eligible for the 30% solar tax credit, homeowners must meet the following criteria:

  • You have installed a residential solar energy system at any point from 2006 through the end of 2032.
  • You have placed the solar energy system in a residential location. It does not have to be your primary residence.
  • You own the solar energy system, either having paid for it in cash or by taking out a solar loan. Homeowners who lease solar panels are not eligible to claim the ITC.

Other Arkansas Solar Incentives

Arkansas does not currently offer a statewide solar tax exemption for sales tax or property tax. However, some municipalities may have local property tax abatements, so you should check your local government’s website for additional information.

Unfortunately, Arkansas also doesn’t offer a dedicated state rebate for solar panel installations. That said, some solar companies in Arkansas may offer their own incentives or equipment rebates. Always check with your installation provider to see if you’re eligible for any additional rebates or financial incentives for your renewable energy system.

When it comes to solar incentives in Arkansas, the state rides on having a very solar-friendly net metering policy, as well as financing options, which we’ll discuss below.

Net Metering in Arkansas

Arkansas has a very solar-friendly net metering policy, ensuring customers are credited for their excess energy at full retail rate (rather than avoided cost rate, as some states have).7 Arkansas’ net metering policy is as good as net metering gets!

With net metering, any kilowatt-hours (kWh) your solar panel system produces and sends to the grid will offset the kWh supplied to you by your utility provider. If you send just as much energy to the grid as you consume from the grid, your utility will grant you a Net Excess Generation (NEG) credit.8

You can use NEG credits to offset your energy bills during months when your solar energy output is less than your energy consumption. If you don’t use your credit within 24 months, you can choose to have your electric utility purchase those credits back from you at their avoided cost rate, plus any additional sum determined by the Arkansas Public Utilities Commission.9

PACE Financing Arkansas

modern house with solar panels on the roof

Advance Arkansas PACE is a nonprofit that offers loans to homeowners through Property Assessed Clean Energy (PACE) financing.10 PACE financing allows homeowners to take out low- to no-interest loans for energy efficiency and renewable energy projects. These loans can be paid back with an assessment added to your property taxes. In Arkansas, solar photovoltaic (PV) systems, as well as solar thermal water heating systems and other upgrades, are eligible for PACE financing.

Energy Efficiency Rebates in Arkansas

While Arkansas doesn’t offer many solar rebates, many of its utilities do offer rebates for energy-efficiency upgrades. For instance, utility company Entergy Arkansas offers rebates ranging from $10 to $175 for things like pool pumps, efficient washing machines and LED lighting.

EcoWatch Preferred Partners

Here is a list of preferred partners in this area.

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Read More About Going Solar

FAQs: Arkansas Solar Incentives

Here at EcoWatch, we get many questions from Arkansas homeowners looking for information about electricity rates, warranties, interconnection, and other solar-related topics. Here are some of the questions we see regarding Arkansas solar incentives and rebates.11 We recommend checking out DSIRE to see what Arkansas rebates or incentives may be available to you. If you have specific questions that aren’t answered here, reach out to our team of solar experts at solar@ecowatch.com.

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Karsten Neumeister

Solar Expert

Karsten is a researcher, editor, writer and energy specialist focused on environmental, social and cultural development. Before joining EcoWatch, Karsten worked in the solar energy sector, studying energy policy, climate tech and environmental education. A lover of music and the outdoors, Karsten might be found rock climbing, canoeing or writing songs when away from the workplace.