2024 Solar Incentives Guide for Hot Springs, AR - Tax Credits & Rebates

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

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Solar incentives are intended to encourage people to switch their home over to renewable energy by providing incentives that lower the financial burden of solar panel installation and use. Incentives can include things like discounts, cash back or monthly utility bill credits. Some incentives are offered federally, while others are provided by the state of Arkansas or by your specific utility company, county or municipality. Types of solar incentives might include:

• Net Metering: Be sure to speak to your Hot Springs utility company about signing a net metering contract. This allows you to get a credit towards your utility bill every month for the value of excess energy generated by your solar panels. You could receive either a dollar-for-dollar credit or a percentage of the value.
• Rebates: Solar rebates might be provided by your county or state, or by your local utility company. These rebates work as cash back that is applied after your purchase of solar panels and before tax credits are calculated.
• Tax Exemptions: Tax exemptions can come in one of two forms. First, there is sales tax exemption, which is applied when you purchase solar panels. The second is property tax exemption. This allows you to ignore the value added by your solar system when calculating property tax for your house.
• Tax Credits: Different from tax deductions, tax credits reduce, dollar-for-dollar, the amount of income tax that you owe the federal government.

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Federal Solar Incentives

When you hear the term "solar incentives," federal incentives may be the first thing that comes to mind. The Federal Solar Investment Tax Credit, or ITC, is the most well-known federal solar incentive. The ITC provides a tax credit for a specific percentage of the cost of your solar system.

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

Your local Hot Springs solar panel installer can provide more information about the ITC and how it may apply to your situation.

In August 2022, the ITC (now referred to as the Clean Energy Credit) was expanded and extended by the passage of the Inflation Reduction Act. Homeowners are now eligible for a credit of 30% of the total costs of solar system installation for projects that began after January 1, 2022, and will be finished by the end of 2032. The credit percentage will then decrease yearly until the Clean Energy Credit ends in 2035. Beginning in 2023, it will also be easier to claim credits for energy storage systems with the new act.

More information about the new Inflation Reduction Act can be found here. The best way to understand how the new Clean Energy Credit might apply to you is to talk with your local Hot Springs solar panel installers.

State & Local Solar Incentives

There are more than just federal solar incentives; tax credits, rebates and more are often offered at the local or state level. Certain incentives are ongoing, while others are available for a limited time. These incentives might be offered by the Arkansas government, or by your county or municipality.

Next Steps for Installing Solar in Hot Springs

The variety of available solar incentives has helped tremendously increase the nationwide adoption of solar energy over the last 15 years. You can get solar incentives from the federal government, the Arkansas government or from your local utility company. If you're ready to switch over to solar energy, getting in touch with your local Hot Springs solar panel installation expert is an excellent place to start.