2023 Solar Incentives Guide for Little Rock, AR - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Little Rock.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2023 and beyond)
- Ways to optimize your solar investment
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What Solar Tax Credits, Incentives, and Rebates are Available in Little Rock?
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Federal Residential Renewable Energy Tax Credit
Solar incentives are designed to mitigate the cost of installing a solar panel system on your home. This category of financial incentives is in place to encourage more people to switch their home over to renewable energy. Solar incentives can include cash back, upfront discounts or monthly credits towards your utility bill. Some incentives are offered by the federal government, some by the Arkansas government and some by your utility company, county or municipality. Types of solar incentives might include:
- Tax Exemptions: Your solar system might qualify for exemptions on both sales and property tax. Sales tax exemptions come into effect at the time of purchase. Property tax exemptions allow you to ignore the value added by your solar panels when calculating property taxes on your home.
- Rebates: A rebate is a partial refund after the purchase of 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.
- Tax Credits: Tax credits decrease, dollar-for-dollar, how much income tax you owe the government. Tax credits are different from tax deductions.
- Net Metering: You may be able to sign a net metering contract with your Little Rock utility company. This agreement may apply to all or a percentage of the excess electricity your solar panels generate. Your utility company will then deduct this value from your utility bill each month.
Federal Solar Incentives
Federal solar incentives are probably the first thing that you think of when thinking about solar incentives. The Federal Solar Investment Tax Credit, or ITC, is the best-known federal solar incentive. The ITC allows you to claim a tax credit for a predetermined percentage of the cost of your solar system.
The ITC applies to solar panels installed after January 1, 2006 on a primary or secondary residence that you own in the United States. Originally, the tax credit was for 30% of the total cost — for panels, accessories, equipment and labor — although it may range from 26-30%, depending on when your solar system was installed. There is no cap on the claim amount.
To better understand exactly how much the ITC could save you, get in touch with your local Little Rock solar panel installer.
The ITC was both renewed and expanded by the passage of the Inflation Reduction Act in August 2022. It's also now called the Clean Energy Credit. The Clean Energy Credit is valid until 2035. Solar installation projects started after January 1, 2022 and completed by the end of 2032 may qualify for a 30% tax credit; the amount will be decreased slightly each year until the current program ends. Starting in 2023, it will also be easier to obtain credits for energy storage systems under this new program.
Click here to learn more about the new Inflation Reduction Act. Your local Little Rock solar panel company can answer your questions and explain how the new Clean Energy Credit applies to you.
State & Local Solar Incentives
Some solar incentives are often also provided at the state and local level. Similar to federal incentives, these may include rebates, tax credits and more. These incentives might be handled by the Arkansas government, or by your county or municipality. Some incentives may be ongoing, while others are available for a limited time.
Next Steps for Installing Solar in Little Rock
You can apply for and receive solar incentives from the federal government and the Arkansas government, as well as from your local utility company. Growing availability of solar initiatives in the past 15 years has helped greatly increase nationwide adoption of solar energy. Talking to your local Little Rock solar panel installer is the right first step towards getting the most money possible when you switch to solar energy.
EcoWatch's Little Rock, AR Solar Incentives FAQs
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