2025 Solar Incentives Guide for Sherwood, AR - Tax Credits & Rebates

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

Source: https://www.dsireusa.org/

The phrase "solar incentives" refers to financial incentives implemented by the government and by solar companies to encourage the use of renewable energy by making installing and using solar panels more affordable. You might be eligible for various types of incentives, such as discounts, cash back or monthly utility bill credits, depending on your situation. Certain incentives come from your specific utility company, county or municipality, some from the Arkansas government and others from the federal government. Types of solar incentives might include:

• Rebates: Your solar installer might help you claim a rebate, or partial refund after purchase, for your solar panels. States or counties will also sometimes offer limited-time rebates. Any rebates you receive will usually come off the total price before any tax credits are calculated.
• Tax Credits: These credits are dollar-for-dollar reductions (not deductions) in the amount of tax that you owe the federal government.
• Net Metering: Net metering becomes relevant after your solar panels are up and running. If you've signed a net metering agreement with your Sherwood utility company, the company will subtract the value of the excess energy produced by your solar system from your utility bill each month. In some places, this credit is dollar-for-dollar, while in other areas you might receive a refund equivalent to a percentage of the value.
• Tax Exemptions: Sales tax exemptions are effective at the time of purchase for your solar panels. Property tax exemptions let you exclude the value added by your solar system when you're calculating how much property tax you need to pay on your home.

Federal Solar Incentives

Federal incentives are the kind of incentives that you are most likely to have some knowledge of. A federal incentive many people are probably familiar with is the Federal Solar Investment Tax Credit (ITC). This is a tax credit for a certain percentage of your solar system's cost.

The ITC is applied to the total cost of installing solar panels, including the panels themselves as well as equipment, accessories and labor. You can claim this credit for panels installed after January 1, 2006, on a primary or secondary residence that you own, as long as it is located in the United States. The tax credit ranges from 26-30% of total costs depending on when your project was completed. There is no maximum amount you can claim.

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

The Inflation Reduction Act, passed in August 2022, added more provisions to the ITC (as well as renaming it to the Clean Energy Credit). The new Clean Energy Credit extends until 2035. American homeowners can now apply for a 30% credit for solar systems installed between 2022 and 2032. The total credit will then see a slight annual decrease until its expiration. Starting in 2023, the expansion will also make claiming credit for energy storage systems easier than ever before.

Click here to learn more about the new Inflation Reduction Act. The best way to learn more about how the new Clean Energy Credit might apply to you is to speak with your local Sherwood solar panel installation expert directly.

State & Local Solar Incentives

There are often also state solar incentives in addition to those provided by the federal government. Tax credits, rebates and more may be available at a more local level. Incentives may be handled by your county or municipality, or by the state of Arkansas. Some incentives are available for only a limited time, while others are ongoing.

Next Steps for Installing Solar in Sherwood

The variety of solar incentives available has contributed greatly to the increase in the adoption of solar energy nationwide over the past 15 years. You might qualify for solar incentives from the federal government, the Arkansas government or from your local utility company. Speaking with your local Sherwood solar panel installation company is the best first step towards getting the most money possible when you switch to solar energy.