2025 Solar Incentives Guide for Sherwood, AR - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Sherwood.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2024 and beyond)
- Ways to optimize your solar investment
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What Solar Tax Credits, Incentives, and Rebates are Available in Sherwood?
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Federal Residential Renewable Energy Tax Credit
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.
EcoWatch's Sherwood, AR Solar Incentives FAQs
How can I find out if I qualify for specific solar incentives?
It's a smart idea to get in touch with your local Sherwood solar installer to get an understanding of which incentives your project will qualify for. Usually, solar incentives apply to new solar panel systems installed on property you own (in the U.S.) within a specified date range. Some incentives, like those provided at the level of the Arkansas government, may have other requirements.
My home already has solar panels. Do I qualify for any incentives?
If your solar system was installed after January 1, 2022, you may qualify for the recently increased 30% tax credit under the Inflation Reduction Act. If your system was installed between 2006 and 2021, you may qualify for a tax credit between 26% and 30%, depending on the date of installation. Reaching out to the company that installed your solar system, or any local Sherwood solar installer, can help you understand what incentives you qualify for.
What are some environmental benefits of adding solar panels to my home?
Solar energy is a renewable energy source — by changing where you get your energy, you can help reduce the strain on our planet's resources. Solar panels can also lower the CO2 emissions from your home by 350 pounds annually, or around 7,000 pounds in 20 years.
When does the federal solar tax credit end?
The Clean Energy Credit (formerly called the federal solar tax credit, or the ITC), currently ends on January 1, 2035. Currently set at 30%, the credit will drop to 26% in 2033 and to 22% in 2034.
I want to change out my appliances for ones that are more energy-efficient. Are there any credits I can apply for?
With the passage of the new Inflation Reduction Act, there are several new financial incentives that are available when you make eco-friendly improvements to your home. More details regarding these incentives, including information about incentives for purchasing new appliances, can be found here.
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.