2022 Connecticut Solar Tax Credits, Rebates & Other Incentives
Here’s a quick look at the solar incentives in Connecticut:
- Federal Solar Tax Credit (ITC)
- Net Metering
- Connecticut Solar Loan Programs
- Sales and Property Tax Exemptions
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Connecticut is a relatively solar-friendly state, so there are some state and federal solar incentives that make going solar a better investment in the long run and others that make converting to this renewable energy source more affordable.
Connecticut homeowners pay around $2.80 per watt when installing solar panels, which is well above the national average. The total average cost to go solar in the state is $21,000, and many residents will understandably look for ways to reduce their upfront costs or justify spending so much on clean energy. Below, we’ll be discussing all of the incentives and rebate programs available to CT residents and how each can improve your return on investment.
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.
Current Solar Rebates, Tax Credits and Incentive Programs in Connecticut
The table below provides a brief look at the solar incentives you’ll have access to in Connecticut in 2022. We’ll provide a brief description of how each of these works, plus more information about eligibility and upcoming program changes below the table.
|Connecticut Solar Incentive||Description|
|Federal Solar Tax Credit (ITC)||The federal solar tax credit is an incentive from the federal government and is available nationwide, including to all taxpayers in CT. The credit gets applied to the federal income taxes you owe the year you commission your solar panel system, so it’s not an immediate rebate. However, it is one of the most substantial incentives, totaling 26% of your entire system cost.1 In Connecticut, where the average system totals $21,000, the average homeowner will get an ITC of about $5,460.|
|Net Metering||Net metering is a billing policy that utility companies offer to help customers offset electric bills using interconnection. Basically, you can overproduce power with your panels, and your account will get credited based on the energy you send to the grid.2 Net metering is mandated by the State of Connecticut. We’ll discuss the specifics of the policy below.|
|Solar Loan Programs||The average cost to go solar in Connecticut is most easily afforded with solar financing, and the state makes solar loans affordable and accessible to most homeowners. There are several solar loan programs available in Connecticut that you can use to finance your panels for little or no money down and with a low interest rate. We’ll discuss these options in greater depth below.|
|Property Tax Exemption for Renewable Energy Systems||Normally, any time your home’s value increases, your property taxes will go up as well. Although solar panels boost your home value in Connecticut — if you purchase or finance them — the property tax exemption guarantees that your taxes won’t spike as a result.3|
|Sales and Use Tax Exemption for Solar and Geothermal Systems||Connecticut lowers the upfront cost of going solar by providing a sales tax exemption as well, meaning you won’t have to pay sales tax on your solar equipment or installation services.4 Given the state tax rate of 6.35% and the average system total of $21,000, most homeowners will save an average of $1,334 with this incentive.|
Connecticut Solar Incentives
According to the Solar Energy Industries Association (SEIA), Connecticut is relatively solar-friendly and promotes solar conversion more effectively than most states.5 While there is no statewide solar tax credit or rebate program available, there are a number of solar incentive programs you can take advantage of to reduce your cost of going solar and enjoy a more substantial return on investment. These incentives help the state meet its Renewable Portfolio Standard (RPS) goals.
One of the most effective ways Connecticut makes this renewable energy source so accessible is through state-funded solar loan programs. These often supply homeowners with no-money-down options and low interest rates to minimize the long-term costs of solar PV systems. We’ll discuss the solar loan programs available below, followed by the other state incentives.
- Smart-E Loans: The Connecticut Green Bank, Energize CT and local lenders have partnered to create Smart-E Loans, which provide a slew of benefits to those financing their solar energy systems. They have a low APR, require little money down and have no penalty for prepayment.
- Home Energy Solutions Loan Program: This program is geared toward “income-eligible” residents, so low-income households will likely qualify. While the loans from this program aren’t specifically for solar equipment, they can be used for energy-efficiency upgrades including new insulation and windows, which ultimately make your solar system valuable.
- Energy Conservation Loan: Also provided by Energize CT, this loan program provides financing solutions for energy-efficiency upgrades and new construction that follows program guidelines in terms of home efficiency. You can use these loans for hot water heaters, gas water heating, HVAC equipment, new insulation and even some renewable energy technology.
- PACE Financing: Finally, Connecticut homeowners and business owners will have access to PACE financing. PACE loans stay with the property, not the property owner, and they’re secured by your local municipality or government bonds, so they’re generally available even to solar customers who don’t have good credit. These loans are affordable and have a low interest rate to make solar financing as accessible as possible.
Connecticut Solar Sales and Property Tax Exemptions
Connecticut only has a handful of solar incentives, but the state does its best to limit the downsides of going solar. Two of the most important policies to that end are the sales tax exemption and the property tax exemption.
First, Connecticut has the Sales and Use Tax Exemption for Solar and Geothermal Systems, which prevents you from having to pay sales tax on renewable energy equipment. Normally, the standard tax rate of 6.35% would apply to solar panels, battery storage options, inverters, mounting equipment, the installation services and any other part of your solar power system. The sales tax exemption prevents you from having to pay that tax, saving homeowners an average of $1,334 upfront.
The property tax exemption is worth even more in the long run (in most cases). Solar panels bump up your home value, which would normally cause your tax assessed value to increase — along with your property taxes. Increased taxes are a major downside of going solar in states without a property tax exemption, but Connecticut has one. This exemption ensures that your property taxes won’t go up after you install solar panels.
Net Metering in Connecticut
Net metering is one of the major solar incentives in states. Most homes with solar systems will still be grid-tied, meaning you can pull electricity whenever your panels don’t produce enough to cover what you need — like on cloudy days or at night. With net metering, you can also send any excess power to the grid when your panels produce more than you’re using, and you can earn credits for this energy.
The net metering policy provided by your utility company states how you’ll be compensated for outgoing kilowatt-hours. Most credit your charges for incoming energy, helping you to offset or even eliminate your electricity bills.
Net metering is mandated for public utilities in Connecticut. However, while every solar customer will have access to a net metering program, the specifics vary based on your utility provider. You should check with yours before signing anything. Most Connecticut residents will be serviced by Eversource, which is a wonderful option that provides cash for excess energy production throughout the year. In effect, you could be paid by your utility company rather than the other way around!
Federal Solar Tax Credit
Finally, Connecticut homeowners can take advantage of the federal solar investment tax credit (ITC), which is available statewide and is one of the most substantial financial incentives in the area. The ITC is offered by the federal government and gets credited to your federal tax liability. If you install your system in 2022, the tax credit will be for 26% of your entire cost of going solar. In Connecticut, where the typical system totals $21,000, that comes out to a credit of approximately $5,460.
The ITC will drop to 22% for systems installed in 2023, and it will no longer be available for residential solar customers in 2024 unless Congress renews it. Commercial customers will still have access to a 10% credit in 2024. It’s best to install solar as soon as possible to take full advantage of this credit.
FAQ: Connecticut Solar Incentives
At EcoWatch, we frequently get questions from Connecticut homeowners about the solar incentives available in the state and how they can save money on solar conversions. Below are some of the questions we see most often.
Connecticut does not have a state solar tax credit. However, CT residents will still have access to the federal solar tax credit, as well as all of the other Connecticut solar incentives. These include a great net metering program, an abundance of solar loan options to reduce or even eliminate upfront costs, and property and sales tax exemptions.
Yes! There are quite a few solar incentives available in 2022 in Connecticut. Most notable is the federal tax credit, which will provide a 26% tax credit for your entire system cost if you install solar in 2022. This averages out to around $5,460 in CT, although the credit amount will drop in 2023.
Connecticut also mandates net metering, so you’ll have the opportunity to eliminate your electric bills if you get an appropriately sized system.
You’ll pay less for your solar equipment and won’t see a spike in property taxes thanks to the state’s sales tax and property tax exemptions. Lastly, there are quite a few solar loan programs to make solar panels accessible to all homeowners, regardless of credit background and income.
There are no solar rebates currently available in Connecticut. However, the other solar incentives provided by the state make solar a wonderful investment for most homeowners even without rebate programs to help.
Thankfully, no! Most home improvements that increase your home’s value also cause your property tax to spike. This isn’t the case with solar projects in CT because of the property tax exemption. A photovoltaic system will improve your property value — provided you don’t enter into a solar lease or power purchase agreement (PPA), but your property taxes will be unaffected.