2022 Iowa Solar Incentives, Tax Credits, Rebates (And More)

Here’s a quick look at the solar incentives in Iowa:

  • Federal Solar Tax Credit
  • Iowa Property Tax Exemption
  • Iowa Sales Tax Exemption
  • Iowa Solar Easement & Access Laws
  • Additional City & Utility Rebates
Ecowatch Author Karsten Neumeister

By Karsten Neumeister, Solar Expert

Updated 9/19/2022

Why You Can Trust EcoWatch

Our solar experts have sifted through hundreds of local governments’ and utility companies’ websites to find accurate information about current solar incentives in each state. We’ve also unbiasedly ranked and reviewed hundreds of solar installers to empower you to make the right choice for your home.

How Much Can You Save With Solar Incentives in Iowa?

In this article, we’ll discuss the solar incentives and rebates available to Iowa homeowners. When you’re ready to speak with a qualified professional, follow the links below. Each of these companies can help you identify and apply for incentives available in Iowa.

Jump to Section:

  1. Solar Rebates, Tax Credits and Incentive Programs in Iowa
  2. Net Metering in Iowa
  3. Federal Solar Tax Credit
  4. FAQ: Iowa Solar Incentives
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Installing a solar panel system in Iowa has never been more affordable, but the average cost of going solar in the state is still $24,930. This total is based on the average cost per watt of $2.77 in Iowa and the typical system size requirement of 9 kilowatts to offset electricity costs. At nearly $25,000 to go solar, many Iowans find clean energy prohibitively expensive.

Luckily, the federal and state governments provide some solar incentives to promote solar conversions and make renewable energy sources more accessible and realistic. This guide will explore the solar incentives and rebates available in Iowa and how each can affect the total price you’ll pay to convert.

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 Iowa

The table below provides an at-a-glance view of some of the major solar incentives in Iowa.

Iowa Solar Incentive Description
Federal Solar Tax Credit The federal solar tax credit is a credit to your federal income taxes owed. It totals 30% of your total solar panel system cost, making it one of the most appealing incentives. In Iowa, where the average system cost is $24,930, the credit averages around $7,479, bringing the effective cost to $17,451.
Iowa Solar Easement and Access Laws Iowa protects every individual’s right to utilize solar power. The easement and access laws legally allow taxpayers unhindered access to sunlight to operate a solar energy system. That means no one can prevent you from installing panels or accessing sunlight, including neighbors and homeowners associations.1
Property Tax Exemption Iowa’s Property Tax Exemption for Renewable Energy Systems prevents you from having to pay additional property taxes for 5 years after your home value increases from installing solar.2
Sales Tax Exemption The Renewable Energy Equipment Exemption in Iowa means you won’t have to pay sales tax on your solar equipment or residential installation costs.3 With an average solar PV system cost of $24,930 and a typical tax rate of 6% in Iowa, that’s an average savings of $1,496.
Net Metering Net metering provides homeowners with the ability to reduce their energy bills using excess energy produced by their solar panel systems. More information on Iowa’s net metering program can be found below.

Iowa Solar Tax Credit

Unfortunately, Iowa doesn’t offer a statewide solar tax credit currently. There was a Solar Energy System Tax Credit available previously, but it expired for homeowners at the end of 2021. The state solar tax credit is still available in Iowa for commercial installations, but that program is only valid for installations completed prior to the end of 2022.

worker installing solar panels

Iowa’s state legislature was working on extending the credit, but it was ultimately unable to pass the bill. As of right now, there is no state solar credit for homeowners, and it doesn’t appear there will be one going forward.

Other Iowa Solar Incentives

While there isn’t a state solar tax credit in Iowa, there are a few statewide solar incentives available that can save you thousands. 

Iowa Property Tax Exemption

The Property Tax Exemption for Renewable Energy Systems is a significant solar incentive afforded to all Iowa residents. Normally, home improvements that increase your property value will also increase your property taxes, as taxes are paid based on your home’s assessed value. 

Although installing solar panels will boost your property value — by around 4.1%, on average, according to research from Zillow — the property tax exemption prevents your taxes from going up as a result.4 Depending on the cost of your home and the value your system adds, this exemption can save a significant amount of money over the lifespan of your equipment.

Iowa Solar Sales Tax Exemption

Iowans also benefit from the Renewable Energy Equipment Exemption, which exempts all solar equipment from sales tax. Most homeowners in Iowa pay around $24,930 for the 9-kilowatt system required to offset average energy costs in the area. You’ll avoid sales tax on this amount, which equates to a typical savings of around $1,496.

It’s important to note that you’ll simply be granted this exemption from your solar panel installation company. This is not a rebate or a credit, so your estimate for going solar will already include these savings.

Net Metering in Iowa

Net metering is a policy that many states have adopted and mandated to make it easier for homeowners to reduce or eliminate their electric bills and produce clean energy to limit the state’s carbon footprint. Thankfully, Iowa has a favorable net metering program that improves the return on investment you’ll enjoy from your solar equipment.

Through interconnection, electricity can pass in both directions between your solar power system and the grid. On cloudy days or at night, when your system will likely produce less energy than your home uses, the grid will make up the difference. When you overproduce, you’ll send energy to the grid. You’ll be compensated for the excess energy in the form of credits from your electricity provider, and these can be used to offset your future energy bills. The value of the credits will vary based on your provider, but it will typically be a sub-retail rate.

Local Incentives

Iowa used to have a state solar tax incentive, but there have been no additional credits or rebates made available since the credit ended in 2021. However, there are some additional local rebates and incentives you can take advantage of for solar power and clean energy in general, most of which come from local electric companies:

engineer checking solar panels

  • Muscatine Power and Water: Customers of MPW can enjoy rebates for a number of energy-efficiency upgrades, including $1,250 for qualifying air conditioners, up to $3,000 for heat pumps, $1,500 for electric vehicles, $300 for energy-efficient electric water heaters and sub-$100 rebates for smaller efficiency upgrades. While none of these apply specifically to solar, some solar installers can provide these upgrades and help you take advantage of these rebates.
  • Indianola Municipal Utilities: IMU provides similar rebates for energy-efficiency upgrades. Although none pertain specifically to solar, some companies can couple your solar conversion with other home improvements to save you more on electric bills and help you secure the rebates from IMU.
  • Ames Electric Residential Energy Efficiency Rebate: Residents of the City of Ames have a wide array of rebates available for solar installations and other energy-efficiency home improvements. Solar panel systems are eligible for up to $300 per kilowatt, up to $250 for EV chargers and between $25 and $400 in rebates on other upgrades.
  • Alliant Energy Residential Electric Vehicle Charging Rebate Program: Iowa homeowners who drive electric vehicles and are customers of Alliant Energy can get a rebate for installing a Level 2 electric vehicle charging station in their homes. The amount depends on several factors, so you’ll have to contact Alliance and apply for the program to learn what your rebate will be. Again, many solar installers can set you up with EV chargers to help you take advantage of this rebate program.

See also: Calculate how much you can save by going solar

Federal Solar Tax Credit

Finally, Iowans have access to the federal investment tax credit (ITC), which is offered by the federal government and is available to all homeowners who buy or finance solar panels. The ITC is a credit to your federal income taxes owed, and it totals 30% of your entire solar project cost if you convert to solar in 2022. In Iowa, where the average home solar system costs $24,930, that’s a typical credit of $7,479.

The 30% federal solar tax credit applies to all residential solar installations in the U.S. through 2032. It is set to reduce to 26% for photovoltaic systems installed in 2033 and 22% in 2034. The credit is set to expire in 2035 unless Congress renews it.

Read More About Going Solar

FAQ: Iowa Solar Incentives

At EcoWatch, we’re happy to get questions frequently from Iowans about how to save money when converting to solar power. Below are some of the questions we see most often, along with our responses. If you have specific questions that aren’t answered here, reach out to our team of solar experts at solar@ecowatch.com.

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Karsten Neumeister

Solar Expert

Karsten is a researcher, editor, writer and energy specialist focused on environmental, social and cultural development. Before joining EcoWatch, Karsten worked in the solar energy sector, studying energy policy, climate tech and environmental education. A lover of music and the outdoors, Karsten might be found rock climbing, canoeing or writing songs when away from the workplace.