2022 Idaho Solar Tax Credits, Rebates & Other Incentives
Here’s a quick look at the solar incentives in Idaho:
- Federal Solar Tax Credit (ITC)
- Idaho Alternative Energy Tax Deduction
- Net Metering
- Idaho Low-Interest Energy Loans
- Additional City & Utility Rebates
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Solar conversions are rapidly growing in popularity throughout Idaho, and over the past few years, the cost of converting to this renewable energy source has come down considerably. However, Idaho residents still pay an average of $26,000 for their solar panel systems, given the average per-watt cost of $2.60 and the standard system size requirement in Idaho of 10 kilowatts (kW). Some homeowners will undoubtedly find this amount prohibitively expensive.
In an effort to ease the financial burden of going solar, the federal government and the state government both provide incentives to homeowners who wish to adopt a clean energy solution. Below, we’ll discuss all of the incentives, rebates, and tax credits that are available in Idaho.
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 Idaho
The following table provides an overview of the most substantial solar incentives available for Idahoans. We’ll provide a brief description of each in the table and will go further in-depth below.
|Idaho Solar Incentive||Description|
|Federal Solar Tax Credit (ITC)||The federal solar investment tax credit is a credit applied to your federal income taxes due the year you turn on your system. The credit is worth 30% of your entire system cost, which, in Idaho, averages around $7,800.1 Homeowners are eligible for the 30% tax credit through 2032. The credit will dip to 26% in 2033 and 22% in 2034 before it expires in 2035.|
|Residential Alternative Energy Tax Deduction||In addition to the federal tax credit, Idaho provides a state tax deduction worth 40% of your total solar power system cost for the first year after installation.2 Additional credits apply at 20% of the total system cost per year for three years thereafter. It’s capped at $5,000 per year or $20,000 total, whichever comes first. Depending on the taxable income you owe over the years following your purchase, this deduction can generate significant savings.|
|Net Metering||Net metering is a billing option provided to customers by many utility companies to help solar customers offset and even eliminate their electric bills. Basically, net metering reduces your energy costs by crediting you for the energy you overproduce when your panels are at peak efficiency. 3 We’ll discuss Idaho’s net metering policy in greater depth below.|
|Low-Interest State Energy Loans||The State of Idaho aims to make solar as accessible as possible, so it has state-funded low-interest energy loans available for qualifying residents. This program caps interest rates at 4%, loan terms at five years and provides solar financing up to $15,000 for residential solar customers and $100,000 for commercial solar customers.4|
Idaho Solar Tax Credit
Idaho homeowners have access to one of the best state tax credits for solar systems in the country. The state provides a major tax credit based on your total system installation cost, which gets deducted from your personal income taxes over four years.
Solar customers can get a credit of up to 40% of their solar system cost for the first year it’s installed plus an additional 20% each year for three years after that. This credit is capped at $5,000 per year, or $20,000 total.
In Idaho, where the typical system costs $26,000, the average credit for all four years would be the maximum of $5,000, as 20% of the average system cost is more than $5,000. That means the average Idahoan could be eligible for a $20,000 tax deduction for their system over a span of four years, should their taxable income reach levels that high. It’s important to note that this is a tax credit that takes several years to be totally effective, and this is not an instant rebate.
Other Idaho Solar Incentives
As if the state tax credit isn’t enticing enough, Idaho also offers a local solar incentive that makes solar loans more affordable and more accessible to all homeowners: the State Energy Loan Program.
Solar loans offered by third-party lenders and solar panel installation companies are relatively affordable to begin with, but Idaho provides this energy loan program to make them even more appealing. The program caps loans for qualifying individuals at a 4% interest rate and a 5-year term. Residential customers can borrow up to $15,000 through the program, and commercial customers can borrow up to $100,000 for their solar energy system installations.
Idaho Solar Sales Tax Exemption
Some states waive sales tax on solar equipment to reduce the upfront costs of converting. Unfortunately, Idaho does not have a statewide sales tax exemption, so you will have to pay sales tax on the conversion and equipment.
Additionally, Idaho doesn’t provide a property tax exemption, which many other states do. Property tax exemptions prevent your property taxes from increasing when the value of your home inevitably goes up from installing solar panels. In Idaho, converting to solar will bump up your property value and your assessed value, which means your property taxes will also increase.
Net Metering in Idaho
Net metering is a billing policy offered by many utility companies across the country to help customers eliminate or reduce their electric bills. Through interconnection, your solar system can pull energy from the grid and also send power back to it. When you use less energy than your panels produce, the system routes the excess energy to the grid. When you use more than your panels produce, the grid provides the difference. Net metering policies make it so that your electric bill reflects charges for the energy you pull less charges per kilowatt-hour (kWh) for the energy you send.
Idaho does not mandate net metering, but several companies provide options privately for their customers. If you’re a customer of one of the three largest providers in the state — Rocky Mountain Power, Idaho Power or Avista Utilities — you can opt in to net metering based on the utility’s policy.
Despite the lack of a statewide net metering mandate, the Idaho Public Service Commission (IPSC) still pushes beneficial net metering policies. For example, Idaho Power sought to drop its net metering rate to 50% of the retail rate, but the IPSC shut that down.
Idaho is a relatively solar-friendly state, as evidenced by the massive state solar tax credit. However, there are no additional local incentives provided by municipalities or utility companies for solar equipment, specifically. Some local utility providers offer rebates for energy-efficiency equipment and upgrades. You can check your utility company for rebates for solar heat pumps, window upgrades and LED or high-efficiency lighting upgrades.
Federal Solar Tax Credit
Finally, Idaho homeowners have access to the federal solar investment tax credit, commonly referred to as the “ITC.” As the name implies, this credit is offered by the federal government. It amounts to 30% of your total photovoltaic system (PV) cost and gets deducted from your federal income taxes owed for the year your system is installed and turned on. In Idaho, where the average system totals $26,000, the typical credit afforded is $7,800.
It’s crucial to note that the ITC will drop to 22% — from an average of $6,760 to an average of $5,720 — in 2023. The bill is set to expire in 2024, meaning the ITC will no longer be available for residential systems unless Congress renews it. However, this doesn’t apply to commercial PV systems, which will still be eligible for a 10% tax credit in 2024.
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FAQ: Idaho Solar Incentives
We get numerous questions about solar incentives and rebates from Idaho homeowners who are looking to save money on their solar conversion. Below are the questions we see most frequently, along with our responses. If you have specific questions that aren’t answered here, reach out to our team of solar experts at firstname.lastname@example.org.
Yes it does! Idaho has one of the most beneficial state solar incentives in the country. Homeowners will generally receive a portion of the tax credit once a year for four years following installation. The first year, you can get up to 40% of your total system cost or $5,000, whichever is lower. For the next three years, you can get up to 20% of your total system cost or $5,000, whichever is lower.
For most Idahoans who pay the average cost of $26,000 to go solar, the per-year tax credit will be the maximum $5,000, coming out to a total credit of $20,000.
Yes, and as of right now, 2022 is the best year to go solar in Idaho. Homeowners have access to the substantial state solar tax credit, which averages out to $20,000 in tax credits over four years. The federal solar tax credit is also at 30% through 2032, averaging out to a total credit of $7,800 alone.
Additionally, Idaho residents can enjoy a positive net metering policy that can help eliminate electric bills, as well as the Low-Interest State Energy Loan Program that makes solar financing accessible and affordable to all residents.
Unfortunately, there are no statewide rebates available in Idaho, although the other state incentives should maximize your return on investment when going solar. However, some local utilities provide rebates for energy-efficiency upgrades. While these don’t apply specifically to solar equipment, they can help you save while improving your home’s energy efficiency overall.
Unfortunately, yes. Home improvements that increase your home’s value will also increase your assessed value. Since your property taxes are based on the assessed value, your taxes will go up a bit when you install panels because solar systems increase your home value.
Some states provide a property tax exemption to prevent your property taxes from increasing after solar panel installation, but Idaho does not currently have this exemption.