Illinois Solar Incentives (Rebates, Tax Credits & More in 2023)

In the chart below, we’ll include a breakdown of all of the incentives and rebates you can take advantage of as a solar customer in Illinois. We’ll also include the average savings afforded by each perk to help you prioritize which to take.

What Do Illinoisans Need to Know About the Federal Solar Tax Credit?

The federal solar investment tax credit (ITC) is, in our opinion, the most appealing incentive available in Illinois. It’s offered by the federal government, and it provides a massive credit to your income tax burden in the amount of 30% of your total system value.

That system value is calculated using the cost of your panels, batteries and inverters, plus installation costs. In Illinois, the credit averages out to $6,143.

This credit has been available since 2005, and it has gone through some changes since it was initially offered. At first, the credit amount was set to decrease based on the below schedule:

• 30% credit for systems installed between 2005 and 2022
• 26% credit for systems installed in 2022
• 22% credit for systems installed in 2023
• 0% credit for systems installed in 2024 or later

In August of 2022, the federal government re-upped the credit amount and pushed back the expiration date of the program. The new guidelines are as follows:

• 30% credit for systems installed between 2022 and 2032
• 26% credit for systems installed in 2033
• 22% credit for systems installed in 2034
• 0% credit for systems installed after 2035

How to Claim the Federal ITC in Illinois

Claiming the federal tax credit in Illinois couldn’t be much easier. You can follow the steps below to ensure you get access to this outstanding benefit program.

• Step 1: When you’re ready to file your taxes or have your accountant file your taxes for the tax year you install your solar energy system, go to the IRS’s website and print out form 5695.

• Step 2: Fill out the form using information about your local solar installation company, the system that you had installed and the property address where the PV panel installation took place.

• Step 3: File the form along with your taxes, or have your accountant send it in for filing.

It’s worth mentioning that tax software like HR Block and TurboTax know about this incentive and typically ask you when you go to file if you installed renewable energy equipment. If you answer “yes,” the software will automatically direct you to fill in the required information.

EcoWatch’s Opinion on the Federal Credit in Illinois

In our opinion, the federal credit is the best and most valuable incentive available in Illinois. If you only have time to file for one credit, we strongly suggest making it this one. It provides an average potential value of $6,143 for Illinois residents, and it takes just a few minutes to file for.

It’s important to note that this is not a cashback incentive, so you won’t get the average credit value of $6,143 back. Instead, the total credit amount is applied to the income taxes you owe, which means you can only take the credit if you owe money on your taxes.

You can, however, take a partial credit the first year and roll over any leftover credit for up to five years. Provided you expect to owe around $1,200 or more each year in taxes for the next five years, you should be able to take the entire credit or close to it.

Still, we think this is an outstanding solar perk and well worth the time it takes to apply.

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What You Need to Know About the Illinois Shines Program

The Illinois Shines program is the state’s equivalent of the Solar Renewable Energy Credit (SREC) programs and adjustable block programs in other states. It credits all solar customers for solar production, and those energy credits can then be sold for a profit.

Through the program, you earn one credit for every 1,000 kWh (1 megawatt-hour) your system generates, which most IL property owners generate in a single month. The state has a local SREC market where your credits can be sold. Utility companies that need to meet the state’s RPS goals buy them to remain in compliance.

The price per REC in Illinois is governed by the Illinois Power Agency. As of the time of writing, each SREC in IL is worth approximately $72. With one credit earned each month, that’s an average of $840 per year your system will earn you. We recommend using the money earned via your credits to:

• Put toward your solar loan as additional principal to reduce the payoff timeline
• Use to recoup your cash investment in solar to expedite your solar payback period

How to Claim the Illinois Shines Program Benefits

Selling your SRECs on the local market is easier to do than you might think, as it’s automatic for most homeowners. We’ll discuss the steps you need to take below to ensure you get full credit for your SRECs.

• Step 1: Your first order of business will be to hire a reputable solar company in Illinois. Companies with experience in the local solar industry will understand the ins and outs of the SREC market and will be able to set you up to sell your credits automatically.

• Step 2: Next, you can install your solar energy system and begin producing energy.

• Step 3: Your credits should automatically be logged and sold, and you’ll receive a lump sum for your credits produced, either over a 7-year period or a 15-year period. This can vary in some cases.

EcoWatch’s Opinion on the Illinois Shines Program

We’re big fans of SREC programs because they credit you for all of your solar production, regardless of what you do with the energy. Whether it’s ported to the grid or used in your home, you’ll earn a cash value for all of the energy you generate. For the average Illinois resident, this solar program yields around $12,600 over the life of their system!

Best of all, the program takes no time to enroll in, as your installer will set up automatic credit sales for you. As such, taking advantage of this is a no-brainer.

What You Need to Know About the Illinois Solar for All Program

The Illinois Solar for All (ILSFA) Program is an excellent option for low-income households to convert to solar power. It allows residents with household incomes below 80% of the median to get PV panels installed for no upfront costs.

The program is made possible via the REC market in Illinois. ILSFA-approved vendors are paid via the sales of the system’s RECs. The homeowner, in turn, enjoys solar panels and the energy that they generate at a low cost. This is an outstanding program for those who qualify and cannot afford to convert to solar using other payment methods.

Assuming you have an average system installed and typical energy bills for the area — around $93.98 — and your panels generate enough to offset 50% of your bill, this program could save you an average of $11,277 over the first 20 years of the panels’ lifespan.

How to Claim the Illinois Solar for All Program

Enrolling in this program is far more complicated than the other incentives discussed above. We’ll break down the initial steps below.

• Step 1: You’ll start by confirming your income on the ILSFA website. You’ll need an income verification to begin, which you should be able to get from your employer or via your most recent tax return.

• Step 2: A program administrator will reach out to you if you’re eligible for the program. The admin will discuss the program basics with you and help you find an approved vendor. You will very likely need to provide additional documentation confirming your income, your address and some other personal information.

• Step 3: Your system will be installed, and you’ll begin reaping the benefits of the no-cost solar.

EcoWatch’s Opinion on the Illinois Solar for All Program

The ILSFA program is an outstanding option for aspiring solar customers who cannot pay for their systems in cash or qualify for a loan or lease.

While it’s an excellent opportunity for some Illinoisans to support the clean energy movement without laying out a ton of money, it’s not the most beneficial way to get solar. You’ll see far less personal benefit than if you purchased or financed panels. Still, we love programs like this because it makes renewable energy far more accessible.

What You Need to Know About the Solar Property Tax Exemption in Illinois

The tax exemption for solar equipment in IL prevents your taxes from going up as a result of installing solar equipment. In most cases, home improvements that make your home more valuable also push your taxes higher since your taxes are based on your overall home value.

The tax exemption prevents the value of your solar panel system from contributing to your tax-assessed value. That means your taxes won’t increase just because you convert to solar energy.

Given the tax rate in IL of 2.16% and the typical system value of $20,475, this exemption should save you approximately $8,845 in taxes over the life of your equipment.²

How to Claim the Property Tax Exemption in Illinois

The tax exemption is another automatic state incentive, so you don’t have to take any action to claim it. Your local tax assessor will simply not include the value of your solar power system when determining your tax-assessed value.

EcoWatch’s Opinion on the Property Tax Exemption in Illinois

Since this exemption requires no action on your part and will save you a few thousand dollars over the life of your system, we think this is an outstanding solar benefit program. You don’t need to apply for anything or file any paperwork, and the savings are massive.

Net Metering in Illinois

Net metering, also called net energy metering (NEM), is a billing policy that is mandated in many states by the local Public Utilities Commission (PUC). It guarantees that you are credited for all excess power your system produces that isn’t used in your home and is instead sent to the grid.

All utility companies in Illinois are required to participate, including Ameren and ComEd.

Net energy metering makes it far more likely for residents to offset their utility bills entirely, helping to maximize their energy savings and reduce the amount of time it takes to pay off their equipment.

Illinois has a very favorable net metering program that helps bring down effective energy costs. All excess energy is credited at the full retail rate, which is the best-case scenario.

That means that every kilowatt-hour (kWh) you generate and send to the grid will offset one kWh you pull from the grid when your panels fail to produce enough energy for your home — like at night or on cloudy days.

The credits you accrue roll over for an entire year, and you can choose from two different billing periods for your credits to get reset to zero annually.

It’s important to note that while the net energy metering program in IL is currently outstanding, these policies change all the time across the country. It’s possible that the future holds a less appealing avoided-cost rate for excess energy in Illinois or no compensation at all.

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How to Enroll in Net Energy Metering in Illinois

Enrolling in net energy metering is, thankfully, a simple and straightforward process. We’ll outline the steps you need to take below.

• Step 1: Contact your solar installation company to confirm you have a bidirectional meter installed. This is required to take part in net energy metering.

• Step 2: Proceed with installing your solar array. Your solar installation company will handle the paperwork involved with enrolling in net metering during this stage.
• Step 3: Pass the inspection carried out by your local utility company before receiving permission to operate (PTO) your solar system. Your solar installer will handle the logistics of the inspection, but you may have to be home at the time.
• Step 4: We recommend monitoring your electric bills for the first few months to make sure your excess power is being credited properly.

EcoWatch’s Opinion on Net Energy Metering in Illinois

Across the country, NEM is one of the most beneficial incentives available for solar customers. It helps pay off your system more quickly and maximizes your long-term energy savings.

The net energy metering program in Illinois is outstanding, even compared to similar programs in other states. The PUC mandates that all excess energy be credited at the full retail rate, which gives you the best chance of eliminating your utility bills.

Lastly, net energy metering doesn’t cost you anything to apply for, and it takes virtually no time investment either. All credits are automatic, provided you have the right electric meter, and a new one will be provided for free even if you don’t have a bidirectional meter.

Local Solar Incentives in Illinois

In addition to the federal and statewide solar perks mentioned above, there are two other local incentives that might be available to you, depending on where you live. We’ll list these incentives below and provide a brief explanation as to how they work.

• City of Chicago Solar Express Permit Program: Solar customers in Chicago who file permits for solar equipment can get the approval process expedited and save $100 in the process. This program doesn’t provide great savings, but it takes no time or effort to take advantage of, so it’s definitely worthwhile.

• Commonwealth Edison (ComEd) Solar Rebate Program: Businesses, nonprofits, industrial customers and community solar projects can get a massive cashback incentive for solar equipment from ComEd. The maximum amount is $250 per kW of capacity installed up to 2,000 kW. That’s a maximum cashback amount of $500,000. Note that this is not available for residential customers.

Which Tax Incentives Are The Best In Illinois?

Above, we’ve discussed all of the incentives available to Illinois property owners. However, not all of these programs are equally as beneficial, especially when you consider the time investment required to take advantage of them.

Below, we’ll rank what we believe are the top three most crucial incentives to make sure you take as an Illinois solar customer.

Federal Tax Credit

As we mentioned above, the federal credit is the best solar perk available in IL, in our opinion. It takes just a few minutes to apply for when you’re filing your taxes, and it provides an average value of over $6,000 in the Prairie State, provided you have a tax liability that allows you to take the full credit.

This credit is also available to all Illinois property owners, and it’s guaranteed to be offered until 2034. Just keep in mind that the credit rate will drop in 2032.

Net Energy Metering (For Now)

Net energy metering is the second-best perk available to Illinois homeowners, in our opinion. This incentive also takes basically no time to apply for, as you’ll be opted in automatically by your electric company.

Currently, the full retail rate for net energy metering in Illinois means the program will help reduce your panel payback period, maximize your long-term savings and help reduce your monthly electricity bills for the entire time your system produces electricity.

The program could get less beneficial in the future as it is in some other states, but right now, this is our pick for the second most crucial benefit program to take advantage of in Illinois.

Illinois Shines Program

Lastly, we believe the SREC program in IL is a staple of the incentive spread available to you and one that you should definitely take part in.

Enrolling in this program is automatic, provided you choose a reputable installer to handle your PV panel installation. Over the 15 years the program lasts, you’re expected to earn around $12,600 for your solar production. This is a massive amount of money to put toward your system costs for minimal effort on your part.

What Illinois Residents Need To Know About SRECs?

The SREC program in Illinois — called the IL Solar Shines Program — credits you for all solar power you produce with your system. As mentioned above, every 1,000 kWh you generate will yield an energy credit, which will get sold automatically on the local market.

The program lasts for 15 years after you install your photovoltaic (PV) equipment. At that time, you’ll be paid a lump sum for all of the credits you accrued. Some electric companies pay out two lump sums — one at seven years and one at 15 years.

Are SRECs taxable in Illinois?

Yes, SRECs are considered taxable income, so you will need to pay taxes on these. This technically won’t cost you anything since you can take the taxes out of the lump sum payment you get. Still, you should plan to include the SREC value in your income and to pay taxes on them.

What’s The Near-Term Outlook For More Incentives In Illinois?

As of right now, there are no near-term changes to incentives in Illinois planned, which is good news for solar customers.

We should note that the federal solar tax credit rate is scheduled to drop over the next ten years, according to the schedule below:

• 30% credit for systems installed between 2022 and 2032
• 26% for systems installed in 2033
• 22% for systems installed in 2034

Following 2034, the program will no longer be available.

We should also mention that the beneficial NEM program is subject to change, as it has in some other states across the country. It’s possible that, as the Prairie State approaches or surpasses its RPS goal, the net energy metering credit rate will drop or go away entirely.

Right now, there are no plans to make the net energy metering program less beneficial, but things could change without notice at any time.

Read More About Going Solar in Illinois

• The Best Solar Companies in Illinois
• Illinois Solar Panel Cost Guide
• Are PV Panels Worth It In Illinois?