2025 Solar Incentives Guide for Champaign City, IL - Tax Credits & Rebates

What Solar Tax Credits, Incentives, and Rebates are Available in Champaign City?

Source: https://www.dsireusa.org/

Solar incentives are intended to encourage people to switch to renewable energy by providing incentives meant to lower the financial burden of solar panel installation and use. These incentives may include cash back, upfront discounts or monthly credits towards your utility bill. Some incentives are handled by the federal government, some by the state of Illinois and some by your utility company, county or municipality. Some solar incentives you might qualify for are:

• Solar Renewable Energy Certificate (SREC): SRECs can be sold to your utility company (or other buyers) for cash that typically becomes part of your taxable income. Typically, a certain (small) threshold of energy production must be met before your solar system qualifies for SRECs or other performance-based incentives. These kinds of incentives are typically handled at the state level.
• Net Metering: Be sure to speak to your Champaign City utility company about signing a net metering agreement. This allows you to receive credit towards your utility bill every month for the value of excess energy your solar panels generate. You could receive either a dollar-for-dollar credit or a percentage of the value.
• Tax Exemptions: Tax exemptions may come in one of two forms. The first is sales tax exemption, which is applied at the time you purchase your solar panels. The second is property tax exemption, which allows you to ignore the added value of your solar system when paying property tax on your home.
• Rebates: Rebates, or partial refunds after a purchase, are typically applied before any solar tax credits are calculated. These rebates can be given by your local utility company, by your state or by your county.
• Tax Credits: Tax credits are dollar-for-dollar reductions (not deductions) in the amount of tax that you owe the federal government.

Federal Solar Incentives

When someone says "solar incentives," you probably think of federal incentives first. An incentive that most people are likely to be familiar with is the Federal Solar Investment Tax Credit (ITC). This incentive is a tax credit for a predetermined percentage of the cost of your solar system.

The ITC applies to solar panels installed on your primary or secondary residence in the United States. The solar system must have been installed after January 1, 2006, on a property owned by you for you to be eligible for the credit. Initially, the ITC applied to 30% of all system installation costs (panels, accessories, labor and equipment), although the total amount has fluctuated slightly over time between 26-30%. The installation date of your solar system will determine what percentage you are eligible for. There is no cap on the amount you can claim.

Your local Champaign City solar panel installation expert can provide you with more information about the ITC and how it may apply to your situation.

The Inflation Reduction Act, passed in August 2022, made some changes to the ITC (as well as retitling it the Clean Energy Credit). With the new provisions, solar installation projects begun after January 1, 2022, and finished by December 31, 2032, may be eligible for a 30% tax credit. The amount of the credit will then decrease slightly each year until the end of the current Clean Energy Credit in 2035. Beginning in 2023, it will also be easier to obtain credits for energy storage systems under the new laws.

More information about the new Inflation Reduction Act can be found here. Your local Champaign City solar panel installation expert is the best person to answer your questions regarding the new Clean Energy Credit and how it may apply to you.

State & Local Solar Incentives

Some solar incentives may be provided at the state and local level. Similar to federal incentives, these might include tax credits, rebates and more. Incentives might be handled by the state of Illinois, or by your county or municipality. Certain incentives may be available for only a limited time, while others are ongoing.

Next Steps for Installing Solar in Champaign City

Solar incentives may be offered by the Illinois government, the federal government or your local utility company. The variety of available solar incentives has helped nationwide use of solar energy increase greatly in the last 15 years. Talking to your local Champaign City solar panel installer is the right first step towards getting the most money possible when you switch to solar energy.