2025 Solar Incentives Guide for Chicago, IL - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Chicago.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2024 and beyond)
- Ways to optimize your solar investment
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What Solar Tax Credits, Incentives, and Rebates are Available in Chicago?
Special Assessment for Solar Energy Systems
ComEd - Energy Efficiency Program for Residential
Air Purifier: $50
Clothes Washer: $50
Dehumidifier: $50
Electric Clothes Dryer: $50
Freezer: $50
Refrigerator: $50
Room Air Conditioner: $25
Refrigerator/Freezer Recycling: Free pickup and $50, plus an additional $10 if recycling a room A/C at the same time
Heating & Cooling
Air Source Heat Pump: $400 - $600
Central A/C: $300 - $600
Ductless Mini-Split Heat Pump: $400
Geothermal Heat Pump: Up to $6,000/home
Furnace Blower Motor (ECM): $50 - $100
Miscellaneous
Advanced Power Strip: $10
Air Sealing: Up to $400/home
Attic Insulation: Up to $300/home
Duct Sealing: Up to $500/home
Lighting: In-store discounts, varies
Pool Pump: $275
Smart Thermostat: $100
Wall Insulation: Up to $400/home
City of Chicago - Green Building Permit Programs
Solar Renewable Energy Credits
Federal Residential Renewable Energy Tax Credit
Source: https://www.dsireusa.org/
Solar incentives are intended to make renewable energy usage more affordable via financial incentives for individuals who install solar panels on their homes. Incentives could include things like discounts, cash back or credit towards your monthly utility bill. Some incentives are provided by the federal government, while others are offered by the Illinois government or your utility company, county or municipality. Some broad categories of solar incentives include:
- Tax Exemptions: Your solar panel system could qualify for both sales tax and property tax exemptions. Sales tax exemptions are effective at the time of purchase. Property tax exemptions allow you to exclude the value added by your solar panels when you are calculating property taxes on your house.
- Tax Credits: Tax credits are dollar-for-dollar reductions (not deductions) in how much in taxes you owe the federal government.
- Net Metering: Be sure to speak to your Chicago utility company about signing a net metering contract. This will allow you to receive credit towards your monthly utility bill for the value of excess energy generated by your solar panels. You might receive either a dollar-for-dollar credit or a percentage of the value.
- Rebates: Your solar installer might help you claim a rebate, or partial refund after purchase, for your solar panels. Counties or states will also offer limited-time rebates at various times. If you receive a rebate, that amount will usually be deducted from the total price before any tax credits are calculated.
- Solar Renewable Energy Certificate (SREC): SRECs and other similar performance-based incentives are typically handled by your state government. Once your solar panel system meets the threshold (typically a small amount of energy production), you can receive SRECs that you can then sell to your utility company or other buyers. The money you receive is generally considered part of your taxable income.
Federal Solar Incentives
When thinking about solar incentives, you probably think of federal incentives first. The Federal Solar Investment Tax Credit, or ITC, is likely the best-known federal solar incentive. The ITC provides a tax credit for a set percentage of your solar system's cost.
The ITC can be applied to the total cost of solar system installation, including the panels themselves as well as labor, accessories and equipment. This credit can be claimed for panels installed after January 1, 2006, on a primary or secondary residence that you own, as long as it is located in the United States. From its original value of 30% of the total cost, the credit has fluctuated slightly between 26-30%, and you may qualify for varying percentages depending on when your project was completed. There is no maximum amount you can claim.
To find out exactly how much money the ITC could save you, speak with your local Chicago solar panel installer.
The Inflation Reduction Act, passed in August 2022, expanded and extended the ITC (as well as retitling it the Clean Energy Credit). Homeowners are now eligible for a credit of 30% of the total solar system installation costs for projects that began after January 1, 2022, and will be finished by the end of 2032. This percentage will then begin to decrease yearly until the Clean Energy Credit ends in 2035. Starting in 2023, it will also be easier to claim credits for energy storage systems with the new act.
Click here to learn more about the new Inflation Reduction Act. To fully understand how the new Clean Energy Credit will apply to you, speak with your local Chicago solar installation expert.
State & Local Solar Incentives
There are often state solar incentives available in addition to federal ones. Tax credits, rebates and more can be offered at a more local level. These incentives — which may be provided by the state of Illinois, or by your county or municipality — may be offered on an ongoing basis, or for only a limited time.
Next Steps for Installing Solar in Chicago
Nationwide solar energy use has significantly increased in the last 15 years, in part thanks to the increase in availability of solar incentives. You may get these incentives from your local utility company, the Illinois government or the federal government. When you're ready to switch over to solar energy, reaching out to your local Chicago solar panel installation expert is an excellent place to start.
EcoWatch's Chicago, IL Solar Incentives FAQs
How can I find out if I qualify for different solar incentives?
It's best to speak with your local Chicago solar installer to get an understanding of which incentives your project may qualify for. Generally, solar incentives apply to new solar systems installed on a property you own (in the U.S.) within a specified date range. Some incentives, like those offered by the government of Illinois, may have additional requirements.
What are the best solar panel installation companies near me?
To find the best solar panel installers near you, read our article on the best solar companies in Chicago.
I want to change out my appliances for ones that are more energy-efficient. Are there any credits I can claim?
The new Inflation Reduction Act creates a variety of new financial incentives to encourage you to make eco-friendly improvements to your home. More details about these incentives, including information about incentives for purchasing new appliances, can be found here.
Can I receive incentives both towards the initial cost of solar panels, and later as reimbursement?
The order in which incentives are applied could vary depending on which incentives you are eligible for but usually yes, you can claim multiple types of incentives for your solar project. Get in touch with your solar installer or a local tax professional to confirm you are claiming all the incentives you qualify for and applying them in the correct order.
Can I get any financial incentives when I add solar panels to a rental property, vacation home or commercial property?
While we recommend getting in touch with your local solar installer and/or tax professional to fully understand what solar incentives apply to you, many will apply to a second home, provided that it is in the United States and owned by you. There may be additional incentives available for commercial properties specifically, depending on the details.
Our goal is to reach as many people as we can with sensible solutions like solar energy. Our team of full-time local researchers collects solar price and installation data for every city in America then compiles it to create these digestible city guides. If you want to read our solar expert's opinion on the top solar companies featured here, follow this link.