2023 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 2023 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
Electric Clothes Dryer: $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
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
Solar incentives are designed to encourage people to switch to renewable energy by providing incentives meant to lower the financial burden of solar panel installation and use. Different kinds of incentives, such as discounts, cash back or monthly utility bill credits, might be available to you. Certain incentives may be handled by the state of Illinois, by your utility company or by county or municipality, while other incentives are federal. Some solar incentives you might qualify for are:
- Solar Renewable Energy Certificate (SREC): SRECs and other performance-based incentives might be available to you if you have a solar system that produces over a specified (usually small) amount of electricity. Performance-based incentives are typically handled at the state level. You can sell the SRECs you receive to your utility company or other buyers, and the money you receive in return is normally considered part of your taxable income.
- Tax Exemptions: Tax exemptions can come in two forms. First, there is sales tax exemption, which is applied when you purchase solar panels. The second is property tax exemption, which allows you to exclude the value added by your solar system when paying property tax 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: Net metering becomes relevant once your solar panels are up and running. If you have a net metering agreement with your Chicago utility company, the company will subtract the value of the excess energy your solar system produces from your utility bill each month. In some areas, this is a dollar-for-dollar credit, while in other areas you might make back a percentage of the value.
- Rebates: A rebate is a partial refund credited to your account after you've paid for your solar panels. Rebates may be offered by your local utility company, your state or your county. The rebates are usually applied before tax credits are calculated.
Federal Solar Incentives
Federal solar incentives are likely the first thing that comes to mind when you think about solar incentives. The solar incentive that you're most likely to have heard of is the Federal Solar Investment Tax Credit (ITC), which gives you a credit on your taxes equal to a predetermined percentage of your solar system's cost.
The ITC initially applied to 30% of the cost of solar panel installation, and has fluctuated slightly over the last few years between 26-30%. The installation date of your solar system will determine what percentage you qualify for. The total installation cost includes the panels themselves as well as the cost of labor, equipment and accessories. There is no maximum claim amount. The ITC applies to solar panels installed after January 1, 2006 on your primary or secondary residence. The residence must be in the United States and owned by you.
To better understand how the ITC may apply to you, reach out to your local Chicago solar panel installer and ask for more information.
In August 2022, the ITC (now referred to as the Clean Energy Credit) was bolstered by the passing of the Inflation Reduction Act. The new Clean Energy Credit extends until 2035. Homeowners can now apply for a 30% credit for solar systems installed between 2022 and 2032. This credit will then see a slight annual decrease until its expiration. The program expansion also makes claiming credit for energy storage systems easier than ever before, starting in 2023.
Click here to learn more about the new Inflation Reduction Act. Your local Chicago solar panel installation experts can answer any questions you have and explain how the new Clean Energy Credit will apply to you.
State & Local Solar Incentives
Some solar incentives are often also offered at the local or state level. Like with federal incentives, these might include tax credits, rebates and more. These incentives — which may be handled by your county or municipality, or by the state of Illinois — could be offered for only a limited time, or on an ongoing basis.
Next Steps for Installing Solar in Chicago
Solar incentives may be provided by your local utlity company, the Illinois government or the federal government. The variety of solar incentives available has helped nationwide use of solar energy increase greatly in the last 15 years. Reaching out to your local Chicago solar panel installation expert is a great first step towards making sure you get all the incentives you qualify for when you switch to solar energy.
EcoWatch's Chicago, IL Solar Incentives FAQs
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.