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

Solar installers are experts in maximizing your solar tax credits and rebates.
Get a free quote from one of our trusted Chicago solar installers to see how much you can save.

By EcoWatch Local Advisors

Data Analysis: James Savino

Ranking Methodology: Karsten Neumeister

Updated January 20, 2023

Why you can trust EcoWatch

We work with a panel of solar experts to create unbiased reviews that empower you to make the right choice for your home. No other site has covered renewables as long as us, which means we have more data and insider information than other sites. Our rankings are never affected by revenue or partnerships.

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

Special Assessment for Solar Energy Systems

Incentive Type:
Property Tax Incentive
Varies

ComEd - Energy Efficiency Program for Residential

Incentive Type:
Rebate Program
Appliances
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

Incentive Type:
Green Building Incentive
50% of Building Permit Fee amount up to $25,000. Varies by project type and sector.

Solar Renewable Energy Credits

Incentive Type:
Solar Renewable Energy Credit Program
Negotiated with procurement administrators

Federal Residential Renewable Energy Tax Credit

Incentive Type:
Personal Tax Credit
30% federal tax credit for systems placed in service after 12/31/2021 and before 01/01/2033. Good for: solar water heat, solar photovoltaics, biomass, geothermal heat pumps, wind (small), fuel cells using renewable fuels.

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


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.

Best National Provider

SunPower

★★★★★
5.0

  • Most efficient panels on the market
  • National coverage
  • Cradle to Cradle sustainability certification
  • Great warranty coverage
  • Expensive
  • Customer service varies by local dealer

Best Solar Financing

Blue Raven Solar

★★★★★
4.5

  • Industry-leading in-house financing
  • Competitive pricing
  • Excellent reputation
  • Doesn't offer solar batteries (coming 2022)

Best Technology

Tesla Energy

★★★★★
4.5

  • Price-match guarantee
  • Sleek, efficient, and durable solar panels
  • Best solar battery on the market
  • Some reported issues with customer service
  • Customer service varies by local dealer

EcoWatch's Chicago, IL Solar Incentives FAQs

What if I add a solar system to a rental property, vacation home or commercial property? Will I still qualify for incentives?

While we recommend getting in touch with your local solar installer and/or tax professional to better understand what solar incentives apply to you, many can be claimed on a second home, as long as it is in the United States and owned by you. There may be other incentives available for commercial properties specifically, depending on the specifics.

How much will solar panels save me on my electric bill in Chicago annually?

After adding solar panels to your house in Chicago, you can expect to save approximately $699.94 per year, or approximately $13,298.90 over the next 20 years.

How long until the federal solar tax credit ends?

The Clean Energy Credit (previously referred to as the federal solar tax credit, or the ITC), is slated to end on January 1, 2035. Currently set at 30%, the credit will drop to 26% in 2033 and to 22% in 2034.

I want to change out my appliances for ones that are more energy-efficient. Are there any incentives I can apply for?

With the passage of the new Inflation Reduction Act, there are a variety of new financial incentives that are available when you make eco-friendly improvements to your home. More details regarding these incentives, including information about incentives for purchasing new appliances, can be found here.

Can I qualify for incentives both towards the initial cost of solar panels, and later as reimbursement?

The order in which incentives are applied might vary depending on which incentives you are eligible for but usually yes, you can receive multiple types of incentives for your solar project. Speak to your solar installer or a local tax professional to verify you are claiming all of the incentives you qualify for and applying them in the correct order.

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.

Solar incentive research was conducted by Melissa Smith and Karsten Neumeister. Local data analysis was conducted by James Savino. See something we missed or could do better? Email the editor.

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