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

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

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

Solar incentives are designed to make renewable energy usage more affordable through financial incentives for those who install solar panels on their homes. The incentives might include upfront discounts, cash back or credit towards your monthly utility bill. Some incentives are given by the federal government, some by the state of Illinois and some by your utility company, county or municipality. Categories of solar incentives include:

• Tax Credits: Tax credits are dollar-for-dollar reductions (not deductions) in how much income tax you owe the government.
• Solar Renewable Energy Certificate (SREC): In general, solar systems that produce more than a predetermined (normally small) amount of electricity will qualify for SRECs or similar performance-based incentives. SRECs and similar incentives are typically given at the state level. When you receive an SREC, you can sell it to your utility company or another buyer, and generally the money you make is normally considered part of your taxable income.
• Tax Exemptions: Tax exemptions can come in one of two forms. First, there 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 value added by your solar system when calculating property tax for your house.
• Net Metering: Net metering is an incentive you can get after your solar panels are up and running. If you have in place a net metering agreement with your Effingham utility company, the company will subtract the value of the excess energy your solar system produces from your utility bill each month. In some locations, this is a dollar-for-dollar credit, while in others you may make back a percentage of the value.
• Rebates: Your solar installer might help you claim a rebate, or partial refund after purchase, for your solar system. Counties or states will also sometimes offer limited-time rebates. If you receive a rebate, that amount will usually be deducted from your total price before tax credits are calculated.

Federal Solar Incentives

Federal incentives are the kind of incentives that you are most likely to have heard of. It's likely that you've heard of the Federal Solar Investment Tax Credit, or ITC. This is a tax credit that reduces your taxes by a specified percentage of the money you spend on solar panels for your home.

The ITC applies towards solar systems installed after January 1, 2006, and under this program you can deduct from your taxes a percentage of the total cost of solar panels, labor, accessories and equipment. You can claim this credit for solar panels installed on a primary or secondary residence that you own in the United States. The original claim amount was 30% of the total cost, although depending on when the project was completed, your credit may range from 26-30%. There is no maximum claim amount.

Have questions about how the ITC applies to your specific situation? Reach out to your local Effingham solar panel installation expert to get more information.

In August 2022, the ITC (now called the Clean Energy Credit) was expanded and extended by the passage of the Inflation Reduction Act. The new Clean Energy Credit is valid until 2035. American homeowners can now apply for a 30% credit for solar systems that began installation on or after January 1, 2022, and will be done by December 31, 2032. The total credit will then decrease annually until it expires. Starting in 2023, the expansion will also make claiming credit for energy storage systems easier than ever before.

Click here to learn more about the new Inflation Reduction Act. To better understand how the new Clean Energy Credit will apply to you, reach out to your local Effingham solar installation expert.

State & Local Solar Incentives

Some solar incentives are often also offered at the local or state level. Like with federal incentives, these could include tax credits, rebates and more. These incentives may be handled by the Illinois government, or by your county or municipality. Some are available for a limited time, while others are ongoing.

Next Steps for Installing Solar in Effingham

Solar incentives can come from your local utility company, the federal government or the Illinois government. The large number of incentives available has facilitated the nationwide growth of solar energy use in the last 15 years. Your local Effingham solar panel installation company can provide you with more details about which incentives you can apply for, and get you feeling good about making the change to renewable energy today.