2023 Solar Incentives Guide for Lombard, IL - Tax Credits & Rebates

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

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

Solar incentives are meant to encourage homeowners to switch to renewable energy by offering incentives meant to lower the financial burden of solar panel installation and use. Various kinds of incentives, including cash back, discounts or credit towards your monthly utility bill, might be available to you. Certain incentives may be provided via the Illinois government, by your utility company or by county or municipality, while other incentives are federal. Types of solar incentives might include:

• Tax Exemptions: Tax exemptions can come in one of two forms. First, there is sales tax exemption, applied at the time you purchase your 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 home.
• Tax Credits: Tax credits lower, dollar-for-dollar, the amount of income tax you owe the government. Tax credits differ from tax deductions.
• Rebates: Rebates, or partial refunds after a purchase, are usually applied before any solar tax credits are calculated. Rebates might be given by your local utility company, by your state or by your county.
• Solar Renewable Energy Certificate (SREC): SRECs are credits that can be sold to your utility company (or other buyers) for money that typically becomes part of your taxable income. Generally, you must meet a certain (small) threshold of energy production before your solar system is eligible for SRECs or similar performance-based incentives. These kinds of incentives are generally handled at the state level.
• Net Metering: Net metering is an incentive you can get once your solar panels are up and running. If you've signed a net metering agreement with your Lombard utility company, they will subtract the value of the excess energy your solar system produces from your monthly utility bill. In some areas, this credit is dollar-for-dollar, while in other areas you might make back a percentage of the value.

Federal Solar Incentives

Federal incentives are the kind of incentives that you are most likely to have heard of. The solar incentive that you may be most familiar with 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 applies to the value of solar panels installed on your primary or secondary residence in the United States. The solar panels must have been installed after January 1, 2006 on a property owned by you for you to be eligible for the credit. The ITC initially covered 30% of all system installation costs (panels, equipment, labor and accessories), although the total amount has fluctuated slightly over the last few years between 26-30%. The amount you qualify for will depend on when your solar system was installed. There is no cap on the amount you can claim.

To better understand how the ITC might apply to you, reach out to your local Lombard solar panel installer and request more information.

The Inflation Reduction Act, passed in August 2022, made some changes to the ITC (as well as retitling it the Clean Energy Credit). Now, 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 current Clean Energy Credit expires in 2035. The program expansion also makes credits for energy storage systems even easier to claim, beginning in 2023.

More information about the new Inflation Reduction Act can be found here. To understand how the new Clean Energy Credit applies to you, speak with your local Lombard solar installers.

State & Local Solar Incentives

In addition to federal solar incentives, there are often also state ones. Rebates, tax credits and more may be available at a more local level. Incentives may be offered by the state of Illinois, or by your county or municipality. Some incentives are available for only a limited time, while others are ongoing.

Next Steps for Installing Solar in Lombard

There are many kinds of solar incentives: those provided by local utility companies, those provided by the Illinois government and those provided by the federal government, to name a few. The use of solar energy has increased tremendously in the last 15 years, thanks to these incentives. We suggest talking to your local Lombard solar installation company to learn more about these incentives and to be sure that you're getting the most money possible for your solar system.