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

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

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

Solar incentives mitigate the cost of installing a solar panel system on your home. These financial incentives are intended to encourage more Americans to make the switch to renewable energy. Incentives might include things like discounts, cash back or credit on your utility bill each month. Some incentives are offered federally, while others are offered by the state of Illinois or your utility company, county or municipality. Some broad categories of solar incentives include:

• Rebates: A rebate is a partial refund after the purchase of your solar system. These may be offered by your local utility company, your county or your state. The cash back that you get from the rebates is normally applied before calculating tax credits.
• Net Metering: Net metering becomes relevant after your solar panels are up and running. If you've signed a net metering agreement with your Mchenry utility company, the company will subtract the value of the excess energy produced by your solar system from your utility bill each month. In some areas, this credit is dollar-for-dollar, while in other places you might receive a refund equivalent to a percentage of the value.
• Solar Renewable Energy Certificate (SREC): SRECs and similar performance-based incentives may be available to you if the solar system on your home produces more than a specified (typically small) amount of electricity. Performance-based incentives are typically handled at the state level. You can sell any SRECs you have to your utility company or other buyers, and the money you make is generally considered part of your taxable income.
• Tax Credits: Tax credits reduce, dollar-for-dollar, how much income tax you owe the federal government. Tax credits are different from tax deductions.
• 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. This allows you to exclude the added value of your solar system when calculating property tax for your house.

Federal Solar Incentives

When thinking about solar incentives, federal incentives might be the first thing that comes to mind. The Federal Solar Investment Tax Credit, or ITC, is the most well-known federal solar incentive. The ITC offers a tax credit for a set percentage of your solar system's cost.

The ITC applies to the value of a solar system installed on your primary or secondary residence in the United States. The solar system has to have been installed on a property you own after January 1, 2006 for you to claim the credit. The ITC initially covered 30% of all system installation costs (panels, accessories, equipment and labor), although the total amount has fluctuated slightly over time 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, contact your local Mchenry solar panel installer and request more information.

The ITC has been renewed and expanded following the passage of the Inflation Reduction Act in August 2022. It's also now called the Clean Energy Credit. The new Clean Energy Credit now runs until 2035. You are now eligible for a 30% credit for solar systems installed between 2022 and 2032. This credit will then decrease annually until the date of expiration. The expansion to the program also makes it easier to get credit for energy storage systems, beginning in 2023.

Click here to learn more about the new Inflation Reduction Act. To best understand how the new Clean Energy Credit will apply to you, speak with your local Mchenry solar installation expert.

State & Local Solar Incentives

Federal solar incentives are not your only option; rebates, tax credits and more are often offered at the local or state level. Incentives may be offered by your county or municipality, or by the state of Illinois. Certain incentives may be available for only a limited time, while others are ongoing.

Next Steps for Installing Solar in Mchenry

Solar incentives might come from your local utlity company, the Illinois government or the federal government. The variety of available incentives has contributed to a large increase in solar energy use in the last 15 years. When you're ready to make the switch to solar energy, calling your local Mchenry solar panel installation expert is an excellent place to start.