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

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

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

Solar incentives are intended to encourage homeowners to switch their home over to renewable energy by providing incentives meant to lower the financial burden of solar panel installation and use. These incentives might include cash back, upfront discounts or monthly credits towards your utility bill. Some incentives are offered by the federal government, some by the Illinois government and some by your utility company, county or municipality. Some broad categories of solar incentives include:

• Solar Renewable Energy Certificate (SREC): SRECs and similar other performance-based incentives may be available to you if the solar system on your home produces over a specified (typically small) amount of electricity. This category of incentives is generally 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.
• Net Metering: Net metering factors in once your solar panels are up and running. If you have a net metering agreement in place with your Montgomery utility company, they will subtract the value of the excess energy your solar system produces from your utility bill each month. In some places, this is a dollar-for-dollar credit, while in others you might make back a percentage of the value.
• Tax Credits: Tax credits are dollar-for-dollar reductions that lower the amount of income tax you owe the federal government. (This is different from a tax deduction.)
• Rebates: Solar companies may help you claim a rebate, or partial refund of your purchase, for your solar system. Counties or states will also offer limited-time rebates at various times. If you receive a rebate, that amount will usually come off your total price before tax credits are calculated.
• Tax Exemptions: Your solar panel system could qualify for exemptions on both sales and property tax. Sales tax exemptions are applied at the time of purchase. Property tax exemptions let you ignore the added value of the solar panels when you are calculating property taxes on your house.

Federal Solar Incentives

Federal incentives are the type of incentives that you are most likely to have some familiarity with. You might have heard of the Federal Solar Investment Tax Credit, or ITC. This is a tax credit that reduces your taxes by a predetermined percentage of the money you spend on solar panels for your home.

The ITC was originally for 30% of the total cost of solar system installation, and has fluctuated slightly over the last few years between 26-30%. The percentage you qualify for will depend on when your solar system was installed. The total installation cost includes the panels themselves as well as the cost of equipment, labor and accessories. There is no maximum amount you can claim. The ITC applies to solar systems installed after January 1, 2006 on your primary or secondary residence. The residence must be in the United States and owned by you.

Your local Montgomery solar panel installation expert can provide more information about the ITC and how it might apply to your situation.

In August 2022, the Inflation Reduction Act laid out new provisions for the ITC, now called the Clean Energy Credit. For solar system installations that begin after January 1, 2022 and are completed by the end of 2032, homeowners can apply for a credit equal to 30% of the total cost. This percentage will decrease annually after 2032 until the Clean Energy Credit ends in 2035. Starting in 2023, it will also be easier to obtain credits for energy storage systems under the new laws.

More information about the new Inflation Reduction Act can be found here. Your local Montgomery solar panel installers are the best people to answer your questions regarding the new Clean Energy Credit and how it will apply to you.

State & Local Solar Incentives

There are more than just federal solar incentives; rebates, tax credits and more are often offered at the state and local level. The incentives — which may be handled by your county or municipality, or by the state of Illinois — might be offered on an ongoing basis, or for only a limited time.

Next Steps for Installing Solar in Montgomery

Solar incentives might come from the Illinois government, the federal government or your local utility company. The growing number of solar incentives available has facilitated the nationwide growth of solar energy use in the last 15 years. Your local Montgomery solar panel installation expert can provide you with more details about which incentives you can apply for, and get you started on the path to switching to renewable energy today.