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

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

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

Solar incentives are designed to mitigate the cost of installing a solar panel system on your home. Financial incentives like these are intended to encourage more people to switch their home over to renewable energy. Solar incentives can 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:

• Rebates: A solar rebate is a partial refund given after you've purchased your solar panels. These could be offered by your local utility company, your county or your state. The rebates are usually applied before tax credits are calculated.
• Net Metering: Be sure to speak to your North Litchfield utility company about signing a net metering contract. This will allow you to receive credit towards your utility bill every month for the value of excess energy generated by your solar panels. You may receive either a dollar-for-dollar credit or a percentage of the value.
• Tax Credits: Unlike tax deductions, tax credits reduce, dollar-for-dollar, the amount of income tax that you owe the government.
• Solar Renewable Energy Certificate (SREC): SRECs are credits that can be sold to your utility company (or other buyers) for cash that typically becomes part of your taxable income. In most cases, a certain (small) threshold of energy production must be met before your solar system qualifies for SRECs or other performance-based incentives. These kinds of incentives are generally handled at the state level.
• Tax Exemptions: Tax exemptions can come in one of two forms. The first is sales tax exemption, which is applied when you purchase 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 you think about solar incentives, you probably think of federal incentives first. The Federal Solar Investment Tax Credit, or ITC, is probably the best-known federal solar incentive. The ITC offers a tax credit for a set percentage of the cost of your solar system.

The ITC initially applied to 30% of the total cost of installing solar panels, although it has fluctuated slightly over the years between 26-30%. The percentage you qualify for will depend on when your solar system was installed. The total cost of installation includes the panels themselves as well as the cost of equipment, labor and accessories. There is no maximum amount you can claim. The ITC can be applied 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 could apply to you, call your local North Litchfield solar panel installation expert and ask for more information.

The ITC was renewed and increased in scope after the passage of the Inflation Reduction Act in August 2022. It's also now called the Clean Energy Credit. The Clean Energy Credit bolsters the current credit, increasing it up to 30% for solar installations undertaken between January 1, 2022 and December 31, 2032. At this point, the credit percentage will decrease slightly each year until the program expires in 2035. The expansion to the program 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 fully understand how the new Clean Energy Credit will apply to you, reach out to your local North Litchfield solar installers.

State & Local Solar Incentives

Rebates, tax credits and more might be claimed at multiple levels. In addition to federal solar incentives, there are often state and local ones as well. Certain incentives are ongoing, while others are offered for only a limited time. Your local incentives may come from the Illinois government, or from your specific county or municipality.

Next Steps for Installing Solar in North Litchfield

Nationwide solar energy use has significantly increased in the last 15 years, in part due to the growth in the number of solar incentives. You may get these incentives from your local utility company, the federal government or the Illinois government. Talking to your local North Litchfield solar panel installation expert is an excellent first step towards making sure you get all the incentives you qualify for when you switch to solar energy.