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

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

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

The term "solar incentives" generally refers to financial incentives put in place by solar companies and the government to encourage people to use renewable energy by making installing and using solar panels more affordable. Different types of incentives, such as discounts, cash back or credit towards your monthly utility bill, might be available to you. Certain incentives may be handled by the Illinois government, by your utility company or by county or municipality, while others are federal. You might qualify for any of the following types of solar incentives:

• Net Metering: Net metering factors in after your solar panels are up and running. If you have in place a net metering agreement with your Northville utility company, the company will subtract the value of the excess energy your solar system produces from your monthly utility bill. In some locations, this credit is dollar-for-dollar, while in other places you may receive a refund equivalent to a percentage of the value.
• Tax Exemptions: Tax exemptions can come in 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 ignore the added value of your solar system when calculating property tax for your home.
• Rebates: Rebates, or cash back after a purchase, are typically given prior to any solar tax credits being calculated. Rebates may be provided by your local utility company, by your state or by your county.
• Solar Renewable Energy Certificate (SREC): SRECs and similar performance-based incentives are normally handled by your state government. Once your solar panel system meets a predetermined threshold (generally a small amount of energy production), you are eligible to receive SRECs that you can then sell to your utility company or other buyers. The money you make is usually considered part of your taxable income.
• Tax Credits: Tax credits are dollar-for-dollar reductions in the amount of income tax that you owe the government. (A tax credit is different from a tax deduction.)

Federal Solar Incentives

Federal incentives are the type 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 specified percentage of the cost of your solar system.

The ITC applies to solar panels installed after January 1, 2006 on a primary or secondary residence that you own in the United States. Initially, the credit applied to 30% of the total cost — for panels, accessories, equipment and labor — although it may range from 26-30%, depending on when your solar project was undertaken. There is no cap on the amount you can claim.

Your local Northville solar panel installation expert can offer more information about the ITC and how it applies to your situation.

The Inflation Reduction Act, passed in August 2022, made some changes to the ITC (as well as retitling it the Clean Energy Credit). For solar systems installed between January 1, 2022 and December 31, 2032, homeowners can receive a credit equal to 30% of the total cost. This percentage will decrease annually after 2032 until the Clean Energy Credit expires in 2035. The expansion to the program also makes it easier to get credit for energy storage systems, starting in 2023.

More information about the new Inflation Reduction Act can be found here. The easiest way to learn more about how the new Clean Energy Credit applies to you is to reach out to your local Northville solar panel installers with your questions.

State & Local Solar Incentives

Some solar incentives may be provided by state and local governments. As with federal incentives, these might include tax credits, rebates and more. Certain incentives are offered for only a limited time, while others are ongoing. These local incentives could come from the Illinois government, or from your specific county or municipality.

Next Steps for Installing Solar in Northville

Solar incentives may be offered by your local utility company, the federal government or the Illinois government. The growing number of incentives available has helped nationwide use of solar energy increase greatly in the last 15 years. Talking to your local Northville solar panel installer is the right first step towards getting the most money possible when you switch to solar energy.