2025 Solar Incentives Guide for O'Fallon, IL - Tax Credits & Rebates

What Solar Tax Credits, Incentives, and Rebates are Available in O'Fallon?

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

The term "solar incentives" broadly refers to financial incentives put in place by solar companies and the government to encourage increased use of renewable energy by making the installation and use of solar panels more affordable. You might be eligible for different kinds of incentives, such as cash back, discounts or monthly utility bill credits, depending on your situation. Some incentives come from your specific utility company, county or municipality, some from the Illinois government and others from the federal government. Categories of solar incentives include:

• Rebates: Solar rebates can be offered by your local utility company, or by your state or county. These rebates work as cash back that is applied after you purchase a solar system and before tax credits are calculated.
• Net Metering: Net metering is an incentive you can get once your solar system is up and running. If you have a net metering agreement with your O'Fallon utility company, it will subtract the value of the excess energy your solar system produces from your utility bill each month. In some places, this credit is dollar-for-dollar, while in others you may make back a percentage of the value.
• Tax Exemptions: Tax exemptions can come in one of two forms. First, there is sales tax exemption, 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 paying property tax on your house.
• Solar Renewable Energy Certificate (SREC): SRECs and other similar performance-based incentives are normally handled at the state level. Once your solar system meets the qualification 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 generally considered part of your taxable income.
• 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.)

Federal Solar Incentives

When thinking about solar incentives, you probably think of federal incentives first. 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 percentage of your solar system's cost.

The ITC can be applied to the total cost of installing a solar system, including the panels themselves as well as accessories, equipment and labor. You can claim this credit for panels installed after January 1, 2006, on a primary or secondary residence that you own, as long as it is located in the United States. From its original value of 30% of the total cost, the credit has fluctuated slightly between 26-30%, and you may qualify for varying percentages depending on when your project was completed. There is no maximum amount you can claim.

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

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. Now, solar installation projects started after January 1, 2022, and completed by the end of 2032, can qualify for a 30% tax credit. This credit amount will then decrease slightly each year until the current Clean Energy Credit expires in 2035. Starting in 2023, it will also be easier to get credits for energy storage systems under this new program.

More information about the new Inflation Reduction Act can be found here. Your local O'Fallon solar panel installation experts can answer your questions and explain how the new Clean Energy Credit applies to you.

State & Local Solar Incentives

Some solar incentives may be provided at the state and local level. Similar to federal incentives, these could include rebates, tax credits and more. These incentives might be handled by your county or municipality, or by the Illinois government. Some incentives may be available for a limited time, while others are ongoing.

Next Steps for Installing Solar in O'Fallon

You can apply for solar incentives from the federal government and the Illinois government, as well as from your local utility company. This increase in availability of solar initiatives over the last 15 years has helped greatly increase nationwide adoption of solar energy. Your local O'Fallon solar panel installation company can provide you with more details about which incentives you can apply for, and get you on track to switch to renewable energy today.