2025 Solar Incentives Guide for Palatine, IL - Tax Credits & Rebates

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

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

Solar incentives are designed to mitigate the cost of installing solar panels on your home. These financial incentives are intended to encourage more Americans to make the switch to renewable energy. Various types of incentives, like cash back, discounts or credit towards your monthly utility bill, may be available to you. Certain incentives may be handled by the Illinois government, by your utility company or by county or municipality, while other incentives are federal. Types of solar incentives might include:

• Rebates: A solar rebate is a partial refund after the purchase of your solar system. Rebates could be offered by your local utility company, your state or your county. The discount that rebates offer is normally applied to the price of solar panels before calculating tax credits.
• Tax Exemptions: Tax exemptions may come in one of two forms. First, there is sales tax exemption, which is applied when you purchase solar panels. The second is property tax exemption. This allows you to ignore the value added by your solar system when paying property tax on your house.
• Solar Renewable Energy Certificate (SREC): In general, solar systems that produce over a threshold (usually small) amount of electricity can qualify for SRECs or similar performance-based incentives. SRECs and performance-based incentives in general are typically provided by your state government. When you receive an SREC, you can sell it to your utility company or another buyer, and generally the money you make is normally considered part of your taxable income.
• Tax Credits: Tax credits reduce, dollar-for-dollar, the total amount of tax you owe the government. These are different from tax deductions.
• Net Metering: Don't forget to speak with your Palatine utility company about signing a net metering contract. This allows you to get a credit towards your monthly utility bill for the value of excess energy your solar panels generate. You might receive either a dollar-for-dollar credit or a percentage of the value.

Federal Solar Incentives

When thinking about solar incentives, you likely think of federal incentives first. The Federal Solar Investment Tax Credit, or ITC, is likely the most commonly known federal solar incentive. The ITC provides you with a tax credit for a set percentage of your solar system's cost.

The ITC applies to a solar system installed on your primary or secondary residence in the United States. The solar panels have to have been installed after January 1, 2006, on a property you own for you to claim the credit. Initially, the ITC applied to 30% of all system costs (panels, labor, equipment and accessories), although this amount has fluctuated slightly over the last few years between 26-30%. The installation date of your solar system will determine what percentage you are eligible for. There is no cap on the amount you can claim.

Talking to your local Palatine solar panel installation expert is the best way to learn more about how the ITC could apply to you.

In August 2022, the Inflation Reduction Act made revisions to the ITC, now referred to as the Clean Energy Credit. With the new provisions, solar installation projects begun after January 1, 2022, and finished by December 31, 2032, can qualify for a 30% tax credit. This credit amount will then decrease slightly each year until the end of the current Clean Energy Credit 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. The easiest way to fully understand how the new Clean Energy Credit applies to you is to get in touch with your local Palatine solar panel installers.

State & Local Solar Incentives

Rebates, tax credits and more might be claimed at multiple levels. Along with federal solar incentives, there are often state and local ones as well. Some incentives are ongoing, while others are available for a limited time. Solar incentives might be provided by your county or municipality, or by the Illinois government.

Next Steps for Installing Solar in Palatine

You can apply for and receive solar incentives from the Illinois government and the federal government, as well as from your local utility company. Growing availability of solar initiatives over the last 15 years has helped greatly increase nationwide adoption of solar energy. Getting in touch with your local Palatine solar panel installation company is the right first step towards getting all the incentives you qualify for when you switch to solar energy.