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What Solar Tax Credits, Incentives, and Rebates are Available in Shelbyville?
Special Assessment for Solar Energy Systems
Solar Renewable Energy Credits
Federal Residential Renewable Energy Tax Credit
The phrase "solar incentives" covers a range of financial incentives put in place to make installing and using solar panels more affordable. This is done to encourage people to switch to renewable energy. Incentives may include things like discounts, cash back or credit towards your monthly utility bill. Some incentives are offered federally, while others are offered by the Illinois government or your utility company, county or municipality. Some broad categories of solar incentives include:
- Net Metering: Net metering is an incentive you can get after your solar panels are up and running. If you've signed a net metering agreement with your Shelbyville utility company, the company will subtract the value of the excess energy your solar system produces from your monthly utility bill. In some areas, this credit is dollar-for-dollar, while in other places you may make back 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, which allows you to ignore 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 usually handled at the state level. Once your solar system meets the qualification threshold (normally a small amount of energy production), you can receive SRECs that can be sold to your utility company or other buyers. The money you receive is usually considered part of your taxable income.
- Tax Credits: Tax credits are dollar-for-dollar reductions (not deductions) in how much income tax you owe the government.
- Rebates: Solar rebates can be offered by your county or state, or by your local utility company. These rebates work as partial refunds that are applied after your purchase of a solar system and before tax credits are calculated.
Federal Solar Incentives
Federal solar incentives are likely to be the first thing that comes to mind when thinking about solar incentives. The Federal Solar Investment Tax Credit, or ITC, is the most well-known federal solar incentive. The ITC provides you with a tax credit for a specific percentage of your solar system's cost.
The ITC can be applied to solar systems installed after January 1, 2006 and under this program you can deduct from your taxes a percentage of the total cost of solar panels, accessories, labor and equipment. This credit can apply towards solar panels installed on a primary or secondary residence that you own in the United States. Originally, you could claim 30% of the total cost, although the amount you can claim may range between 26-30%. There is no maximum amount you can claim.
To more fully understand how the ITC could apply to you, get in touch with your local Shelbyville solar panel installer and request more information.
The Inflation Reduction Act, passed in August 2022, expanded and extended the ITC (as well as renaming it to the Clean Energy Credit). Under the new program, solar installation projects started after January 1, 2022 and completed by the end of 2032 may be eligible for a 30% tax credit. This percentage will then decrease slightly each year until the current Clean Energy Credit expires in 2035. Beginning in 2023, it will also be easier to qualify for credits for energy storage systems under this new program.
Click here to learn more about the new Inflation Reduction Act. Your local Shelbyville solar panel company is the best resource for answering 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 might also be offered at the local or state level. Some incentives are offered for only a limited time, while others are ongoing. Your local solar incentives could come from the Illinois government, or from your specific county or municipality.
Next Steps for Installing Solar in Shelbyville
You can apply for and receive solar incentives from the federal government and the Illinois government, as well as from your local utility company. Growing availability of solar initiatives over the last 15 years has helped increase solar adoption nationwide. We recommend talking to your local Shelbyville solar installation company for more information about these incentives and to be sure that you're getting the most money possible for your solar system.
EcoWatch's Shelbyville, IL Solar Incentives FAQs
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