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

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

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

The phrase "solar incentives" includes 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. Various kinds of incentives, including 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. Some broad categories of solar incentives include:

• Tax Exemptions: Your solar panel system could qualify for exemptions on both sales and property tax. Sales tax exemptions are effective at the time of purchase. Property tax exemptions let you exclude the value that solar panels add when you are calculating property taxes on your home.
• Rebates: A rebate is a partial refund given after you've purchased your solar system. Rebates could be offered by your local utility company, your county or your state. The cash back that you get from the rebates is normally applied before tax credits are calculated.
• Net Metering: Net metering is an incentive you can get after your solar system is up and running. If you've signed a net metering agreement with your Urbana utility company, it will subtract the value of the excess energy produced by your solar system from your utility bill each month. In some areas, this is a dollar-for-dollar credit, while in others you might make back a percentage of the value.
• Solar Renewable Energy Certificate (SREC): SRECs and other performance-based incentives are typically handled at the state level. Once your solar system meets the qualification threshold (normally 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 from the sale is usually considered part of your taxable income.
• Tax Credits: These credits are dollar-for-dollar reductions (not deductions) in how much in taxes you owe the government.

Federal Solar Incentives

Federal incentives are the kind of incentives that you are most likely to have some familiarity with. One of the incentives that most people are likely to be familiar with is the Federal Solar Investment Tax Credit (ITC). The ITC is a tax credit for a certain percentage of the cost of your solar system.

The ITC covers solar systems installed after January 1, 2006 and allows you to deduct from your taxes a percentage of the total cost of solar panels, accessories, equipment and labor. This credit can apply towards a solar panel system installed on a primary or secondary residence in the United States that you own. Originally, you could claim 30% of the total cost, although the amount you can claim may range between 26-30%. There is no maximum claim amount.

Your local Urbana solar panel installer can provide you with more information about the ITC and how it might apply to your situation.

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 re-raises the credit up to 30% for solar systems installed between 2022 and 2032. At this point, the percentage will decrease slightly each year until the end of the program in 2035. Starting in 2023, the expansion to the program will also make claiming credit for energy storage systems easier than ever before.

More information about the new Inflation Reduction Act can be found here. Your local Urbana solar panel installers are the best people to answer your questions about the new Clean Energy Credit and how it applies to you.

State & Local Solar Incentives

Some solar incentives are often also provided by state and local governments. Like with federal incentives, these can include tax credits, rebates and more. These incentives might be provided 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 Urbana

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 in the past 15 years has helped greatly increase nationwide adoption of solar energy. Reach out to your local solar panel installer today to find out more information and to save as much money as possible on a solar system for your Urbana home.