2022 Indiana Solar Incentives (Tax Credits, Rebates & More)
In this EcoWatch guide on the solar incentives in Indiana, you’ll learn:
- Which solar tax breaks Hoosiers can take advantage of
- What Tipmont REMC’s Energy Efficiency Equipment Rebate Program is
- What Indiana homeowners should know about the federal ITC
- How Hoosiers can profit off of the solar energy their homes produce
This guide has helped thousands of Indiana homeowners save time and money when going solar by providing them with all of the latest incentives available in the area. Let’s get started!
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What Should You Know About Indiana’s Solar Market?
Despite the average cost of going solar in Indiana being at an all-time low, residents throughout the state still pay an average of $25,460 to install a PV system large enough to offset their energy bills. This is assuming the average per-watt cost of solar of $2.68 in Indiana and the typical system size of 9.5 kilowatts.
Homeowners throughout Indiana naturally look for ways to keep costs down and benefit financially from their solar conversion. Thankfully, there are some incentives offered by the federal and state governments to make home solar power systems more appealing and more affordable.
Below, we’ll be discussing all of the solar incentives available in Indiana and how each can provide you with a better return on investment.
Watch Below: Why Electric Rates And Your Electric Bill Are So High — and Could Keep Climbing
What Solar Rebates and Incentives Does Indiana Offer?
Indiana residents have several solar incentives available to them on the federal and state level. The table below provides a quick look at each incentive, and additional information can be found below.
|Indiana Solar Incentive||Description|
|Federal Solar Tax Credit (ITC)||The federal tax credit is available to all IN residents and appears as a credit to federal income tax owed. The credit is for 30% of your total solar system cost1, which averages around $7,638 in Indiana.|
|Net Metering||Net metering is a billing policy that allows you to offset energy bills — or eliminate them altogether — by overproducing energy and “banking” it with your utility company for when you need it2. We’ll provide more details on Indiana’s net metering program below.|
|Renewable Energy Property Tax Exemption||Indiana’s Renewable Energy Property Tax Exemption prevents you from having to pay additional property taxes after your solar system boosts your home value3. Most other home improvements will bump up your taxes. |
This exemption can save you thousands of dollars over the lifetime of your solar equipment, especially if you live in an area with higher taxes, like Indianapolis.
|Sales and Use Tax Exemption for Electrical Generating Equipment||Indiana also provides a sales tax exemption for solar equipment and equipment for systems of other renewable energy sources. Given the average sales tax rate of 7% in Indiana4 and a typical system cost of $25,460, that’s an average savings of $1,782.|
|Indiana Solar Easements & Rights Laws||Indiana residents are also afforded the right to install solar panels and maintain access to sunlight, thanks to Indiana’s Solar Easements & Rights Laws. These laws prevent any person or entity — including HOAs — from prohibiting solar panel installation or obstructing your panels.|
Indiana Solar Tax Credit
In an effort to make solar conversion more affordable, many states offer a state tax credit in addition to the federal tax credit. Unfortunately, Indiana does not have a solar energy tax credit on a state level. Homeowners in Indiana can take advantage of the federal tax credit — discussed in more detail below — but no additional credits are available.
Indiana State Solar Tax Exemptions
Although there is no state tax credit to incentivize solar conversion, Indiana does provide two important tax exemptions to reduce the financial burden of going solar.
First is the sales tax exemption, which prevents you from having to pay sales tax on all of your solar equipment and the installation costs. Given the average state sales tax rate of 7% and the average cost of going solar sitting around $25,460, this sales tax exemption saves homeowners approximately $1,782, on average.
It’s important to note that these are savings, and this amount isn’t a rebate. As such, it will be reflected in your total cost to go solar.
Indiana also provides a property tax exemption, which can save you thousands of dollars over time on your property taxes. Under normal circumstances, home improvements improve the value of your home and, because your property taxes are based on home value, the improvements cause your taxes to increase.
However, the property tax exemption prevents this from happening, despite the fact that your panels will increase your property value.
Net Metering in Indiana
Net metering is a wonderful benefit provided by many utility companies and mandated by many state governments. Via interconnection through your inverters, your photovoltaic system can send and receive electricity to and from the grid.
When your panels underproduce — like on a cloudy day — the grid provides any additional electricity needed. When you overproduce, you send the excess power your system produces to the grid and “bank” it for later use.
Net metering allows you to offset the cost of energy needed with the cost of the clean energy you overproduce. Indiana’s net metering policy isn’t as beneficial as in many other states, but it still helps lower your cost of electricity.
Net metering is mandated in Indiana, but electric providers aren’t required to buy back excess energy at the retail rate. Most will purchase your excess electricity at a wholesale cost, which isn’t great, but it can still help offset your electricity bills.
In addition to the net metering and tax incentives available in Indiana, residents will typically have access to some incentives from local power companies. However, these incentives in Indiana are geared more toward energy efficiency upgrades in general and not specifically at solar power systems.
Some of the more reputable solar installers in your area might be able to include the efficiency upgrades that come with rebates in your solar panel installation. Some of the more appealing incentives include:
- Indiana Michigan Power’s Energy Savings Rebate Program: This rebate program is for energy efficiency upgrades only. You can get between $25 and $350 back when you upgrade your thermostat, install a heat pump or ductless mini-split, opt for a geothermal heat pump and more.
- NineStar Connect’s Residential Energy Efficient Equipment Rebate Program: NineStar Connect customers can take advantage of rebates as high as $1,500 for energy efficiency upgrades. The eligible upgrades include geothermal heat pumps, heat pump water heaters, pool pumps and more.
- Tipmont REMC’s Energy Efficiency Equipment Rebate Program: Tipmont REMC has fewer eligible upgrades that come with rebates, but it’s still worth looking into. You can get between $50 and $100 back when you install qualifying home energy monitors, thermostats and water heaters.
Additional rebates might be available from your power company. You can check the DSIRE database for more information or check with a local solar company near you to see what else is available.
What Do Hoosiers Need to Know About the Federal Solar Investment Tax Credit?
Finally, all Indiana residents will have access to the federal solar investment tax credit (ITC), which is one of the largest incentives for going solar in Indiana. This is a credit from the federal government in the amount of 30% of your total solar project cost.
In Indiana, where the average solar energy system costs $25,460, the typical credit amount is $7,638. The credit is applied to the federal taxes you owe the year your solar panel system is installed and commissioned.
U.S. homeowners are eligible for the 30% tax credit installed through 2032. The credit will drop to 26% in 2033 and 22% in 2034 before being phased out in 2035.
Read More About Going Solar
FAQs: Indiana Solar Incentives
At EcoWatch, we get questions about solar incentives in the Hoosier State quite frequently. The questions we see most often are listed below. If you have specific questions that aren’t answered here, reach out to our team of solar experts at email@example.com.
Indiana residents do have access to the federal tax credit, which is a substantial incentive that makes going solar far more affordable. However, unlike many other states, Indiana does not offer a state solar tax credit, so the federal tax credit is the only one available.
There are several solar incentives available in 2022 in Indiana. These include a decent net metering policy to help you offset your electricity bills, a property tax exemption, a sales tax exemption, some local incentives for other energy efficiency upgrades and the federal solar tax credit. However, there is no state tax credit available in addition to these incentives.
There are currently no solar-specific rebates available to Indiana residents. However, local utility companies throughout the state often provide rebates for energy efficiency upgrades, including LED lights, heat pumps, geothermal technology and more. You can check the local incentives listed above or the DSIRE database for more information.
Thankfully, no. Home improvements that boost your home value normally do cause your property taxes to increase. Although solar panels bump up your home value, Indiana’s property tax exemption prevents your non-educational taxes from going up as a result.