2025 Solar Incentives Guide for Paducah, KY - Tax Credits & Rebates

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

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

The phrase "solar incentives" generally refers to financial incentives put in place by solar companies and the government to encourage the adoption and use renewable energy by making installing and using solar panels more affordable. Solar incentives may include upfront discounts, cash back or credit towards your monthly utility bill. Some incentives are handled by the federal government, some by the state of Kentucky and some by your utility company, county or municipality. Some solar incentives you might qualify for are:

• Tax Credits: Tax credits are dollar-for-dollar reductions in the amount of income tax that you owe the government. (This is different from a tax deduction.)
• Tax Exemptions: Sales tax exemptions are effective at the point of sale for your solar system. Property tax exemptions allow you to exclude the value that your solar panels add when calculating the amount of property tax you need to pay on your home.
• Rebates: Some solar companies will help you claim a rebate, or partial refund after purchase, for your solar system. Counties or states will also sometimes offer limited-time rebates. Any rebates you receive will usually be deducted from your total price before any tax credits are calculated.
• Net Metering: Net metering factors in after your solar system is up and running. If you've signed a net metering agreement with your Paducah utility company, the company will subtract the value of the excess energy your solar system produces from your monthly utility bill. In some places, this is a dollar-for-dollar credit, while in other places you might receive a refund equivalent to a percentage of the value.

Federal Solar Incentives

Federal incentives are the kind of incentives that you are most likely to have some familiarity with. The solar incentive that you're most familiar with is probably the Federal Solar Investment Tax Credit (ITC), which provides a credit on your taxes equal to a certain percentage of the cost of your solar system.

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

Have questions about how the ITC applies to your specific situation? Reach out to your local Paducah solar panel installer to get more information.

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. Homeowners can now receive a credit of 30% of the total solar system installation costs for projects started after January 1, 2022, and completed before the end of 2032. The percentage will then decrease on a yearly basis until the Clean Energy Credit ends in 2035. The program expansion also makes credits for energy storage systems even easier to claim, beginning in 2023.

Click here to learn more about the new Inflation Reduction Act. To fully understand how the new Clean Energy Credit applies to you, get in touch with your local Paducah solar installation expert.

State & Local Solar Incentives

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

Next Steps for Installing Solar in Paducah

There are many kinds of solar incentives: those offered by local utility companies, those provided by the Kentucky government and those provided by the federal government, to name a few. The use of solar energy has increased tremendously in the last 15 years, partially due to these incentives. Talking to your local Paducah solar panel installer is the best first step towards getting the most money possible when you switch to solar energy.