2025 Solar Incentives Guide for Ann Arbor, MI - Tax Credits & Rebates

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

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

Solar incentives encourage people to make the switch to renewable energy by providing incentives that lower the financial burden of solar panel installation and use. These incentives can include cash back, upfront discounts or credit towards your monthly utility bill. Some incentives are handled by the federal government, some by the state of Michigan and some by your utility company, county or municipality. Categories of solar incentives include:

• Rebates: A rebate is a partial refund given after you've purchased your solar panels. Rebates might 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 calculating tax credits.
• Tax Credits: Unlike tax deductions, tax credits reduce, dollar-for-dollar, the amount of income tax that you owe the federal government.
• Net Metering: Net metering is an incentive you can get after your solar panels are up and running. If you have a net metering agreement in place with your Ann Arbor utility company, they will subtract the value of the excess energy produced by your solar system from your utility bill each month. In some locations, this credit is dollar-for-dollar, while in others you may receive a refund equivalent to a percentage of the value.
• Tax Exemptions: Your solar panel system might qualify for both sales tax and property tax exemptions. Sales tax exemptions come into effect at the time of purchase. Property tax exemptions let you ignore the value that solar panels add when you are calculating property taxes on your home.

Federal Solar Incentives

Federal incentives are the type of incentives that you are most likely to have heard of. It's likely that you've heard of the Federal Solar Investment Tax Credit, or ITC. This incentive is a tax credit equal to a predetermined percentage of the money you spend on solar panels for your home.

The ITC can be applied to a solar system installed on your primary or secondary residence in the United States. The solar system must have been installed on a property you own after January 1, 2006, for you to be eligible for the credit. The ITC originally paid out 30% of all installation costs (panels, labor, equipment and accessories), although the amount has fluctuated over the 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.

Have questions about how the ITC applies to your specific situation? Get in touch with your local Ann Arbor solar panel installation expert to get more information.

The Inflation Reduction Act, passed in August 2022, made some changes to the ITC (as well as renaming it to the Clean Energy Credit). For solar system installations that begin after January 1, 2022, and are completed by the end of 2032, homeowners may be eligible for a credit for 30% of the total cost. This percentage will decrease annually after 2032 until the Clean Energy Credit expires in 2035. Starting in 2023, the expansion to the program will also make it easier to get credit for energy storage systems.

More information about the new Inflation Reduction Act can be found here. To fully understand how the new Clean Energy Credit will apply to you, speak with your local Ann Arbor solar installers.

State & Local Solar Incentives

There are more than just federal solar incentives; rebates, tax credits and more may be offered at the state and local level. Certain incentives are ongoing, while others might only be available for a limited time. Incentives may be offered by your county or municipality, or by the Michigan government.

Next Steps for Installing Solar in Ann Arbor

You can qualify for solar incentives from the federal government and the Michigan government, as well as from your local utility company. The increased availability of solar initiatives in the past 15 years has helped increase nationwide solar energy use enormously. If you're prepared to switch over to solar energy, getting in touch with your local Ann Arbor solar panel installation expert is a great first step.