2023 Solar Incentives Guide for Watertown, MN - Tax Credits & Rebates

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

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

Solar incentives are designed to make renewable energy usage more affordable via financial incentives to help people install solar panels on their homes. Incentives may include things like discounts, cash back or credit on your utility bill each month. Some incentives are offered by the federal government, while others are handled by the state of Minnesota or your utility company, county or municipality. Categories of solar incentives include:

• Tax Exemptions: Your solar system might qualify for exemptions on both sales and property tax. Sales tax exemptions are applied at the time of purchase. Property tax exemptions allow you to ignore the value added by your solar panels when you are calculating property taxes on your home.
• Tax Credits: Different from tax deductions, tax credits reduce, dollar-for-dollar, the amount of income tax that you owe the government.
• Rebates: A rebate is a partial refund credited to your account after you've paid for your solar panels. These could be offered by your local utility company, your state or your county. 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 once your solar system is up and running. If you have in place a net metering agreement with your Watertown utility company, the company will subtract the value of the excess energy your solar system produces from your utility bill each month. In some places, this is a dollar-for-dollar credit, while in other areas you may receive a refund equivalent to a percentage of the value.

Federal Solar Incentives

Federal incentives are the type of incentives that you are most likely to have some familiarity with. An incentive that most people are likely to be familiar with is the Federal Solar Investment Tax Credit (ITC). This incentive is a tax credit for a given percentage of your solar system's cost.

The ITC is applied to the total cost of solar system installation, including the panels themselves as well as equipment, labor and accessories. This credit can be claimed for panels installed after January 1, 2006 on a primary or secondary residence located in the United States that you own. The tax credit ranges from 26-30% of total costs depending on when your project was completed. There is no maximum amount you can claim.

To find out exactly how much the ITC could save you, contact your local Watertown solar panel installer.

The Inflation Reduction Act, passed in August 2022, made some changes to the ITC (as well as renaming it to the Clean Energy Credit). Homeowners can now receive a credit equal to 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 begin to decrease yearly until the Clean Energy Credit expires in 2035. Starting in 2023, it will also be easier to obtain credits for energy storage systems under this new program.

Click here to learn more about the new Inflation Reduction Act. To better understand how the new Clean Energy Credit might apply to you, speak with your local Watertown solar installation company.

State & Local Solar Incentives

Tax credits, rebates and more can be provided at multiple levels. On top of federal solar incentives, there are often state and local ones as well. Some incentives are ongoing, while others are available for a limited time. These incentives may be offered by the Minnesota government, or by your county or municipality.

Next Steps for Installing Solar in Watertown

There are a number of different solar incentives: those offered by local utility companies, those offered by the federal government and those offered by the Minnesota government, to name a few. Solar energy utilization has grown tremendously in the last 15 years, partially due to these incentives. Talking to your local Watertown solar panel installation expert is a great first step towards getting all the incentives you qualify for when you switch to solar energy.