Montana Solar Incentives (Rebates, Tax Credits & More in 2023)

The table below includes a breakdown of all of the perks that are available in the area, as well as an estimate of how much each can save you on your solar project.

What Do Montanans Need to Know About the Federal Solar Tax Credit?

The federal solar tax credit is a program offered by the federal government that aims to encourage the adoption of solar power in the U.S. It is available to all taxpayers and provides a credit worth 30% of the cost of a solar system. That includes the cost of panels, solar batteries, inverters and labor.

For the average system in your area, the credit on the typical total cost of $22,860 would be around $6,858. This is a credit and not a solar rebate, so this amount is applied to any income taxes owed. It cannot be claimed if you don’t owe taxes for the year you install your system.

The credit was first introduced in 2005 at 30% and was originally set to decrease to 26% in 2022 and again to 22% in 2023. The program was scheduled to end in 2024.

The Inflation Reduction Act, which was signed in 2022, increased the credit back to 30% and extended it until 2035. The current schedule for the credit rate is as follows:

• 30% for systems installed between 2022 and 2032
• 26% for systems installed in 2033
• 22% for systems installed in 2034
• 0% for systems installed in 2035 and beyond

How to Claim the Federal ITC in Montana

Claiming the federal credit is done when you file your taxes, and the process couldn’t be much easier. You can follow the steps below to ensure you get access to this perk.

• Step 1: Complete your solar installation and fill out IRS form 5695 with information provided by your installation company. You’ll need contact information for the installer, as well as some technical and cost information for your PV system.

• Step 2: File the complete form with your taxes or have your accountant file it for you.

If you use a tax software to file your taxes yourself, you can usually forego the above steps and instead answer the questions the program asks you about renewable energy credits or efficiency upgrades to your home.

EcoWatch’s Opinion on the Federal ITC in Montana

In our opinion, the federal credit is the most important perk to take advantage of. It takes just a minute or two to apply, yet it can potentially save an average of over $6,750 on your income taxes owed. This is the best bang for your buck in terms of solar benefit programs, so we’d recommend this incentive over any other in your area.

We should mention that the federal credit won’t benefit everyone equally. While it’s available to all taxpayers, it only provides actual value to those who owe money on their income taxes. If you don’t owe or if the government owes you, you cannot take the credit. You’ll need to owe an average of around $1,375 per year for five years to take the full credit.

What You Should Know About the Revolving Loan Program in Montana

This is a solar financing option for solar PV systems that help make converting more affordable upfront for individuals, businesses and nonprofits. Funds for the program are collected from penalties paid out by businesses or individuals that fail to meet clean air standards set forth by the Montana Department of Environmental Quality (DEQ).

The loan program provides financing for up to $40,000 for approved projects, which is nearly double what the average resident spends on a PV system. The loan term is capped at ten years, and the interest rates are kept low in an effort to make solar more affordable in the long term.

How to Claim the Loan Program in Montana

Enrolling in the loan program and getting financing isn’t terribly difficult or time-consuming. You can follow the simple steps below to enroll.

• Step 1: Go to the DEQ’s web page on the program. Click on “Application Forms and Checklists,” and then click the application form that applies to you.

• Step 2: Fill out the form. This will probably take you about 20 to 30 minutes. The form is only eight pages long, but you’ll need some information about your assets and liabilities, which can take some time to collect. You’ll also need basic information about you and your co-applicant — if applicable — your system and the site where you plan on installing your panels.

• Step 3: If you’re approved for the loan, a program administrator will reach out to you with the next steps.

EcoWatch’s Opinion on Montana’s Alternative Energy Revolving Loan Program

We think this perk is a great option for residents looking to finance their panels. Cash purchases provide more value and savings to you over time, but many residents understandably cannot afford to pay $20,000+ upfront for their systems.

This program is a great way to keep savings higher than they would be with a solar lease or power purchase agreement (PPA) while still making solar affordable.

What You Should Know About the Renewable Energy Systems Exemption

This exemption prevents your property taxes from increasing as a result of your solar power system — or geothermal heat pumps, biomass systems or other renewable energy system — raising your home value. In most cases, home improvements that make your home more valuable will raise your assessed value and, in turn, your annual taxes.

Solar will make your property more valuable, so under normal circumstances, solar conversion would yield higher taxes.¹ This perk exempts the added value from taxation, which decreases the financial burden of converting to solar.

Given the average solar energy system value of $22,860 and the statewide property tax rate of 0.74%, this incentive provides an estimated annual savings of $169.² While your system will depreciate in value as the years go by, the maximum savings this perk will provide over the first 20 years of your system’s life totals around $3,383.

How to Claim the Exemption for Property Taxes in Montana

The beauty of this exemption is that it doesn’t require any application process or time or effort from you to enjoy the benefits. Your tax assessor will just ignore the value your PV system adds to your property when assessing your taxes. Savings will automatically be reflected on your tax bill.

EcoWatch’s Opinion on the Exemption for Property Taxes in Montana

This exemption provides fairly significant savings over time, and it requires no action from you to apply. As such, we think this is an outstanding perk and one that serves solar customers well throughout the state. The upfront burden of going solar is large enough without having to deal with a bump in taxes as a result as well.

Net Metering in Montana

Net energy metering is an outstanding solar benefit program that is mandated by the Public Service Commission (PSC).

It allows customers of public utility providers, investor-owner utilities (IOUs) and electric cooperatives to earn credits for excess energy production that is sent to the electric grid via local utility companies. These credits can lower your utility bills in future months if your panels fail to meet your energy demands.

The net energy metering program is available for all residential systems, although the rate at which you’re credited for each kilowatt-hour (kWh) isn’t set by the PSC. You’ll need to check with your energy provider for details on the credit rate available.

We should mention that net energy metering (NEM) programs are getting less and less beneficial for customers across the country. Several states have abandoned the perk altogether, while others that had the credit set to the retail rate have decreased the rate requirements.

It’s possible that net metering will be abandoned in your area as well, although there is no evidence to suggest that that will happen anytime soon.

How to Enroll in Net Metering in Montana

Enrolling in net energy metering is a simple process and just requires a single application filed with your local energy provider. In many cases, Montana homeowners don’t even need to file the application, as most reputable installation companies in MT will do it on their behalf.

You can follow the steps below to make sure you get access to this solar perk.

• Step 1: Contact your utility company to confirm that you have a bidirectional meter installed on your home. This is required for interconnection and tracking of energy flowing between your alternative energy system and the electric grid. If you don’t have this upgraded meter installed, you should be able to get one for free.
• Step 2: Choose a reliable solar installer to complete your home solar project. Before proceeding with the installation, confirm that a representative from the company will file the application for you.
• Step 3: Move forward with the installation.
• Step 4 (Optional): We recommend checking to make sure your credits are accruing after the installation is completed. You can look at your energy bills, which should reflect credits accruing or getting applied to your account.

EcoWatch’s Opinion on Net Metering in Montana

Net energy metering is an outstanding perk to have access to as a solar customer. It provides a multitude of benefits, including increasing your energy savings over time, further reducing emissions, shortening your panel payback period and adding value to your system overall.

There are few other Montana state incentives available, so we think net energy metering is a crucial part of making solar worthwhile, and it’s one of the best we can envision for Montanans. This is especially true since it helps push your all-in savings close to the state average of $15,189, and it takes minimal effort to enroll in.

Local Solar Incentives in Montana

We’ve discussed all of the federal and statewide solar benefit programs available in your area above. Unfortunately, there are no additional local incentives or solar rebates offered by utility companies or municipalities.

You can check with your utility company to see if there are other perks, like rebates for energy efficiency home improvements.

Which Tax Incentives Are The Best In Montana?

Above, we’ve discussed all of the incentives offered throughout the state, but not every one of these perks will bring the same savings and ease of application. Below, we’ll discuss which perks we suggest taking the most and which provide the most bang for your buck.

The Federal Tax Credit

In our opinion, the federal credit is the single most valuable perk you have access to. It’s available to all residents, provides an average value of $6,858 and takes just a few minutes to apply for.

You won’t be able to take full advantage of this credit if you don’t owe anything in income taxes, but provided you will owe the total amount over five years, this perk is massively beneficial.

Net Energy Metering

Net energy metering is the second most crucial incentive to take, in our opinion. Thanks to the mandate put in place by the PSC, this perk is also available to all residents.

For most customers, NEM will take no time or effort to apply for, as solar installation companies typically handle the application and setup process. Not only is the application process usually almost automatic if you choose a reputable installer, but this perk maximizes your system value and your long-term savings.

The Renewable Energy Systems Exemption

Finally, the exemption for property taxes is a great incentive to promote energy conservation through renewable energy sources. There is no application process required, so you’ll automatically enjoy this perk when you convert to solar. It can save over $3,000 on property taxes over the life of your system, on average, making it a great value for solar customers throughout the state.

What’s The Near Term Outlook For More Incentives In Montana?

As of right now, there is no plan for new incentives to become available in the area. We don’t expect any to pop up in the near future, nor do we foresee the existing perks becoming more valuable.

The state had an RPS goal, but it expired in 2015. Since these goals often serve as the driving force for solar perks, you likely won’t see any advancement in the rebates and incentives unless the state sets a new RPS goal.