2023 Solar Incentives Guide for Allentown, PA - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Allentown.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2023 and beyond)
- Ways to optimize your solar investment
Solar installers are experts in maximizing your solar tax credits and rebates.
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Updated September 15, 2023
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What Solar Tax Credits, Incentives, and Rebates are Available in Allentown?
High Performance Buildings Incentive Program
Commercial loans/loan guarantees: $2 million
Grants: Lesser of 10% of project costs or $500,000
Wind and Geothermal Incentives Program
Manufacturer grants: $5,000 per job created within 3 years
Loans for geothermal systems: $3 per square foot of space served up to $5 million; also limited to 50% of eligible costs for residential systems.
Loans for wind energy production projects: $5 million
Grants for wind energy production projects: $1 million
Grants for feasibility studies: 50% of cost up to $175,000
Loan guarantee grants: Up to 75% of deficient funds up to $5 million
Solar Alternative Energy Credits
High Performance Building Incentives Program
Federal Residential Renewable Energy Tax Credit
Source: https://www.dsireusa.org/
Solar incentives are designed to make renewable energy usage more affordable through financial incentives for those who install solar panels on their homes. You might qualify for different types of incentives, including cash back, discounts or monthly utility bill credits, depending on your situation. Some incentives come from your specific utility company, county or municipality, some from the state of Pennsylvania and others from the federal government. Some solar incentives you might qualify for are:
- Tax Credits: Tax credits decrease, dollar-for-dollar, the amount of income tax you owe the federal government. These are different from tax deductions.
- Tax Exemptions: Sales tax exemptions are effective at the time of purchase for your solar system. Property tax exemptions allow you to ignore the value that your solar panels add when calculating the amount of property tax you need to pay on your house.
- Rebates: A rebate is a partial refund given after you've purchased your solar system. Rebates may be offered by your local utility company, your county or your state. The discount that rebates offer is normally applied to the price of solar panels before calculating tax credits.
- Net Metering: Net metering is an incentive you can get once your solar system is up and running. If you've signed a net metering agreement with your Allentown utility company, they will subtract the value of the excess energy your solar system produces from your utility bill each month. In some places, this credit is dollar-for-dollar, while in other areas you might make back a percentage of the value.
- Solar Renewable Energy Certificate (SREC): SRECs and similar performance-based incentives may be available to you if the solar system on your home produces over a specified (usually small) amount of electricity. These types of incentives are usually handled at the state level. You can sell any SRECs you have to your utility company or other buyers, and the money you make is normally considered part of your taxable income.
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Federal Solar Incentives
When people think of solar incentives, federal incentives may be the first thing that comes to mind. One of the incentives that most people are likely familiar with is the Federal Solar Investment Tax Credit (ITC). The ITC is a tax credit for a certain percentage of the cost of your solar system.
The ITC covers solar systems installed after January 1, 2006 and lets you deduct from your taxes a percentage of the total cost of solar panels, equipment, accessories and labor. This credit can apply towards a solar panel system installed on a primary or secondary residence that you own in the United States. The original amount you could claim was 30% of the total cost, although depending on when the project was completed, your credit may range from 26-30%. There is no maximum claim amount.
Curious how the ITC might apply to your specific situation? Get in touch with your local Allentown solar panel installer to get more information.
The Inflation Reduction Act, passed in August 2022, made some changes to the ITC (as well as retitling it the Clean Energy Credit). The Clean Energy Credit has increased the current credit up to 30% for solar installations undertaken between January 1, 2022 and December 31, 2032. After 2032, the percentage will be reduced slightly each year until the end of the program in 2035. Starting in 2023, it will also be easier to qualify for credits for energy storage systems with the new act.
Click here to learn more about the new Inflation Reduction Act. Your local Allentown solar panel installers are the best people to answer your questions regarding the new Clean Energy Credit and how it may apply to you.
State & Local Solar Incentives
Rebates, tax credits and more might be claimed at multiple levels. Along with federal solar incentives, there are often state and local ones as well. Incentives may be given by the state of Pennsylvania, or by your county or municipality. Certain incentives might only be available for a limited time, while others are ongoing.
Next Steps for Installing Solar in Allentown
The nationwide use of solar energy has increased enormously in the past 15 years, in part due to the increase in availability of solar incentives. You may get these incentives from the federal government, the Pennsylvania government or your local utility company. When you're prepared to make the change to solar energy, talking to your local Allentown solar panel installation expert is a great first step.
EcoWatch's Allentown, PA Solar Incentives FAQs
How can I find out if I qualify for solar incentives?
Generally, solar incentives apply to:
- a new solar panel system
- installed on a property that you own
- within the U.S.
- between the dates specified by a particular incentive.
Specific incentives, including ones handled by the Pennsylvania government or by your county/municipality, sometimes have additional qualifications. Get in touch with your local Allentown solar installer to learn more about what incentives your project may qualify for.
I already have solar panels. Does my system qualify for any incentives?
An excellent idea would be to talk to the company that installed your system — or get in touch with a local Allentown solar installer — to better understand which incentives you may qualify for. If your solar panels were installed after January 1, 2022, you likely qualify for the newly increased 30% tax credit under the Inflation Reduction Act. Solar systems installed between 2006 and 2021 may qualify for a tax credit of 26-30%.
How much will a solar system save me on my electric bill in Allentown annually?
Typically, Allentown homeowners who install solar panels save about $728.23 per year, or about $13,836.45 over 20 years after they make the switch.
What are the environmental benefits of switching to solar?
Solar energy is a renewable energy source — by switching where you get your energy, you can help reduce the strain on our planet's resources. You can also lower the CO2 emissions from your home by 250 pounds annually, or roughly 5,000 pounds in 20 years.
Can I claim incentives both towards the up-front cost of solar panels, and later as reimbursement?
The order in which incentives are applied may vary depending on which incentives you are eligible for but usually yes, you can receive multiple types of incentives for your solar project. Check with your solar installer or a local tax professional to confirm you are claiming all possible incentives and applying them in the correct order.
Our goal is to reach as many people as we can with sensible solutions like solar energy. Our team of full-time local researchers collects solar price and installation data for every city in America then compiles it to create these digestible city guides. If you want to read our solar expert's opinion on the top solar companies featured here, follow this link.
Solar incentive research was conducted by Melissa Smith and Karsten Neumeister. Local data analysis was conducted by James Savino. See something we missed or could do better? Email the editor.