2023 Solar Incentives Guide for Indiana, PA - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Indiana.
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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By EcoWatch Local Advisors
Data Analysis: James Savino
Ranking Methodology: Karsten Neumeister
Updated May 04, 2023
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What Solar Tax Credits, Incentives, and Rebates are Available in Indiana?
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
First Energy (MetEdison, Penelec, Penn Power, West Penn Power) - Residential Solar Water Heating Program
FirstEnergy (MetEdison, Penelec, Penn Power, West Penn Power) - Residential Energy Efficiency Programs
Clothes Washer: $25- $50
Clothes Dryer: $50
Fridge/Freezer Recycling: $50
HVAC tune up: $50
Furnace Fan Motor: $150
Ductless Minisplit AC : $200
Central AC: $100 - $200
Air Source Heat pump: $250 - $500
Geothermal Heat Pump: $600
Packaged Terminal AC: $75
Packaged Terminal Heat Pump: $150
Programmable Thermostat: $25
Solar Water Heat: $500
Heat Pump Water Heater: $500
Home Energy Audit: $250
Lighting: Available as in-store discount in participating stores
Federal Residential Renewable Energy Tax Credit
Solar incentives are meant to encourage homeowners to make the switch to renewable energy by offering financial incentives meant to lower the burden of solar panel installation and use. Various kinds of incentives, such as cash back, discounts or monthly utility bill credits, may be available to you. Certain incentives may be handled by the state of Pennsylvania, by your utility company or by county or municipality, while other incentives are federal. Some solar incentives you might qualify for are:
- Solar Renewable Energy Certificate (SREC): SRECs are credits that can be sold to your utility company (or other buyers) for cash that normally counts as part of your taxable income. In most cases, a certain (small) threshold of energy production must be met before your solar system qualifies for SRECs or similar performance-based incentives. Incentives like these are typically handled by your state government.
- Net Metering: Net metering becomes relevant after your solar system is up and running. If you've signed a net metering agreement with your Indiana utility company, it will subtract the value of the excess energy your solar system produces from your monthly utility bill. In some areas, this credit is dollar-for-dollar, while in other places you might receive a refund equivalent to a percentage of the value.
- Tax Exemptions: Your solar system may qualify for exemptions on both sales and property tax. Sales tax exemptions are effective at the time of purchase. Property tax exemptions allow you to ignore the value that solar panels add when you are calculating property taxes on your home.
- Tax Credits: Tax credits lower, dollar-for-dollar, the amount of income tax you owe the government. These are different from tax deductions.
- Rebates: A solar rebate is a partial refund after the purchase of your solar system. These may be offered by your local utility company, your state or your county. The rebates are usually applied before tax credits are calculated.
Federal Solar Incentives
When someone says "solar incentives," you probably think of federal incentives first. A federal incentive that most people are likely familiar with is the Federal Solar Investment Tax Credit (ITC). This is a tax credit for a specific percentage of the cost of your solar system.
The ITC is applied to the total cost of installing solar panels, including the panels themselves as well as labor, equipment and accessories. You can claim this credit for panels installed after January 1, 2006 on a primary or secondary residence that you own, as long as it is located in the United States. 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.
Your local Indiana solar panel installation expert can provide you with more information about the ITC and how it applies to your situation.
The Inflation Reduction Act, passed in August 2022, expanded and extended the ITC (as well as retitling it the Clean Energy Credit). The Clean Energy Credit is valid until 2035. Your solar installation project undertaken between 2022 and 2032 may qualify for a 30% tax credit; this amount will be decreased slightly each year until the current program ends. The expansion also makes claiming credit for energy storage systems easier than ever before, beginning in 2023.
More information about the new Inflation Reduction Act can be found here. Your local Indiana solar panel installation experts can answer any questions you have and explain how the new Clean Energy Credit will apply to you.
State & Local Solar Incentives
There are often state solar incentives available in addition to federal ones. Tax credits, rebates and more can be offered at a more local level. These solar incentives — which may be given by your county or municipality, or by the state of Pennsylvania — may be offered for only a limited time, or on an ongoing basis.
Next Steps for Installing Solar in Indiana
There are a number of different solar incentives: those provided by local utility companies, those provided by the federal government and those provided by the Pennsylvania government, to name a few. Solar energy utilization has grown enormously in the last 15 years, partially thanks to these incentives. Your local Indiana solar panel installer can help you learn more about which incentives you can apply for, and get you feeling good about making the change to renewable energy today.
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EcoWatch's Indiana, PA Solar Incentives FAQs
If I already have solar panels, can I still claim incentives?
Your best bet is to talk to someone from the company that installed your system — or speak to a local Indiana solar installer — to better understand which incentives you might qualify for. If your system was installed after January 1, 2022, you likely qualify for the recently increased 30% tax credit under the Inflation Reduction Act. Solar panels 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 Indiana annually?
Typically, Indiana homeowners who install solar panels save around $752.61 per year, or around $14,299.55 over 20 years after making the switch.
What are the top solar panel installation companies near me?
To find the right solar panel installer for you, check out our guide to Indiana's best solar panel companies.
How long until the federal solar tax credit ends?
The federal solar tax credit, formerly called the ITC and now titled the Clean Energy Credit, is set to end on January 1, 2035. The current 30% credit will end in 2032, replaced by a 26% credit in 2033 and a 22% credit in 2034.
Can I use multiple types of renewable energy to power my home?
Yes, you can utilize multiple types of renewable energy to power your home — for example, a combination of geothermal and solar. You can also use both renewable energy sources and a non-renewable backup source of energy. You should discuss your proposed plan with your local Indiana solar installation expert, to make sure you know what you'll need and what types of incentives you may or may not qualify for.
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.