2022 South Dakota Solar Tax Credits, Rebates & Other Incentives

Here’s a quick look at the solar incentives in South Dakota:

  • Federal Solar Tax Credit (ITC)
  • Property Tax Exemption
  • Local Energy-efficient Rebates
  • Additional City & Utility Rebates
Ecowatch Author Karsten Neumeister

By Karsten Neumeister, Solar Expert

Updated 9/19/2022

Why You Can Trust EcoWatch

Our solar experts have sifted through hundreds of local governments’ and utility companies’ websites to find accurate information about current solar incentives in each state. We’ve also unbiasedly ranked and reviewed hundreds of solar installers to empower you to make the right choice for your home. 

How Much Can You Save With Solar Incentives in South Dakota?

In this article, we’ll discuss the solar incentives and rebates available to South Dakota homeowners. When you’re ready to speak with a qualified professional, follow the links below. Each of these companies can help you identify and apply for incentives available in South Dakota.

Jump to Section:

  1. Solar Rebates, Tax Credits and Incentive Programs in South Dakota
  2. Net Metering in South Dakota
  3. Federal Solar Tax Credit
  4. FAQ: South Dakota Solar Incentives


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South Dakota is not one of the top states for solar, but data from the Solar Energy Industries Association shows that more and more South Dakotans are installing residential solar panels.1 

A reason solar might not be taking off as quickly in South Dakota compared to other states is because the state doesn’t offer much when it comes to solar incentives, aside from a property tax exemption. However, the cost of solar panels in South Dakota is relatively low and continually dropping.2 Those facts, coupled with rising standard electricity rates, could incentivize more South Dakotans to switch to renewable energy sources.

You may be installing a solar photovoltaic (PV) system in hopes of lowering your electricity bills, or perhaps you’re seeking energy independence from utility companies. Whatever your reason for going solar, we want to make sure you’re taking advantage of all the solar incentives and energy savings available to South Dakota residents.

Disclaimer: This article is for informational purposes only. It should not be relied on for and is not intended to provide accounting, legal or tax advice.

Current Solar Rebates, Tax Credits and Incentive Programs in South Dakota

South Dakota Solar Incentive Description
Federal Solar Tax Credit (ITC) The federal solar investment tax credit, or ITC, allows homeowners to claim 26% of their system costs as a credit against the federal taxes they owe. The credit is set to reduce to 22% in 2023 and will be eliminated for residential systems in 2024 unless it is extended by Congress.3
Renewable Energy Systems Property Tax Exemption South Dakota lawmakers implemented a property tax exemption to guarantee that adding a renewable energy system (up to $50,000) will not raise your property taxes.4

South Dakota Solar Incentives

Unfortunately, South Dakota has not done much to incentivize solar energy. With at least 83% of the states’ electricity generation coming from renewable energy sources (primarily hydro and wind energy), South Dakota lawmakers don’t have much of a driving force to promote residents to switch to clean energy alternatives.5

South Dakota Solar Tax Exemptions

close up shot of black solar panels

Home improvements, like adding solar power systems, tend to raise the value of your home, However, South Dakota lawmakers implemented a property tax exemption to guarantee that any bump in value (up to $50,000) will not raise your property taxes. For many South Dakota residents, that’s a long-term savings of thousands — or even tens of thousands — of dollars.

While South Dakota does have a sales tax exemption for solar equipment, it only applies to large-scale solar PV systems for commercial, industrial or agricultural purposes.6

Net Metering in South Dakota

Net metering is a program that allows solar users to be compensated via utility credits for any extra energy production they produce and send back to the grid.

Unfortunately, South Dakota is one of the few remaining states that does not mandate net metering. Individual utility companies must provide the opportunity for solar interconnection, but there are no interconnection standards set by the state. You’ll have to check with your electricity provider to confirm if net metering is available.

Local Incentives

South Dakota comes up short when it comes to local incentives as well. There aren’t any statewide rebates or tax incentives to ease the financial burden of converting to solar.

Some cities and utility companies offer energy-efficiency rebates for certain upgrades that your solar installer might offer, like LED lighting, geothermal heat pumps and more. Here are a few of the utilities we found that offer incentives:

  • Beresford Municipal Utilities
  • Big Stone City Municipal Utilities
  • Black Hills Energy
  • Brookings Municipal Utilities
  • Burke Municipal Utilities
  • City of Faith
  • City of Pickstown
  • Flandreau Municipal Utilities
  • Fort Pierre Municipal Utilities
  • Montana-Dakota Utilities
  • Otter Tail Power Company
  • Pierre Municipal Utilities
  • Southeastern Electric Cooperative
  • Vermillion Light & Power
  • Watertown Municipal Utilities Dept.
  • Winner Municipal Utilities 

You can check the DSIRE database for available incentives from your utility provider.

See also: Calculate the costs and savings you can get from installing solar panels

Federal Solar Tax Credit

solar panels on a tile rooftop

Regardless of which state you live in, all homeowners in the U.S. are eligible for the federal solar investment tax credit for installing solar panels as well as solar batteries and other energy storage systems. You can claim the ITC on your federal tax returns for a deduction of 26% of the total cost of the system from the taxes you owe.

With the average cost of a solar system in South Dakota at about $25,095, the federal tax credit can lead to a savings of about $6,525.

The ITC was first developed through the Energy Policy Act of 2005, under the Bush administration. Initially, it was set to last for just two years, but due to its success has continually been extended for solar panel installations. It’s important to note that, unless Congress extends the credit, it is set to phase out entirely for residential PV systems by the end of 2023.

To be eligible for the solar tax credit, homeowners must meet the following criteria:

  • You have installed a residential solar energy system at any point from 2006 through the end of 2022.
  • You have placed the solar energy system in a residential location. It does not have to be your primary residence.
  • You own the solar energy system, either having paid for it in cash or by taking out a solar loan. Homeowners who lease solar panels are not eligible to claim the ITC.

Read More About Going Solar

FAQ: South Dakota Solar Incentives

EcoWatch routinely gets questions from South Dakota homeowners about going solar. Here are a few of the most common questions we see, along with our answers. If you have specific questions that aren’t answered here, reach out to our team of solar experts at solar@ecowatch.com.

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Karsten Neumeister

Solar Expert

Karsten is a researcher, editor, writer and energy specialist focused on environmental, social and cultural development. Before joining EcoWatch, Karsten worked in the solar energy sector, studying energy policy, climate tech and environmental education. A lover of music and the outdoors, Karsten might be found rock climbing, canoeing or writing songs when away from the workplace.