2023 Solar Incentives Guide for Aberdeen, SD - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Aberdeen.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2023 and beyond)
- Ways to optimize your solar investment
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What Solar Tax Credits, Incentives, and Rebates are Available in Aberdeen?
Renewable Energy System Exemption
Federal Residential Renewable Energy Tax Credit
The phrase "solar incentives" refers to a wide range of financial incentives designed to make installing and using solar panels more affordable. This is done to encourage people to switch to renewable energy. Different types of incentives, like discounts, cash back or monthly utility bill credits, may be available to you. Certain incentives may be offered by the state of South Dakota, by your utility company or by county or municipality, while other incentives are federal. Categories of solar incentives include:
- Net Metering: Net metering becomes relevant after your solar system is up and running. If you've signed a net metering agreement with your Aberdeen utility company, the company will subtract the value of the excess energy produced by your solar system from your utility bill each month. In some areas, this credit is dollar-for-dollar, while in other places you may receive a refund equivalent to a percentage of the value.
- Tax Exemptions: Tax exemptions can come in two forms. First, there is sales tax exemption, which is applied when you purchase solar panels. The second is property tax exemption. This allows you to ignore the added value of your solar system when calculating property tax for your house.
- Rebates: Solar rebates may be offered by your local utility company, or by your state or county. These rebates are essentially cash back that is applied after you pay for a solar system and before tax credits are calculated.
- Tax Credits: Tax credits are dollar-for-dollar reductions (not deductions) in how much income tax you owe the federal government.
Federal Solar Incentives
When someone says "solar incentives," you likely think of federal incentives first. The solar incentive that you may be most familiar with is the Federal Solar Investment Tax Credit (ITC), which gives you a credit on your taxes equal to a predetermined percentage of your solar system's cost.
The ITC applies to the value of solar panels installed on your primary or secondary residence in the United States. The solar panels have to have been installed after January 1, 2006 on a property owned by you for you to claim the credit. Initially, the ITC applied to 30% of all system costs (panels, labor, equipment and accessories), although this amount has fluctuated over time between 26-30%. The amount you qualify for will depend on when your solar system was installed. There is no cap on the amount you can claim.
Your local Aberdeen solar panel installation expert can offer more information about the ITC and how it applies to your situation.
The ITC was both renewed and expanded by the passage of the Inflation Reduction Act in August 2022. It's also now called the Clean Energy Credit. The new Clean Energy Credit extends until 2035. American homeowners can now receive a 30% credit for solar systems that began installation on or after January 1, 2022 and will be done by December 31, 2032. This new credit will then decrease annually until the date of expiration. Starting in 2023, it will also be easier to obtain credits for energy storage systems with the new act.
Click here to learn more about the new Inflation Reduction Act. Your local Aberdeen solar panel installers are the best people to answer your questions about the new Clean Energy Credit and how it applies to you.
State & Local Solar Incentives
Some solar incentives may be provided at the state and local level. Like with federal incentives, these can include rebates, tax credits and more. Some incentives are ongoing, while others are offered for only a limited time. Your local solar incentives may come from the South Dakota government, or from your specific county or municipality.
Next Steps for Installing Solar in Aberdeen
The expanding number of available solar incentives has contributed greatly to the increase in the adoption of solar energy nationwide over the last 15 years. You can get solar incentives from the federal government, the South Dakota government or from your local utility company. If you're prepared to make the switch to solar energy, getting in touch with your local Aberdeen solar panel installation expert is a great first step.
EcoWatch's Aberdeen, SD Solar Incentives FAQs
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.