2023 Solar Incentives Guide for Sioux Falls, SD - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Sioux Falls.
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 Sioux Falls?
Renewable Energy System Exemption
Southeastern Electric - Residential Energy Efficiency Rebate Program
Air to Air Heat Pump: $600
Refrigerator or Freezer: $100
Dishwasher: $50
Clothes Washer or Dryer: $50
Water Heater: rebates on Marathon water heaters, $500-$700
Southeastern Electric Cooperative - Electric Equipment Loan Program
Weatherization/Insulation: $3,000
Federal Residential Renewable Energy Tax Credit
Source: https://www.dsireusa.org/
Solar incentives are meant to help mitigate the cost of installing solar panels on your home. This category of financial incentives is in place to encourage more homeowners to switch their home over to renewable energy. Solar incentives can include cash back, upfront discounts or monthly credits towards your utility bill. Some incentives are given by the federal government, some by the South Dakota government and some by your utility company, county or municipality. You might qualify for any of the following types of solar incentives:
- Tax Credits: Tax credits are dollar-for-dollar reductions that lower the amount of income tax you owe the federal government. (This is different from a tax deduction.)
- Net Metering: Make sure you speak with your Sioux Falls utility company about signing a net metering contract. This allows you to get a credit towards your utility bill every month for the value of excess energy generated by your solar panels. You may receive either a dollar-for-dollar credit or a percentage of the value.
- Rebates: Rebates, or cash back after a purchase, are typically given before any solar tax credits are calculated. Rebates may be offered by your local utility company, by your state or by your county.
- Tax Exemptions: Your solar panels might qualify for both sales tax and property tax exemptions. Sales tax exemptions come into effect at the time of purchase. Property tax exemptions let you exclude the added value of the solar panels when you are calculating property taxes on your home.
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Federal Solar Incentives
Federal solar incentives are probably the first thing that you think of when thinking about solar incentives. You may have heard of the Federal Solar Investment Tax Credit, or ITC. This incentive is a tax credit that reduces your taxes by a predetermined percentage of the money you spend installing solar panels.
The ITC is applied to the total cost of solar panel installation, including the panels themselves as well as labor, equipment and accessories. This credit can be claimed for panels installed after January 1, 2006 on a primary or secondary residence located in the United States that you own. From its original value of 30% of the total cost, the credit has fluctuated slightly between 26-30%, and you may qualify for varying percentages depending on when your project was completed. There is no maximum claim amount.
To find out exactly how much the ITC could save you, talk to your local Sioux Falls solar panel installer.
In August 2022, the Inflation Reduction Act laid out new provisions for the ITC, now called 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 this, the percentage will decrease slightly each year until the end of the program in 2035. Starting in 2023, the expansion will also make credits for energy storage systems even easier to claim.
Click here to learn more about the new Inflation Reduction Act. The easiest way to understand how the new Clean Energy Credit applies to you is to speak with your local Sioux Falls solar panel installation expert directly.
State & Local Solar Incentives
Some solar incentives may be provided by state and local governments. Similar to federal incentives, these may include rebates, tax credits and more. Incentives may be handled by your county or municipality, or by the state of South Dakota. Some incentives may be available for only a limited time, while others are ongoing.
Next Steps for Installing Solar in Sioux Falls
Solar incentives can come from the federal government, the South Dakota government or your local utility company. The variety of available solar incentives has facilitated the nationwide growth of solar energy use in the last 15 years. Talking to your local Sioux Falls solar panel installer is an excellent first step towards getting all the incentives you qualify for when you switch to solar energy.
EcoWatch's Sioux Falls, SD Solar Incentives FAQs
How do I know if I qualify for different solar incentives?
Generally, solar incentives apply to:
- a new solar panel system
- installed on a property that you own
- within the U.S.
- within the date range specified by a particular incentive.
Specific incentives, including ones handled by the South Dakota government or by your county/municipality, sometimes have additional qualifications. Speak with your local Sioux Falls solar installer to learn more about what incentives your project may qualify for.
My home already has solar panels. Does my system qualify for any incentives?
You should plan to talk to a representative from the company that installed your solar panels — or speak to a local Sioux Falls solar installer — to better understand which incentives you might qualify for. If your solar panels were installed after January 1, 2022, you likely qualify for the recently 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 can I save annually on my electric bill if I install solar panels on my Sioux Falls home?
Typically, Sioux Falls homeowners who install solar panels save approximately $881.42 per year, or approximately $16,746.92 over 20 years after making the switch.
What are some environmental benefits of installing solar panels on my home?
Solar energy is renewable — by changing where you get your energy, you help lessen the strain on our planet's resources. You can also reduce the CO2 emissions from your home by 450 pounds yearly, or around 9,000 pounds in 20 years.
When does the federal solar tax credit end?
The Clean Energy Credit (previously referred to as the federal solar tax credit, or the ITC), currently ends on January 1, 2035. Currently set at 30%, the credit will drop to 26% in 2033 and to 22% in 2034.
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.