Dallas Solar Incentives, Tax Credits And Other Rebates [2022 Updated]
In this EcoWatch guide on Dallas solar tax credit and incentives, you’ll learn about:
- Specific solar credits for Dallas residents
- The federal solar Investment Tax Credit (ITC) for Dallas residents
- Net metering policies in Dallas
- Additional city and federal rebates available to locals
This guide has helped thousands of Dallas homeowners save time and money when going solar by providing them with all of the latest incentives available in the area. Let’s get started!
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How Much Can You Save With Solar Incentives in Dallas?
Dallas homeowners pay an average of $30,935 for their solar panel systems, which is well above the national average. Thankfully, there are quite a few solar incentives available in Dallas that help bring this price down significantly.
The average solar customer in Dallas, TX can save nearly $10,000 by taking advantage of the solar incentives available in the city. This solar savings estimate takes a few things into consideration:
- The federal tax credit (ITC) is applied for and can be taken. This is based on the typical system size of 11.5 kilowatts and a typical cost per watt of $2.69 in Dallas for a total system cost of $30,935 in Dallas. With the 30% ITC, this would be a credit of $9,280 in 20221
- A property tax saving of around $597. This is an average saving based on the typical system cost of $30,935 and the average property tax rate of 1.93% of assessed value in Dallas2
There are several other statewide and citywide solar incentives available in Dallas that can save you additional money, although calculating the exact savings is challenging. We’ll discuss these incentives and more in the sections below so you can calculate potential savings for yourself.
What Incentives or Solar Tax Programs Are Offered in Dallas for Homeowners?
In the table below, we’ll include brief information on all of the solar incentives available to Dallas residents. Below the table, we’ll dive a bit deeper into each incentive and how it can save you money or make your solar panel system more valuable.
|Dallas Solar Rebate/Incentives||Description|
|Local Net Energy Metering (NEM)||Net metering is an outstanding way to eliminate your electric bills. It provides credits for excess energy generated by your panels, which you can use to pay down future utility bills. NEM is only available from specific utility providers in Dallas. We’ll include more information below.|
|Renewable Energy Systems Property Tax Exemption||This is a property tax exemption that prevents your property taxes from increasing after you go solar. This ends up saving Dallas residents thousands of dollars over the lifespans of their systems.|
|Texas Solar Rights Laws||Texas has enacted solar rights laws to ensure that access to clean energy is available for all property owners, including those in strict homeowners’ associations (HOAs) in Dallas and throughout the state.|
|Federal Solar Investment Tax Credit (ITC)||The ITC is the most significant solar incentive available to Dallas residents. This offers a credit to your income taxes for a massive 30% of your entire system value. This averages out to $9,280 in Dallas.|
Dallas Net Energy Metering
Net energy metering (NEM) lets you accumulate credits for any energy you produce with your panels and don’t use for your home. These credits get “stored” for future use, so you can use them to offset bills if your production ever dips below energy consumption — like at night or on cloudy days.
Net metering is not mandated by the Texas Public Utilities Commission (PUC). However, the benefit is offered on a private level by several retail electric providers in Texas. The utility providers with a service area in Dallas that offer net metering include Green Mountain Energy and TXU Energy.
Green Mountain Energy’s energy buyback program is based on the PUC’s average electricity cost for the billing period.3
TXU Energy’s NEM program changes based on your location and availability. You can check the company’s website for buyback rates and eligibility.
Check out this video to learn more about net metering in Texas. It can be a bit complicated.
Renewable Energy Systems Property Tax Exemption
The Renewable Energy Systems Property Tax Exemption is available to all Dallas residents, as well as property owners located throughout Texas, including those in Austin, El Paso, San Antonio, Houston and many other cities.
Under normal circumstances, home improvements that boost your home value will also raise your assessed value and, in return, your property taxes. Many potential solar customers are deterred by the prospect of increased property taxes, but this exemption prevents tax hikes based on the value of your solar system after solar conversion.4
Since the average property tax rate in Dallas is around 1.93% of the assessed value, and the typical solar energy system in the area is worth $30,935, you will avoid a property tax increase of around $597 per year.
Our savings estimate above only includes a single year’s worth of tax savings, as calculating beyond the first year is challenging. Your tax assessor will assess the value added by your solar PV system according to depreciation, so your annual savings after the first year will change.
Since Texas property taxes are significantly higher than they are in most other states, this exemption is worth more in Dallas than in most cities throughout the country. In actuality, this exemption is likely to save you a few thousand dollars, although the specifics vary quite a lot from system to system.
Texas Solar Rights Laws
The State of Texas has enacted solar rights laws to ensure that all property owners have equal access to solar power and available sunlight on their properties. These rights are afforded to all residents in Dallas and throughout Lone Star State.
The laws specifically prevent Texas homeowners associations and municipalities from restricting solar panel installation and the use of solar equipment. However, there are some solar panel uses that can be denied. These include:
- Ground-mounted solar panels that are visible from the street
- Rooftop panels that go above the ridgeline or are sloped differently than the roof
- Any panels with obtrusive coloration (specifically, anything other than black, silver or copper)
- Panels installed on common property5
Other than these restrictions, the solar rights laws guarantee that you can install and enjoy solar in Dallas, provided you get any required municipal permits.
Credit: Mrganso / Pixabay
Federal Solar Investment Tax Credit (ITC)
Finally, all residential property owners in Dallas can take advantage of the federal tax credit, which is the most significant incentive available in the Dallas-Fort Worth area.
The ITC guarantees a credit to your personal income taxes for the year your system is installed. The credit amount is equal to 30% of the entire solar project cost. In Dallas, the ITC averages out to $9,280, given the typical system cost of $30,935 in the area.
It’s important to note that this credit doesn’t provide money back for going solar, so you’re not guaranteed to enjoy the entire amount. If your income taxes owed are less than $9,280 then you’ll only get a partial credit. However, the federal government does allow you to roll over the credit for up to five years. After that, you’ll lose any remaining credit balance.
It’s also important to note that you’ll get the credit applied to your taxes, so you should count on not seeing any monetary benefit until you file your taxes for the year your system is commissioned.
How Do Homeowners Redeem Solar Incentives In Dallas?
Knowing about the incentives available in Dallas is one thing, but in some cases, you need to apply for the incentives to take advantage of them. We’ll include some instructions below for making sure you benefit from all of the available incentives.
How to Apply for Net Metering in Dallas
In states where net metering is mandated, there usually is no application process. However, since net metering isn’t a requirement in Dallas, you’ll have to take some steps to ensure you’re getting this incentive. We’ll detail these below:
- Ensure you’re a customer of Green Mountain Energy, TXU Energy or another local energy provider that offers net metering
- Sign up for the company’s electric service that includes NEM — this sometimes involves agreeing to a clean energy plan
- You’ll automatically see credits applied to your energy bills once the net metering process begins
How to Get the Solar Property Tax Exemption in Dallas
The property tax exemption is straightforward to apply for in Dallas. Either you or your accountant will need to file Form 50-123 with your local property tax assessor’s office once your system is up and running. This form is the Exemption Application for Solar or Wind-Powered Energy Devices.
Once the form is processed and approved, your assessor will adjust the future assessed value for your home to exclude the value of your solar energy system. You only need to file this form once — not every year you want the exemption to apply.
How to Take Advantage of Dallas’s Solar Rights Laws
The solar rights laws in Dallas don’t require any specific action on your part. You simply have access to solar, and no HOA or governing municipality can prevent you from installing solar.
As mentioned above, there are some exceptions to this law, so make sure your proposed system complies with the requirements.
Additionally, the City of Dallas still requires that you get written permission from your HOA prior to installing panels; the law just prevents your HOA from denying the application for any reason other than the stated exceptions described above.
How to Apply for the ITC in Dallas
You’ll absolutely want to make sure you apply for the ITC in Dallas, as this is the most substantial financial benefit of going solar.
When you or your accountant file your taxes, make sure you also submit federal tax Form 5695 for Residential Energy Credits. You’ll need some basic system information included in the application, including the cost and the installer’s contact information.
What Incentives or Solar Tax Programs Are Offered in Dallas for Businesses?
All of the solar incentives mentioned above for residential property owners in Dallas are also available for commercial solar customers in the area. The only difference in the above incentives is that the ITC amount for commercial solar systems is 30% for 2022, which is a more substantial credit.
There are two additional incentives for Dallas business owners. We’ll include some brief information on these in the table below, followed by more in-depth information.
|Dallas Solar Rebate/Incentives||Description|
|LoanSTAR Revolving Loan Program||The LoanSTAR loan program is a solar financing program that allows commercial solar customers to repay their solar loans using the energy savings their panels provide.6|
|Solar & Wind Energy Business Franchise Tax Exemption||This is a franchise tax exemption for companies in Texas that manufacture, sell or install solar equipment.7|
LoanSTAR Revolving Loan Program
The LoanSTAR (Saving Taxes and Resources) program is designed to make going solar more affordable for public entities and some public businesses. These include city and county buildings in Dallas and Dallas County, private schools, government agency buildings, some hospitals, public schools, universities and colleges.8
The program provides loans for solar equipment and then allows the entity to repay the loan using the energy savings it enjoys from converting to solar.
Combined with the ITC for businesses and net metering, this is an outstanding way to affordably convert to solar for certain companies in Dallas.
Solar & Wind Energy Business Franchise Tax Exemption
This tax exemption lets companies in the solar industry avoid the franchise tax, otherwise known as the corporate tax. There is no limit to this exemption.
Since the franchise tax can be quite high in TX, this incentive can save thousands or even tens of thousands of dollars for companies that manufacture, sell or install photovoltaic (PV) equipment.
How Do Business Owners Redeem Incentives In Dallas?
In the sections below, we’ll include some brief information on how businesses in Dallas can sign up for the Dallas business solar incentives.
How to Apply to the LoanSTAR Revolving Loan Program
Starting the application for the LoanSTAR program is quite straightforward. You can follow the steps below:
- Begin by determining your eligibility on the LoanSTAR application information packet
- Have a representative from your company fill out the application
- Mail three hard copies to the Texas Comptroller’s Office
- File additional information, including utility usage reports for your business, solar installation plans produced by an approved installer and more
The LoanSTAR program has limited funds, so you might have to reapply to get approved.
How Businesses Can Take Advantage of the Solar & Wind Energy Business Franchise Tax Exemption
The process for taking advantage of the franchise tax exemption is much simpler and has a less-involved approval process.
When it’s time to file your corporate taxes, have your accountant file form AP-2049, which is the Application for Exemption – Federal and All Others. You’ll need some system information like the size, cost and schematics, as well as contact information for your installer.
FAQ: Dallas Solar Incentives
In the sections below, we’ll answer some of the questions we get asked most often about solar perks and benefits in Dallas, TX.
Dallas doesn’t have a city-specific tax credit for solar systems, nor does the State of Texas. However, all Dallas residents and business owners can take the federal solar tax credit (ITC).
For residential customers, the ITC is 30% of your total system cost credited to your personal income taxes owed. These amounts will not phase out until 2032.
Yes, there are quite a few solar incentives available in Dallas for 2022. These include:
- Net metering — offered by some electric companies, but not all
- Property tax exemption — for all solar system owners
- Texas solar rights laws — these apply to residential and commercial customers
- Federal tax credit — 30% of the system cost for residential property owners, applied to income taxes for the year of installation
- LoanSTAR Program — for businesses only
- Franchise tax exemption — for businesses in the solar industry only
Unfortunately, there are no solar rebate programs available in Dallas. There are also none that are scheduled to become available for 2022 or 2023, although this is subject to change.
Solar panels do bump up your property value, which means they normally would increase your property taxes as well. However, Texas has a property tax incentive for solar equipment, so property taxes for residential and commercial properties will not go up based on the value of your solar system as long as you file the correct paperwork with the tax office in Dallas County.