2022 Utah Solar Tax Credits, Rebates & Other Incentives
Here’s a quick look at the solar incentives in Utah:
- Federal Solar Tax Credit (ITC)
- Utah Solar Tax Credit
- Net Metering
- Additional City & Utility Rebates
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Solar equipment has gone down in price in Utah quite significantly over the last decade, making the renewable energy source much more accessible. However, panels still cost around $2.68 per watt, and with the average home in Utah requiring an 8-kilowatt system to offset energy costs, homeowners still pay around $21,440 in most cases. This total can quickly turn homeowners off from the prospect of clean energy.
Luckily, there are several solar incentives available from the state and federal governments that can reduce the financial burden of going solar in Utah and make a conversion more appealing. In this article, we’ll be discussing all of the solar incentives available in Utah and how each can benefit you.
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 Utah
The table below provides a brief overview of the solar incentives afforded to Utah homeowners. It will include a short description of each incentive, and we’ll provide additional information for each further below.
|Utah Solar Incentive||Description|
|Federal Solar Tax Credit (ITC)||The federal solar tax credit is available to all Utah residents, as it is offered by the federal government. The ITC is for 26% of the total cost of your solar system, which, in Utah, averages out to around $5,574.1 This amount is credited to your federal income taxes for the tax year in which your system is installed. The ITC will be changing in the future, and we’ll include information about those changes below.|
|Utah Renewable Energy Systems Tax Credit (RESTC)||Utah offers a state solar tax credit in addition to the federal tax incentive. The state tax credit is for 25% of your total system cost up to a maximum of $800 in 2022.2 The maximum credit will decrease in 2023 and will no longer be available in 2024.|
|Net Metering||Net metering is a billing policy that isn’t mandated in Utah but is offered by some utility companies in the state. It allows you to offset any energy bills you might have after solar installation using energy you overproduce with your panels.3 We’ll include more information on net metering programs and the potential to save money with the policy below.|
|Rocky Mountain Power Wattsmart Battery Program||Rocky Mountain Power customers who opt to install a solar battery along with their panels will have access to the Wattsmart Battery Program. This incentive provides an upfront rebate for certain solar storage options, based on the size of the battery.4|
Utah Solar Tax Credit
Utah homeowners have access to the Utah Renewable Energy Systems Tax Credit, which is the state solar tax credit. The credit is for 25% of your total system cost up to a maximum of $800 for systems installed in 2022. With most Utah homeowners paying $21,440 for their solar systems, the majority of residents will be eligible for the entire $800 credit.
This tax incentive is set to decrease to a maximum of $400 in 2023, and it will no longer be available for solar PV systems in 2024. As such, you will benefit most from this solar incentive if you install your system sooner rather than later, despite the credit being relatively small.
As we’ll discuss later, the federal solar tax credit is also set to drop in 2023 and be eliminated in 2024, so there is even more motivation to install solar now rather than wait.
Other Utah Solar Incentives
According to the Solar Energy Industries Association (SEIA), Utah is ranked 12th in the country for solar adoption and incentives available.5 As such, it’s not too surprising that there are additional incentives to entice homeowners to convert to clean energy. All of the additional statewide and local incentives will be explained in greater detail below.
- Rocky Mountain Power Wattsmart Battery Program: For solar customers looking to maximize their energy savings, maintain electricity through power outages and reduce or eliminate their electric bills, installing a solar battery is an essential part of converting to solar power. Thankfully, customers of Rocky Mountain Power can take advantage of the electric company’s Wattsmart Battery Program, which is an upfront rebate for solar storage solutions. As RMP is the largest electric utility in Utah, most homeowners will be eligible. The rebate is for $400 per kilowatt installed, with a cap of 30 kilowatts. Only Sonnen batteries qualify for the rebate at this time. With a typical output of 5 kW, the average rebate on these batteries would be around $2,000 each.
Utah Solar Sales Tax Exemption
Some states waive sales tax on all solar equipment to keep costs low and reduce the financial burden of installing solar panels. Unfortunately, Utah doesn’t provide a sales tax exemption on solar equipment for residential customers, but it doesn’t charge sales tax for commercial and industrial solar entities. This exemption doesn’t directly benefit homeowners, but it does lead to an overall lower solar cost throughout the state.
Some states also provide a property tax exemption in an effort not to disincentivize solar conversions. Utah does not have a property tax exemption, so you can expect your property taxes to increase as a result of going solar. Solar panels increase the value of your home, which bumps up the assessed value on which your taxes are based. Most homeowners still find that going solar ultimately saves them money, but this is certainly something to consider before committing to solar, especially in higher-tax areas like Salt Lake City.
Net Metering in Utah
Net metering is a billing policy afforded by utility companies across the country, and it’s one of the best benefits when it comes to saving money on electric bills. Basically, interconnection allows energy to flow to your home from the grid — to supply additional energy at night or on cloudy days when your panels don’t produce enough to cover consumption — and to the grid from your home — when your panels produce more energy than your home needs. Net metering policies dictate how you’re compensated for excess energy generation, and it can often be used to offset electricity costs for what you pull from the grid.
Utah does not mandate net metering as some states do. However, Rocky Mountain Power, which is the most prominent electricity provider in the state, does have a net billing program, which is similar. The amount the utility pays for incoming energy depends on the month:
- June through September: $0.05817 per kilowatt-hour
- October through May: $0.05487 per kilowatt-hour
Since the average cost per kWh you pull from the grid is around $0.08, this net billing program isn’t quite as beneficial as if you received full retail rates for your excess energy. However, this is still a great option that allows many homeowners to eliminate their electric bills.
There might also be some local incentives offered by the municipality or local utility companies, depending on the city in which you live. Some electricity providers offer rebates on energy-efficiency upgrades, including LED lighting, heat pumps, solar water heaters, insulation, new windows and more.
While these don’t specifically pertain to photovoltaic panels or batteries, these upgrades can make your home more energy-efficient, increase the value of your solar array and help reduce your carbon footprint. Some solar panel installation companies will be able to tackle energy efficiency upgrades along with the conversion process. You can check the DSIRE database or with your local utility company for more information on available rebate programs.6
Federal Solar Tax Credit
Finally, all Utah taxpayers converting to solar will have access to the federal solar investment tax credit, commonly referred to as the ITC. The ITC is a credit applied to your federal income taxes for the year you have your solar energy system installed. The credit is for a massive 26% of your solar system installation cost, and, unlike the Utah state solar tax credit, there is no cap. In Utah, where the average home solar project totals $21,440, the typical credit is $5,574.
Much like the state tax credit, the ITC is scheduled to drop in 2023. For systems installed in 2023, the credit will only be for 22% of the system total, which will average around $4,717. By 2024, the federal tax credit will no longer be available for residential customers unless Congress renews the bill. There will, however, still be a federal tax credit available for commercial at 10% of the total system cost.
Given that the state and federal tax credits will drop in 2023 and no longer be available in 2024, homeowners in Utah are urged to install solar as soon as possible to maximize the credits they receive.
FAQ: Utah Solar Incentives
Utah homeowners ask us questions all the time about solar incentives available in the state. Below are some of the questions we see most frequently, along with our responses.
Yes! Utah has a state solar tax credit for 25% of the total system cost up to a maximum of $800 in 2022. Given the average solar panel system cost of $21,440 in the state, most solar customers will receive the full credit. The credit maximum is set to drop to just $400 in 2023 and won’t be available at all in 2024.
Utah residents also have access to the federal tax credit, which is for 26% of the total system cost with no maximum. In Utah, that’s an average credit of $5,574. The ITC is set to drop in 2023 as well to 22% of the system total. Like the state tax credit, the ITC will be eliminated in 2024.
Yes, there are several solar incentives available in Utah in 2022. Most importantly, residents going solar can take advantage of the state and federal tax incentives, which are for 25% of the system cost (up to $800) and 26% of the system total, respectively. On average, these credits together total $6,374.
Utah residents can also take advantage of Rocky Mountain Power’s net billing program to save on their electric bills. RMP also offers a rebate for solar batteries at $400 per kilowatt (for Sonnen batteries only).
Currently, the only Utah solar rebate is the Rocky Mountain Power Wattsmart Battery Program. Of course, this rebate is only offered to customers of RMP, but it provides a cash incentive of $400 per kilowatt installed. Sonnen batteries — currently the only ones that qualify — average around 5 kilowatts, which yields a rebate of approximately $2,000 each.
There might be additional rebates available for energy-efficiency upgrades, but you’ll have to check with your local utility provider for more information.
Unfortunately, yes, solar panels will increase your property taxes in Utah. Since Utah doesn’t offer a property tax exemption for solar equipment, installing solar panels will boost your home value and your assessed value. Since your taxes are determined based on your assessed value, they will increase after going solar.