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Which states have solar incentives?

what solar incentives are there

So you want to go solar because you heard it could save you money on your electricity bills? The great news is that going solar is also good for the environment. That makes the federal government pretty interested in helping homeowners go green with solar energy. Some states even offer their own benefits for going solar, from state tax incentives to net metering, to property tax exemptions and more.

If you’re curious about solar incentives and you’re a homeowner in the United States, you’ve come to the right place. We’re about to go over all the incredible incentives (and benefits) available for going solar, and which states offer them. Here’s what we’ll cover:

All About the Federal Solar Tax Credit

Probably the best incentive for going solar is one that is offered nationwide. It’s called the Federal Solar Investment Tax Credit (ITC) and it was renewed and improved in 2022. This solar incentive is a credit on your federal income taxes after you go solar. If it’s applicable to you, you’ll receive 30% credit of your entire system including a solar battery that can be applied to your federal taxes. Keep in mind this tax credit can only be applied if you have money due on your federal income taxes. However you can also carryover any unused credit to the next year. In other words, this is a nonrefundable tax credit, meaning you will not get a tax refund for the amount of the solar tax credit that exceeds your tax liability. Read more about the Federal Solar Tax Credit.*

The other requirements for the Federal Solar Tax Credit are:

  • You must own the system outright (not lease it)
  • The system must be located in the United States
  • The system must be located at your primary or secondary U.S. residence or for an off-site community solar project

*ADT Solar does not provide tax advice. Be sure to speak with your tax consultant if you have questions about your personal situation.

State Solar Incentives

In addition to the federal tax incentive, many states and Puerto Rico offer incentives for going solar as well. Each state has different incentives and requirements, so it’s best to search for incentives in your region, or speak to a qualified Solar Energy Specialist to fully understand every opportunity available to you.

Which states have solar incentives?

Here is a list of states that have solar incentives. Even if your state isn’t listed here, you could still be eligible for the 30% Federal Solar Tax Credit. To fully understand what’s available to you, it’s a good idea to speak with a qualified Solar Energy Specialist.

Arizona Nebraska
Arkansas Nevada
California New Hampshire
Colorado New Jersey
Connecticut New Mexico
Delaware New York
Florida North Carolina
Georgia Oklahoma
Hawaii Rhode Island
Ohio South Carolina
Illinois Texas
Iowa Tennessee
Kansas Vermont
Louisiana Virginia
Massachusetts Washington D.C.
Maryland West Virginia
Mississippi Wisconsin
Missouri

Now that we covered which states have solar incentives, let’s find out what all those incentives are. Here’s some information about each type of solar incentive and what it could mean for you, depending on your eligibility.

What type of state solar incentives are available?

State Tax Credits

State credits are similar to the Federal Solar Tax Credit, but the credit is instead applied to your state taxes. Most often homeowners would be able to apply this to their taxes the year after their solar panel system was installed. State tax credit amounts vary widely state to state.

Sales Tax Exemption

Some states offer an exemption on the purchase of your solar panel system equipment. This means you’d pay zero sales tax on your system and depending on the size of your system could add up to a pretty substantial discount. Some of the states that offer this are Texas, Florida, California and New Mexico.

Property Tax Exemption

state incentives for solarThis exemption means your property taxes will not increase when you have a solar panel system installed on your home. As this is considered a home upgrade, your property taxes could increase like any other home construction project. However, not in the states with this exemption.

Some of the states that offer this are Texas, Florida and Arizona.

Net Metering

Net metering allows you to receive credits on your utility bills for sending your unused solar energy back to the grid. It’s a pretty important incentive for going solar. We’ll get into net metering in more depth further down this article.

State Government Rebates

State government rebates are when you can receive a rebate upfront during the year your solar panel system was installed. Most of these state rebates are available only for limited amounts and once the funds are used for a year, the state will stop offering them. A good idea is to get ahead of the crowd by researching rebates for your state and applying well before the deadline. Some allow you to only apply after your system has been installed, so it’s smart to plan this out ahead of time.

Solar Renewable Energy Credits (SREC)

Solar Renewable Energy Credits, or more commonly known as SRECS, are offered by some state governments. This incentive is a certificate of the benefits your solar system provides to the environment. It works like this:

One SREC is generated for every megawatt-hour (MWh), or 1,000 kilowatt hours (kWh) of solar electricity a solar panel system generates.

In the states where SRECS are in effect, utility companies will purchase SRECs under the state’s Renewable Energy Portfolio (RPS) standards, which require utilities to generate a portion of their energy from renewable sources. This standard is determined by the state governments and varies depending on your state.

The states that currently offer SRECs are: New Jersey, Massachusetts, Pennsylvania, Maryland, Washington D.C, Delaware, and Ohio. New Jersey and Massachusetts are not currently accepting new applications for this program.

Home Value Increase with Solar Panels

how many solar panels to run a houseNo matter where you live, when you add solar panels to your home, you’re increasing the value of it. In fact, studies have shown that homes with solar panels sell for more and faster.

According to a comprehensive report done by the US Department of Energy and National Renewable Energy Laboratory (NREL), they concluded the impact of solar panels on residential property values was positive. On average, solar panels add $20 of value for every $1 you save on your electric bill. So if you saved $200 a month on your electric bill with solar panels, you’d have an additional $4,000 of value added to your home.

This was backed up again in 2015 when the Department of Energy and Berkeley Laboratory sought to determine if solar-enabled homes performed better in the real estate market. After analyzing 22,000 homes, they found that homes with solar panels fetched a higher asking price than those without. About $4/watt, which comes out to be around $15,000 for residential, depending on your home and solar system.

In addition, solar panels can help your property spend less time on the market. In another study done by NREL, they found that solar properties earned about 17% more at closing, in addition to selling 20% faster.

What are the top states for solar energy incentives?

According to an article by EcoWatch, they rated their favorite top ten states for solar incentives. Here’s the list they came up with.

  1. New York
  2. Rhode Island
  3. Iowa
  4. Connecticut
  5. Maryland
  6. New Mexico
  7. Colorado
  8. Massachusetts
  9. New Hampshire
  10. New Jersey

What states have net metering?

Net metering is an arrangement between you and your electricity company. It allows you to receive credit towards your utility bill when your solar energy system produces more power than your home consumes. It’s one of the great factors of solar energy, there’s so much energy to go around!

Here are the states that currently offer net metering:

net metering state map

Even though not every state has net metering, it’s changing quickly. For example, Mississippi is on its way to cleaner energy with new net metering rules as of January 2022. These new rules will expand their current net metering program, improve total compensation rates for solar customers, and prioritize solar adoption for low-to-moderate income (LMI) customers. Solar in Mississippi has been slowly growing the last couple of years, and with this plan the state is hoping to boost its solar growth even more.

Are solar incentives going away?

Some states are fighting against certain solar incentives, such as net metering.

This doesn’t seem to make sense because 1) solar energy is good for the environment and 2) homeowners should have a choice in what type of energy they’re using; therefore they should get incentives for using solar energy.

However, the truth is that the more people use solar energy, the less reliance on other types of energy we’ll need. And that means less business for the big oil companies. Therefore, some states are running into roadblocks when it comes to powering their home with clean solar energy. Take California for example.

The debate over net metering in California

California has been the number one state for solar power for quite some time but recent legislation is looking to put a damper on that. Although it’s still to be decided, California’s Net Metering program called NEM could see big changes in the future that would massively cut the benefits to homeowners. Luckily, the proposed changes to NEM 3.0 have just been put on hold indefinitely, as “Reuters reported CPUC president Alice Reynolds requested more time to consider changes”. This is good news for now, but the fight isn’t over just yet. For example, in Florida, the proposed changes to net metering would change the solar energy landscape as well. If you’re interested in supporting this cause, here’s where you can find out more information about California and Florida.

Benefit from solar incentives no matter where you live

As you can see, there are plenty of options when it comes to solar incentives. But don’t forget, the very best way of finding out exactly which incentives are available to you is to schedule some time with a trained professional in this area. Curious what your first solar consultation might look like? We wrote this blog to walk you through it. And when you’re ready to schedule, we’ll be ready and happy to guide you through the process.

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