10 states with the best tax incentives for solar energy

Switching to solar power will help homeowners save a lot of money, especially in the long run. Over time, monthly savings on utility bills will actually increase, making solar panels an investment. In the short term, however, the initial cost may be very low.

Fortunately, there are many tax incentives to offset the initial cost of solar panels and to provide additional financial benefits along the way. The most notable of these incentives is the federal solar tax credit, which is 26% less than the total initial freight cost. Moreover, many states offer their own benefits to homeowners who want to invest in solar energy, and many of the benefits are significant.

So what are the top states for solar tax incentives? Let’s go inside.


Top 10 States for Solar Energy Tax Incentives

When considering investing in solar energy, make sure you are aware of any incentives for your state. If you decide to work with a local major solar company, they may be able to help you get these financial benefits.

According to our research and analysis, the 10 states with the best solar tax incentives include the following.

  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

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New York Solar Incentives

New York residents have more ways to offset the cost of installing solar panels than they do with federal tax incentives.

  • NY-Sun Megawatt Block Incentive Under this program, solar consumers can request a $ / W discount for their systems. Both residential and commercial systems may be eligible for this program.
  • Credit to Solar System Equipment This solar incentive allows residents to deduct up to $ 5,000 or 25% in gross solar energy costs. Credit is available to homeowners who buy a new system or choose to rent a system.
  • Exemption from sales tax; Buyers do not pay the state’s 4% sales tax on solar equipment.
  • Net measurement; New York residents can also use the current government net measurement program to identify systemic charges and return any excess solar energy to the solar grid.

Rhode Island Solar Incentives

There are several ways for Rhode Island residents to save money on solar packages:

  • CommerceRI Renewable Energy Fund Funding Program: Under this program, homeowners install a new system, which is $ 0.85 per watt and $ 7,000. For the average system, this saves between $ 4,000 and $ 5,000.
  • Exemption from property tax; This freedom ensures that solar panels do not increase your property taxes, even if they increase the value of your property.
  • Exemption from sales tax; When Rhode Islanders buy a new solar system, they are exempt from paying 7% of the state’s sales tax on the equipment.
  • Net measurement; Residents of Rhode Island may be replenishing solar energy for utility credits. The state has a renewable energy development program that ensures that those registered return to the grid for 29.65 cents per kilowatt hour.

Iowa Solar Incentives

Iowa offers a number of solar tax incentives in addition to federal tax credit:

  • Iowa Solar System Tax Credit Iowa residents can get back 15% of the $ 5,000 solar system price. This state claims this credit when you file a state income tax return.
  • Exemption from property tax; This freedom ensures that Iowa homeowners do not increase property taxes if solar panels increase the value of their property.
  • Exemption from sales tax; Ioans do not have to pay 6% state sales tax when purchasing equipment for their new solar system.
  • Net measurement; Iowa residents can also benefit from net measurement credit.

Connecticut Solar Incentives

Each of them has several financial incentives in Connecticut, including the following.

  • Residential Solar Investment Discount Program: The discount is administered by Connecticut Green Bank and costs $ 0.463 per installment. Most homeowners are entitled to more than $ 2,000 in savings from this discount program.
  • Energy conservation loan program; Connecticut residents who want to buy a solar system can get a low interest rate loan from the state government. In particular, residents can borrow up to $ 25,000 over 10 years with an interest rate of 0% and no more than 6%.
  • Exemption from sales tax; Connecticut residents do not have to pay a 6.35% state sales tax on new solar panels.
  • Exemption from property tax; This freedom ensures Connecticut homeowners are not subject to property taxes after the installation of the solar panel.
  • Net measurement; Connecticut residents also have a net measurement option, which means any excess solar energy generated by their system can be returned to the solar grid in exchange for consumer credit.

Maryland Solar Incentives

In addition to federal tax incentives, Maryland residents can use these financial incentives:

  • Residential clean energy reduction program; Maryland residents get a $ 1,000 discount when they install a new solar panel system or sunscreen on their main home.
  • Solar Renewable Energy Certificates (SRECs) Maryland homeowners can receive a certificate for each of the megawatts of electricity they generate through their home solar system. These credits can then be sold on the SREC market.
  • Exemption from property tax; Installing solar systems can increase housing costs, but Maryland residents should not have to pay additional property taxes.
  • Exemption from sales tax; Maryland residents do not have to pay the state’s 6% sales tax on new solar panels.
  • Net measurement; Maryland homeowners have a net measure of opportunity, which means that any excess solar energy generated by their system can be returned to the solar grid in exchange for utility credit.

New Mexico Solar Incentives

Residents of New Mexico can benefit from a federal tax incentive as well:

  • Solar Market Development Tax Credit New Mexico taxpayers receive 10% tax credit (up to $ 6,000) for total solar energy costs.
  • Sustainable construction tax credit; When installing solar panels in New Mexico, it costs up to $ 6.50 per square foot. Please note that to be eligible, the home must be approved by the United States Green Building Council.
  • Exemption from property tax; New Mexican homeowners do not have to pay property taxes on the added home price after installing solar panels.
  • Net measurement; Homeowners can sell their surplus energy back to the grid using the state’s net measurement program.

Colorado Solar Incentives

Some of the most popular solar tax incentives in Colorado include:

  • Local discounts; Although Colorado does not have a solar discount program nationwide, most major consumer companies and local organizations offer incentives.
  • Community Solar Gardens: Colorado is a leader in community solar adoption, which means that many homeless residents can sign up to get their energy from off-site solar negotiations.
  • Exemption from sales tax; The state does not charge physical equipment for solar panels or solar systems.
  • Exemption from property tax; Colorado residents do not have to pay additional property taxes for additional housing costs due to solar panels.
  • Net measurement; Colorado homeowners can use a net meter through their metering facilities.

Massachusetts Sun Incentives

There are many incentives for homeowners in Massachusetts:

  • Residential energy credit; Massachusetts residents can get a loan of up to 15% of the total cost of their solar system. The maximum is $ 1,000 credit.
  • Massachusetts Solar Renewal Target (SMART) Program The Massachusetts Department of Energy Resources has created this incentive program, which provides credit to customers of consumer-owned utility companies.
  • Exemption from property tax; Massachusetts residents pay additional property taxes after installing solar panels.
  • Exemption from sales tax; Massachusetts does not pay for physical equipment for solar panels or solar systems.
  • Net measurement; Customers of regulated electricity companies are eligible to receive a net meter in Massachusetts.

New Hampshire Solar Incentives

Tax incentives in New Hampshire include:

  • Renewable Energy Incentive Program Solar systems with a capacity of 10 kilowatts (kW) or less can apply for one-watt (up to $ 1,000) or half-price credits for their home solar system.
  • Exemption from property tax; In selected counties, New Hampshire residents are exempt from paying property taxes by adding value to their solar system.
  • Net measurement; New Hampshire has a nationwide net measurement program that allows residents to make money from utilities.

New Jersey Sun Incentives

The following incentives are available to New Jersey residents.

  • Transition Renewable Energy Certificates (TRECs) Home solar systems can help homeowners obtain these certificates, which can be resold to utility companies.
  • Exemption from property tax; New Jersey residents are exempt from any property tax increase for their home solar system.
  • Exemption from sales tax; Residents do not have to pay 6.625% of the state’s sales tax on solar panels and related installation equipment.
  • Net measurement; New Jersey homeowners can use a net meter, which means any excess solar energy generated by their system can be returned to the solar grid instead of credit.

Federal Tax Incentives for Solar Energy

In any state, all U.S. homeowners can apply for federal tax incentives to install solar panels. This credit can be claimed on your federal income tax return and is 26% of the total cost of your solar purchase. The incentive is to make solar panels more affordable and accessible to a variety of homeowners.

Solar Investment Tax Credit (ITC) was first developed in It was enacted in 2005 by the Energy Policy Act. Initially, it was intended to last only two years, but at least until 2023 it has been extended to residential solar installations. Credit terms have changed over the years and may continue to fluctuate.)

Homeowners must meet the following requirements to be eligible for federal credit.

  • From 2006 to the end of 2022, they installed solar panels everywhere.
  • They put the solar system in their living quarters. It should not be your main residence.
  • You are the solar system (as opposed to leasing), which means you pay it in cash or support it.

Is Home Solar Suitable for You?

We have noticed some high states for solar tax incentives, but it should be noted that there are many other states that offer net counting, discounts and other financial incentives. In addition, we recommend that you check for financial incentives from your city / municipality or local utility company.

While a sunscreen can cost a lot of money, these incentives can make it worthwhile — especially if you live in an area with adequate sun exposure, and can make the most of your system’s energy efficiency.

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