Types of Solar Incentives

The federal solar Investment Tax Credit (ITC) lets you deduct 30% of the cost of installing a solar energy system from your federal taxes. The credit applies to both residential and commercial systems, and there is no cap on its value.

SRECs are tradeable certificates that represent the environmental benefit of 1 megawatt-hour (MWh) of solar electricity generation. In SREC-eligible states, utilities must buy a portion of their electricity from renewable sources and purchase SRECs to prove compliance.

Net metering is a billing arrangement that allows solar homeowners to send excess electricity to the grid in exchange for credits on their utility bill. When your solar panels produce more electricity than you use, the surplus goes to the grid, and when you need more than you produce, you draw from the grid.

Many electric utilities offer cash rebates to customers who install solar energy systems. These programs help utilities meet renewable energy goals and reduce peak demand. Rebates are typically offered per watt of installed capacity or as a flat dollar amount.

Many states exempt the added value of a solar energy system from property tax assessments. Without this exemption, installing solar could increase your property taxes because it raises your home's assessed value.

Some states exempt solar equipment from state sales tax. This provides an immediate upfront discount on the purchase price of solar panels, inverters, and related equipment.