State Tax Rebates Available for Solar Energy
- last updated November 7, 2008
While converting renewable energy of the sun into electricity is pollution-free, reliable and virtually maintenance-free technology - it is also significantly expensive compared to traditional power generation methods.
For this reason, in order to help bring renewable energy to communities and help the country turn toward more "green" energy sources, each state offers a variety of substantial tax incentive programs to support and encourage energy customers to install PV generating systems.
Each state offers varying rebates and incentives - this article will outline those for all fifty U.S. States. Choose your state to review the rebates and incentives available to you. For more information or to apply for any of the programs, contact your state government.
The following states offer no solar tax incentives: Alabama, Alaska, Delaware, Maine, Mississippi, Missouri, Pennsylvania, and West Virginia.
The following states offer Property Tax Exemption only: California, Colorado, Illinois, Indiana, Kansas, Louisiana, Michigan, Nevada, New Hampshire, Ohio, South Dakota, Tennessee, Texas, Virginia, and Wisconsin
The following states offer Sales Tax Exemption only: Georgia, New Jersey, Vermont, Washington, and Wyoming.
Connecticut and Minnesota offers both a Property Tax exemption, and a sales tax exemption.
Tax Credit Chart
The following is a breakdown of tax credits for the states that offer their residents a tax credit for generating solar power.
| State | Tax Credit | Property Tax Exemption | Commercial | Other |
|---|---|---|---|---|
| Arizona | 25% tax credit up to $1000 | No | 10% up to $25,000 | |
| Florida | No | Credit of $0.01/kWh | ||
| Hawaii | 35% tax credit up to $5,000 | 35% up to $500,000 | No | |
| Idaho | 100% tax deduction up to $20,000 | Yes | No | Sales tax refund |
| Iowa | Yes | Commercial tax credit of $0.015/kWh | No | Sales Tax exemption, and Excise Tax Incentive |
| Kentucky | No | No | 100% | |
| Maryland | 20-25% credit incremental cost credit | Yes | commercial an additional $0.0085/kWh tax credit | |
| Massachusetts | 15% credit up to $1000 | Yes | 100% deduction | |
| Montana | $500 credit | Yes | 35% tax credit | |
| Nebraska | No | Commercial tax credit of $0.00075/kWh up to $400k | Sales Tax exemption | |
| New Mexico | 30% tax credit up to $9,000 | No | Commercial $0.015-$0.04/kWh tax credit | Sales tax exemption |
| New York | 25% tax credit up to $5,000 nd 5-20% incremental costs | Yes | 5-20% incremental costs | Sales tax exemption |
| North Carolina | 35% tax credit up to $10,500 | Yes | Commercial tax credit of 35% up to 2.5 million | |
| North Dakota | 15% tax credi | No | No | |
| Oklahoma | No | No | Tax credit of $0.0025/kWh | |
| Oregon | 50% tax credit up to $6,000 | Yes | tax credit of 35% up to $3.5 million. | |
| Rhode Island | 25% tax credit up to $3,750 | Yes | No | Sales tax exemption |
| South Carolina | 25% tax credit | Yes | No | Sales Tax Exemption |
| Utah | 25% tax credit up to $2000 | No | 10% credit up to $50,000 |
Federal Tax Breaks
In addition to state incentives, there are also federal tax incentives. These include both personal and corporate exemptions, corporate depreciation, corporate deduction, corporate tax credits, and a personal tax credit.
In October 2008, President Bush signed H.R. 1424, the Emergency Economic Stabilization Act of 2008, into law. In the bill are a number of provisions supporting energy efficiency and renewable energy. This package includes an 8-year extension of the commercial and residential solar investment tax credit, completely eliminates the monetary cap for residential solar electric installations, and allows utilities and alternative minimum tax (AMT) filers to take the credit. The Investment Tax Credit (ITC) is effective now. However, the lifting of the residential cap for solar electric property is effective after December 31, 2008. Residential solar water heating systems are subject to the $2,000 cap.
A summary of the highlights of the solar investment tax credit (ITC) provisions are as follows:
- Extend for 8 years the 30-percent tax credit for both residential and commercial solar installations
- Eliminate the $2,000 monetary cap for residential solar electric installations, creating a true 30-percent tax credit (effective for property placed in service after December 31, 2008)
- Eliminate the prohibition on utilities from benefiting from the credit
- Allow Alternative Minimum Tax (AMT) filers, both businesses and individuals, to take the credit
- Authorize $800 million for clean energy bonds for renewable energy generating facilities, including solar.
If you are looking to invest into using solar, the U.S. Department of Energy's website (www.eere.energy.gov) has an entire section devoted to the many ways you can use solar energy in your home and tools to calculate your energy costs.