Solar energy systems get billed as super affordable, largely due to the multiple rebate programs available for homeowners that purchase and install new systems. Rebates certainly can help you earn back some of the money that you spend on solar equipment, and they’re definitely great incentive to buy, but actually following through and claiming your money is a whole animal of its own.

Rebates, tax credits, and production-based incentives may be offered through the equipment manufacturer, through your state government, and your utility provider. Your local government can also offer some relief through property tax savings. Additionally, the national Department of Energy and the EPA have a residential tax credit in place that is available for all eligible energy systems. To sign up for these programs, you’ll need to contact the specific managing office and complete the proper paperwork, but before you start, it can help to know a little bit of general information about claiming each kind of rebate.


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Table of Contents

Manufacturer Rebates

Sometimes a manufacturer will offer a rebate for purchasing their system. Your solar salesperson should have information on how to claim that rebate, as well as forms or a website you can visit to receive your rebate.

The Federal Tax Credit

For many homeowners, one of the biggest incentives to buy solar panels is the Residential Renewable Energy Tax Credit, which is offered by the federal government. Federal renewable tax credits were first created in the 1970s to help encourage homeowners to invest in new energy technology, but they’ve changed a lot since then.

The current tax credit returns homeowners 30 percent of the costs of their new energy system on their income taxes.

It is part of the The Consolidated Appropriations Act, enacted by Congress in 2015, which extended the previous tax credit past its initial expiration date of December 31, 2015. Now, the 30 percent tax credit is in effect until December 31, 2019. After that, the rate goes down to 26 percent for the next two years, and then 22 percent for two years afterward.

To claim this rebate, you simply have to complete an IRS form, specifically form 5695, when you complete your taxes. The amount isn’t deducted from your taxable income—rather, it’s taken off your total tax liability, or the amount you owe after calculating your income, assets, and deductions. If you don’t owe the government any money at that time, the credit is rolled over until you do. Similarly, if 30 percent of your system costs is more than the total amount of your liability, then the excess is carried forward until next year—so if 30 percent of your system price is $2,500, and your liability is only $1,500, then $1,000 will be saved for next year.

When you complete the form, it will ask you to calculate the “total solar electric property costs.” The government defines an “energy property” as the cost of the equipment, the labor costs—both to assemble and install the equipment on-site, as well as any money you must spend preparing your rooftop for the installation.

Your system will only qualify if it is used to generate electricity for your dwelling. Additionally, it must be installed in accordance with local electrical and fire regulations.

Remember, you should always keep documentation and receipts for your purchase in your records any time you claim a tax credit.

State Incentives

Some states also provide a rebate for your solar energy system in the form of a state income tax credit.

You can refer to Modernize’s individual state and city solar pages for specific information about the programs available in your area.

Claiming the rebate may be as simple as filling out an additional form to file along with your state income taxes, or your state government may ask you to fill out separate application forms to apply to your program. Your state’s department of energy office will be able to direct you to the proper governing office where you can obtain these forms, or you can check out the DOE’s Database of State Incentives for Renewables and Efficiency for up-to-date information about your area.

In some states, like Hawaii, the value of the rebate is expressed as a percentage of your system costs, much like the federal government’s incentive. In other states, the amount you get back may vary depending upon your system’s size or its expected performance. For instance, in New Hampshire, the value is worth $0.70 per watt. Other states provide production-based rebates based on your actual energy use and production—although this type of rebate is generally distributed through your local energy provider.

Your state may ask you to have your installer certify that your equipment meets certain required conditions. They may require you to provide documentation, including manufacturing specifications, copies of your past electrical bills, aerial photos of the installation area, or copies of required building permits. You may be asked to sign an Interconnection Agreement with your local utility, and provide copies of that document to your state Department of Energy or Public Utilities Board, before you can claim your rebate.

There may also be size restrictions on your system’s capacity—both minimum and maximum sizes, so you’ll definitely want to get confirmation on this before you pick out your equipment.

Generally, your journey into claiming these rebates should start well before you even make your purchase, so you can ensure that you are conforming to area requirements. Get in contact with both your state’s energy department or public utilities commission, and your energy provider to make sure your system is installed in accordance with area guidelines.

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Metered Rebates Through Your Energy Provider

Most states have an incentive called net metering enacted for homeowners who choose to install solar power on their property. This means that the state requires utilities to pay homeowners money (or credit them back on their bills) when they generate power in excess of their household needs.

All net metering programs require that you are connected to the grid—your energy provider obviously isn’t going to credit you for energy it doesn’t have access to. Your utility may also need to install a new meter on your property in order to collect more accurate information about how much energy you use versus how much you generate.

Additionally, although your state may have passed a net metering policy (for a full list of states that have, check out this page from The National Conference of State Legislatures), it may not be mandatory that your utility provides this option to its customers. For instance, some state net metering policies do not require rural co-ops or non-investor-owned utilities to comply. Start by contacting your local power company and asking about their policy to begin.

If your utility does offer net metering to its customers, they will usually ask you to complete a paper or online application to begin the process. As part of the application process, you may also need to sign an interconnection agreement that certifies that your equipment and system meets certain requirements. The process can vary from utility to utility, so it’s best to start with one of your local representatives to get the specific details for your area.

Local Municipal Incentives

It’s very rare that municipal governments offer monetary rebates for residents; instead what they usually have is a property tax exemption for solar equipment. This is useful, since solar installations tend to ramp up home valuations. A tax assessor in your area should be informed about these exceptions, and should take the amount off your home’s total taxes; however, when you’re having your home assessed, it never hurts to ask whether your equipment will be taxed. The Database of State Incentives for Renewables and Efficiency can also help you with this information, as well.

Claiming solar rebates can certainly be a time consuming and frustrating process—but in the end, it’s worth it, especially when you get back thousands of dollars for your trouble. After that, the only question you’ll be left with is what to spend your rebate on!