What financial incentives are available for solar energy systems?

Written by U.S.SolarEnergy

There are a number of different financial incentives that help homeowners and businesses adopt onsite solar and storage systems. The most prominent program is the federal residential solar tax credit (ITC). The ITC is a tax credit that can be claimed on federal income taxes for a percentage of the cost of a solar system. The system must be placed in service during the tax year and generate electricity for a home located in the United States.

In December 2020, Congress passed an extension of the ITC, which provides a 26% tax credit for systems installed in 2020-2022, and 22% for systems installed in 2023. The tax credit expires starting in 2024 unless Congress renews it.

In addition to the federal ITC, many states, counties, municipalities and utilities offer rebates or other incentives for solar energy technologies. Some utilities offer performance-based incentives (PBIs). PBI’s mean that a customer is paid a specific amount for all kWhs of solar generation regardless of whether it is consumed in the household or exported to the utility.