Tax Credits and Incentives for Solar-Panel Homes

Federal Tax Credit

The Residential Renewable Energy Tax Credit program allows you to take a credit on your personal income taxes for the installation of photovoltaic and solar water-heating technologies on your home. To qualify for the program, you must complete your installment by the end of 2016. You can only take the credit for technologies installed on your primary residence, which can include an existing home or new construction. At the time of publication, the program allows you to take a credit of up to 30 percent of your installation costs, which can include equipment and labor.

Certain states offer tax credits for the installation of renewable-energy technologies. For instance, California offers property tax credits for the installation of solar water heater, photovoltaic, solar thermal electric and solar space heater systems installed on residential properties. As of August 2011, you can receive a credit up to the full system cost. Utah sponsors the Utah State Renewable Energy Systems Tax Credit program, which allows you to take a credit on your state income taxes for the residential installation of solar electric, passive solar and solar thermal technologies. You can take a credit of up to 25 percent of the cost of residential installations, not to exceed $2,000.

Certain cities offer incentives for constructing environmentally friendly buildings, typically referred to as green buildings. For example, Dallas enables you to receive expedited permitting for green building construction of residential properties. To qualify for the Dallas program, your construction must meet standards established by green building authorities, such as the U.S. Green Building Council or Green Built North Texas. Philadelphia sponsors the Streamlined Solar Permitting and Fee Reduction program for the installation of photovoltaic systems on residential properties. You can only apply for the SSPFR program for installations up to 10 kilowatts. The program offers reduced permitting fees for solar installations and enables you to receive a single permit for construction and electrical work.

Certain regional utility providers and nonprofit organizations offer rebate programs to help pay for solar installations. For instance, Green Energy Ohio, a nonprofit organization, offers rebates for the cost of solar thermal installations on residential properties. Columbia Water and Light, an energy provider in Columbia, Missouri, offers rebates for residential energy-efficiency improvements, including the installation of photovoltaic systems and solar water heaters. You can receive a rebate up to $800 for the installation of a solar water heater and up to $500 per kilowatt for a photovoltaic system.