Each state offers unique incentives to promote the adoption of home or commercial solar systems. In the state of Indiana, there are a variety of financing and tax credits designed to make the transition to solar power not only environmentally friendly but financially advantageous as well. In this guide, we will dive into the exciting world of solar panel installation in Indiana and explore the array of incentives and rebates available to homeowners and businesses alike.
Indiana Solar Incentives and Financial Considerations
When it comes to harnessing the power of solar energy in Indiana, you’ll find a range of financial incentives and regulations designed to make the transition more accessible and cost-effective. Here’s a comprehensive look at some key aspects of going solar in the Hoosier State:
Sales Tax Exemption
Indiana offers a valuable sales tax exemption for various components of your solar energy system. Thanks to a policy passed by the Indiana General Assembly, you can save money by not paying sales tax on essential components such as solar modules, racking, and inverters. This exemption is in place because these components play a direct role in generating electricity from solar energy.
Property Tax Exemption
When you install a solar power system, you won’t have to pay any property taxes on the increased home value it brings. That’s right, you’re totally off the hook for that extra expense, and it adds up to your pocket every year.
Here’s another perk: when you buy your solar power system (and, by the way, our sales tax is 7% here), you won’t have to cough up any sales tax. That’s a sweet deal, especially considering that Indiana isn’t exactly known for its solar-friendly policies. But here’s the catch – the law technically says you need to be selling the energy to qualify for this sales tax exemption.
According to Zillow, in the USA, including Kentucky, homes equipped with energy systems typically sold for 4.1 percent higher sale price compared to similar homes lacking solar power. This increase in home value can be attributed to the growing demand for eco-friendly & energy-efficient features among homebuyers, making panels an attractive selling point for property owners. Consider consulting one of the most reputed solar panel companies in Indiana, especially if your quote doesn’t mention a sales tax exemption.
Net metering is a billing policy that empowers homeowners to offset or even eliminate their monthly electricity bills. Under this arrangement, you can draw electricity from the grid when needed and send excess solar energy back to the grid during periods of surplus production. Your utility provider will then credit your utility bill accordingly.
It’s worth noting that net metering for new solar panel installation became unavailable in Indiana in January 2021. However, legislative changes in the future may introduce new opportunities, including a grandfathering program for existing solar panel owners.
Solar Easement Laws
Indiana has enacted solar easement laws to ensure that energy systems have access to direct sunlight. These laws are designed to facilitate cooperation among homeowners and their neighbors to prevent shading that might reduce the efficiency of renewable energy systems.
While the state does not have preset protections for sunlight access, homeowners have the option to enter into voluntary solar easement agreements with their neighbors, ensuring unobstructed access to sunlight. This also prevents homeowners associations (HOA) from obstructing your solar power system installation.
Local Incentives in Indiana
In addition to the federal and state incentives we discussed earlier, there are also local incentives available to support your solar panel installation. One noteworthy local incentive program to consider is the Northern Indiana Public Service Company (NIPSCO) Feed-In Tariff. This program resembles Solar Renewable Energy Certificates (SRECs) seen in other states but is specifically designed for NIPSCO customers.
If you have a solar power system with a capacity ranging from 5 kW to 10 kW, you have the opportunity to earn valuable credits. These credits range from $0.15 to $0.17 for each kilowatt-hour (kWh) of electricity you generate, regardless of how you use it. This can significantly offset the cost of your solar installation and lead to substantial savings over time.
To stay updated on the details and developments of the NIPSCO Feed-In Tariff program, you can visit the DSIRE.
Federal Solar Tax Credit
Residents of Indiana are eligible for the federal solar investment tax credit (ITC), which allows for a deduction of 30% of the costs associated with installing panels, according to the Department of Energy. This credit can significantly reduce or even eliminate your federal tax liability, with any remaining credit rolling over to the following tax year.
In 2033, it will drop to 26 percent, and in 2034, it will further reduce to 22%. Starting from 2035, the tax credit is slated to expire unless Congress decides to renew it. This tax credit can significantly reduce your income tax liability for the year in which you install your photovoltaic (PV) system, effectively covering 30% of your system’s value.
Suppose your solar panel system costs approximately $22,000. With the Federal Solar Tax Credit at 30%, the upfront cost reduction would be calculated as follows:
System Cost (Excluding Federal Tax Credit) = $22,000
Reduction in the System Cost = $22,000 * 30% = $6,600
System Cost (Including Federal Tax Credit) = $22,000 – $6,600 = $15,400
Indiana offers a range of incentives and rebates to promote solar panel installation, making it an attractive option for residents looking to harness clean energy sources. These incentives can significantly offset the upfront costs of installations and provide long-term financial benefits. One notable solar panel installer in the region that can help you take advantage of these incentives is Ohio Valley Solar.
They are recognized as one of the best solar panel companies in Indiana and have years of expertise in designing and installing solar panel systems that maximize your energy production and savings. With their expertise and the financial incentives provided by the state, going solar with them is an environmentally friendly and economically sound decision for those seeking sustainable energy solutions in Indiana.