2024 Solar Incentives Guide for Tuscaloosa, AL - Tax Credits & Rebates

What Solar Tax Credits, Incentives, and Rebates are Available in Tuscaloosa?

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The phrase "solar incentives" refers to a range of financial incentives put in place to make installing and using solar panels more affordable. This is done to encourage people to switch to renewable energy. Incentives can include things like discounts, cash back or credit towards your monthly utility bill. Some incentives are offered by the federal government, while others are provided by the state of Alabama or your specific utility company, county or municipality. Types of solar incentives might include:

• Net Metering: Make sure you speak with your Tuscaloosa utility company about signing a net metering contract. This will allow you to get a credit towards your utility bill every month for the value of excess energy generated by your solar panels. You could receive either a dollar-for-dollar credit or a percentage of the value.
• Tax Exemptions: These may come in the form of property tax exemptions, which would allow you to ignore the value added by your solar panels when paying property tax on your house. You may also qualify for an exemption on sales tax at the time of purchase.
• Rebates: A solar rebate is a partial refund after the purchase of your solar panels. These might be offered by your local utility company, your county or your state. The discount that rebates offer is normally applied to the price of solar panels before calculating tax credits.
• Tax Credits: Tax credits reduce, dollar-for-dollar, how much income tax you owe the government. These are different from tax deductions.

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Federal Solar Incentives

Federal solar incentives are likely to be the first thing that comes to mind when thinking about solar incentives. It's likely that you've heard of the Federal Solar Investment Tax Credit, or ITC. This incentive is a tax credit equal to a certain percentage of the money you spend installing solar panels.

The ITC covers solar systems installed after January 1, 2006, and allows you to deduct from your taxes a percentage of the total cost of solar panels, equipment, labor and accessories. You can receive this credit for a solar panel system installed on a primary or secondary residence that you own in the United States. The original claim amount was 30% of the total cost, although the amount you can claim may range between 26-30%. There is no maximum amount you can claim.

Contacting your local Tuscaloosa solar panel installer is the best way to learn more about how the ITC could apply to your situation.

In August 2022, the ITC (now referred to as the Clean Energy Credit) was bolstered by the passage of the Inflation Reduction Act. Homeowners are now eligible for a credit equal to 30% of the total solar system installation costs for projects started after January 1, 2022, and completed before the end of 2032. The credit percentage will then decrease on a yearly basis until the Clean Energy Credit expires in 2035. Beginning in 2023, it will also be easier to qualify for credits for energy storage systems with the new act.

More information about the new Inflation Reduction Act can be found here. Your local Tuscaloosa solar panel installation expert is the best person to answer your questions about the new Clean Energy Credit and how it may apply to you.

State & Local Solar Incentives

There are often state solar incentives available in addition to federal ones. Rebates, tax credits and more may be available at a more local level. Some incentives are offered for only a limited time, while others are ongoing. These local incentives could come from your county or municipality, or from the Alabama government.

Next Steps for Installing Solar in Tuscaloosa

There are a number of different solar incentives: those provided by local utility companies, those offered by the Alabama government and those offered by the federal government, to name a few. The use of solar energy has increased tremendously in the last 15 years, partially due to these incentives. We suggest talking to your local Tuscaloosa solar installation expert to learn more about these incentives and to make sure that you're getting all the money you can for your solar system.