Solar installations have shot up in Illinois over the last two years as the state seeks to meet its renewable energy goals. Installing solar panels is still expensive—solar panel installation cost is usually costing between $19,000 and $30,000—but Illinois offers several incentives and rebate programs to make solar power more affordable.
A top-rated solar company will help you take advantage of these incentives, but it’s worth doing some research yourself. This guide outlines solar incentives available in Illinois and answers common questions about solar power and energy costs.
Illinois Solar Tax Credits and Rebates
Thanks to Illinois’ Renewable Portfolio Standards, the state must produce 25% of its energy from renewable sources by 2025. It offers several solar incentives to support this goal, ranging from subscription programs to tax rebates.
Illinois Solar for All (ILSFA) Program
This incentive program caters to low-income households who might otherwise not have the resources to access renewable energy. There are two main branches: Community Solar projects and Distributed Generation projects.
The Community Solar program allows renters making 80% or less of the median income to subscribe to an offsite solar energy system and receive credit on their electric bill. There are no up-front costs, and the credit’s size depends on the amount of power the individual system produces.
Low-income homeowners and building owners can participate in the Distributed Generation program by installing ground-mounted or rooftop solar panels for homes on their property. Similar to Community Solar, participants must not make more than 80% of the median income, and there is no up-front cost for participating. You’ll benefit by receiving credits on your energy bills. Contact a nearby ILSFA-approved vendor to see if you qualify.
- Illinois Solar for All homepage
- List of approved vendors
- Distributed Generation pamphlet
- Community Solar pamphlet
Also known as the Adjustable Block Program, Illinois Shines is a similar two-branched system to ILSFA, but there are no income limits. Those who already have a solar energy system can register with Illinois Shines and receive 15 years of payments in return for solar renewable energy credits (called SRECs or RECs). You’ll receive credits for each megawatt (MW) of electricity produced over the payback period. Essentially, the state is meeting its clean energy goals by buying solar power from you.
Those who don’t own solar panels can participate by subscribing to an existing solar panel system in your utility company territory. Excess electricity generated by solar panels will result in subscribers receiving credits on their energy bills. Note that substantial changes were made to the program in September 2021 as a result of the Climate and Equitable Jobs Act, so you may need to keep track of updated policies.
Illinois Net-Metering Policy
You don’t have to register with one of the above programs to take advantage of Illinois solar incentives. Utility companies, including Commonwealth Edison, Ameren Illinois Utilities, and MidAmerican Energy Company, offer net-metering programs that provide energy credits to customers who generate more electricity than they use. You must register with your utility company, ensure interconnection with the power grid, and have a bi-directional meter that measures outgoing electricity.
- Illinois Attorney General’s statement on net-metering
- Illinois Power Agency’s 2022 Electricity Procurement Plan
Commonwealth Edison Solar Incentives and Credits
Power company Commonwealth Edison, also known as ComEd, offers its own incentives to customers. Its website has a solar calculator to help homeowners and renters determine which solar programs they qualify for. The company also offers SRECs to residential customers at a rate of 7.1 cents per kilowatt-hour of energy produced. This rebate is subject to income tax requirements.
Special Assessment for Solar Energy Systems
Installing solar panels increases your property value. You’d ordinarily be taxed on this increase, but Illinois waives the increased property tax on your state return. To qualify, you must file the State of Illinois PTAX-330 property tax form with your local county assessor.
Federal Solar Tax Credit
All Illinois homeowners qualify for the federal solar investment tax credit or ITC. Those who install their home solar systems by Dec. 31, 2032, are eligible for a tax deduction equal to 30% of the purchase price. This percentage will drop to 26% in 2033.
Here are some other standards you must meet to qualify for this tax credit:
- You must own your solar panel system or have a solar loan. Those with solar leases or power purchase agreements are not eligible.
- The home must be your primary or secondary residence. Those who rent their property out for part of the year can only claim the solar panel system for the amount of time they live at the property.
The tax credit applies to the total cost of your system, including photovoltaic panels, mounting equipment, inverters, batteries, wiring, labor costs, and sales tax. You must complete IRS Form 5695 and submit it with your federal tax return to receive the deduction. Make sure to keep all receipts to provide proof of your new purchase.
Installing solar panels is expensive, but Illinois residents have several available incentives to reduce costs. Renters can participate in Illinois Shines or ILSFA’s community solar programs, and homeowners may be eligible for SRECs or net-metering credits.
Our top recommended solar installer is Blue Raven Solar due to its comprehensive benefits and excellent guarantees. However, Blue Raven is only available in the Chicago area, so we recommend ADT Solar to homeowners in other parts of the Prairie State. ADT offers whole-home smart-energy solutions.
Any of these two solar companies are an excellent choice. Use our tool below to request quotes from vetted installers near you.
Frequently Asked Questions About Solar Tax Incentives in Illinois
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