Residential solar panels are a big investment for homeowners in Indiana, but the cost of them can be reduced by taking advantage of incentives that include tax credits and rebates. Indiana offers several of these incentives and programs to make your transition to solar energy more affordable. Our guide details the various Indiana solar incentives available, empowering you to make an informed decision and take advantage of the best solar companies. 

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How Does the Federal Solar Tax Credit Work?

All Indiana residents can qualify for the federal solar investment tax credit (ITC). This is a deduction on your owed federal taxes that equals 30% of your solar panel installation costs. You apply for this credit during tax time to reduce or eliminate your owed federal taxes. The remaining amount can roll over to the next tax period if needed. The ITC is limited to customers who own their solar systems. This requires a cash purchase or solar loan.

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Is Net Metering Offered in Indiana?

Net metering is a billing policy that helps homeowners reduce or eliminate their monthly electric bills. This financial agreement lets you pull electricity from the power grid when needed and send excess solar energy back to the grid when you don’t need it. Your utility provider will then apply credits to your utility bill.

Unfortunately, the Indiana Utility Regulatory Commission made net metering for new solar panel installations unavailable in January 2021. However, the state can change its laws around net metering in the future—as it did for residential solar panel owners in 2017—which may result in a grandfathering program.

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How Much Do Solar Panels Cost in Indiana?

The average 6-kilowatt (kW) solar panel system costs about $17,640* before applying tax incentives or rebates. When you receive a solar quote, the solar installer may base the price on wattage, with a $3–$4 per watt average. Going solar in Indiana is more expensive than average, with a 6-kW system typically costing $21,780. Applying for the federal solar tax credit adds $6,534 in savings, equaling a total system cost of $15,246. 

Your overall solar cost and potential return on investment (ROI) depend on your solar financing option. Learn about each payment method below.

• Cash purchase: An outright cash purchase of the system is the most cost-effective option, leading to the quickest ROI. A cash purchase eliminates possible interest rates, credit checks, and loan fees. It also qualifies you for solar incentives because you fully own the system. 
• Solar loan: A solar loan is the second-best payment option. You still own the system but avoid paying a large sum of cash. These loans work like home or auto loans, where you pay for the system monthly over a fixed period. Be aware that you’ll pay more over time than an outright purchase due to interest rates.
• Solar lease: A solar lease is better for homeowners who don’t qualify for loans or have enough up-front cash. However, a solar lease disqualifies you from using any tax incentives and doesn’t increase your property value because you don’t technically own the system. 
• Power purchase agreement (PPA): This option is a billing arrangement in which you pay for your monthly energy use. Your solar installer and utility company set up a PPA so it’s as if you’re still paying your regular energy bill. Some PPAs also include system maintenance and repairs. This option disqualifies you from any tax incentives. 

*Cost figures are based on a 2023 report from EcoWatch.

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Is Going Solar in Indiana Worth It?

Though more expensive than average in Indiana, going solar is still worth it in the state due to the massive amount of money you’ll save on energy costs over time. The average solar payback period is between 9 and 12 years, while solar systems typically last 25–30 years. Unfortunately, Indiana has no quality net-metering program, but solar panels still provide financial savings, increase home value, and have a positive environmental impact with increased energy efficiency. 

We recommend consulting a professional solar installer to explore available incentives and assess your clean energy needs.

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Our Conclusion

Solar panel costs are higher than average in the Hoosier State, but the transition is worth it to decrease your electricity bills and boost your home’s value. As electricity rates increase, you’ll save even more with a solar system. We suggest consulting an expert to understand your solar project’s pros and cons and find the best solar panels possible. 

Use our tool to gather free quotes from quality solar installers that service your ZIP code.

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FAQ About Solar Tax Incentives in Indiana

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Our Rating Methodology

We are committed to providing comprehensive and unbiased reviews to our readers. After over a thousand hours of research on solar companies, interviews with experts, and common customer needs, we’ve created a detailed rating system for solar providers based on six factors:

• Solar equipment, installation, and services (25%)
• Warranty and performance guarantees (25%)
• Brand reputation and certifications (15%)
• Financing options (15%)
• Experience (10%)
• Availability (10%)

Total scores are divided by 20 for a final 5-point rating scale.

To share feedback or ask a question about this article, send a note to our Reviews team at reviews@thisoldhousereviews.com.