best solar incentives

Which States Offer the Best Solar Incentives?

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While there are some federal programs in place that provide incentives and tax credits for solar energy upgrades, each state has its own regulations that differ from the federal ones. The extension of the federal ITC, the investment tax credit, allows homeowners a 30% deduction for solar installation through the end of 2019, reducing to 26% in 2020 and 22% in 2021. But what about the state programs? Depending on where you live, could you get additional incentives or deductions from the state and possibly even the city or county? Let’s take a look at which states offer the best solar incentives and deductions.

Massachusetts, New Jersey, and New York

Based on the 2016 numbers, Massachusetts, New Jersey, and New York were tied for the top spot when it comes to the state solar report card. This means that these states ranked the highest in 2016 in eleven areas on a grading scale of A–F based on several factors, including state rebates and credits, exemptions, and power costs. Massachusetts takes the prize for the shortest time for payback on solar investments, which is four years—the states with next shortest time to earn back your investment ties New York and New Jersey at seven years each. Massachusetts residents can save an average of $386 per year by going solar, while New York and New Jersey residents save $330 and $140, respectively. And while this report card system grades on an overall scale for costs, metering, and other factors, each state’s tax credits and rebate programs rank differently individually, with New York receiving the highest grade out of those three states.

Maryland, Connecticut, and Oregon

Maryland lands next in the overall solar rankings for 2016, receiving excellent grades in most areas with just an average for tax credits and rebates. Maryland’s payback time on investment is nine years, which still isn’t too bad, considering. Connecticut received an excellent score with an eight-year payback time, and rebates are good but tax credits are lacking. Oregon’s payback time falls at seven years, better than the other two but with lower scores in other areas. However, rebates and tax credits both received excellent scores for Oregon.

2017 Numbers

While we’ve still got a bit of time to go in 2017, the first three-quarters of the year have already been graded. Can you guess which state will be #1 for 2017?

  •        Massachusetts
  •        New Jersey
  •        Rhode Island
  •        Oregon
  •        New York

So far, Massachusetts is the clear winner in all areas, outranking the other high-scoring states in every area this time. No ties thus far. Massachusetts has improved its net metering even more, so that boost sets the state apart above the others. New Jersey is a close second, though, and Rhode Island is a new addition to the top-ranking states at third. Rhode Island bumped its score from a B to an A by adding several incentives, which may or may not continue—but for the time being, it improved its score and ranking considerably. Rhode Island’s time on solar payback is an impressive 4 years as well, giving Massachusetts a run for its money and tying the state in that area. Oregon falls in 4th place and New York in 5th, which is no surprise based on 2016’s rankings.

Each top-ranking state continues to make improvements, although some policies expire or are cancelled out, causing the score to average out to the same as in 2016. However, the clear win of Massachusetts for 2017 so far means that it is the state in which it is easiest to upgrade to solar energy. If you live in any of the other states, however, don’t fret. There are still plenty of states that offer help with and incentives for solar installation. Washington, D.C., for example, scores well in the area of rebates but not for tax credits. So just because a state has an overall ranking that doesn’t fall within the top five or seven, that doesn’t mean it’s not still worth it to upgrade to solar in that state. D.C.’s payback time falls at six years, also, so there are other benefits. Besides, it will be best to revisit the state rankings at the end of 2017 after the data has been compiled.

Conclusion

Since there are so many factors to take into consideration, there’s no simple answer to the question of which state has the best solar incentives or benefits. However, the fact that each state receives a solar report card and ranking may be a motivating factor for some of the lower-ranking states to step it up a notch and get in the game, offering more and better incentives, deductions, and rebates. After all, the federal ITC won’t last forever, so in order to continue promoting solar energy, state lawmakers should realize that solar is a hot issue (pun intended) and figure something out while the opportune time still exists. After all, solar upgrades can only benefit everyone involved, making a better future with clean and renewable energy sources. There is really no downside to solar, so why not look into upgrading your home or business?

Walker Reid Strategies specializes in energy efficiency, focusing on 179D deductions and 45L tax credits for individuals and businesses. We partner with many energy and tax organizations to educate and advise the public on strategies for energy efficiency, including tax deductions and benefits available. Contact us directly for more information.