Homeowner Incentives

Federal Incentive: Investment Tax Credit

In an effort to increase the rate of homeowners adopting solar, the United States federal government extended a 30 percent investment tax credit (ITC). This occurred in August 2022 when the landmark Inflation Reduction Act became law. The tax credit — which has been available since 2005 but has undergone several iterations — runs until 2032.

The ITC provides a credit to homeowners’ federal income tax liability in the amount of 30 percent of your total solar system cost. The 30 percent ITC is a dollar-for-dollar, nonrefundable credit. Homeowners need to have the proper tax appetite throughout the year to qualify for the full credit. The ITC can be carried over to the following year, if necessary. We advise consulting with a tax professional to ensure you can take full advantage of the 30 percent investment tax credit in the first year.

The 30 percent ITC offers a significant savings on the total cost of going solar and won’t be around forever. In fact, the ITC is slated to drop from 30 percent to 26 percent for systems installed in 2033 and further plummets to 22 percent in 2034. The credit craters to zero percent in 2035. With monthly electricity bills rising, this federal incentive provides a fantastic reason to consider implementing solar within the next decade before the ITC vanishes.

State Incentive: Illinois Shines Program

Illinois homeowners are further incentivized to adopt solar through a state-administered incentive program. The Illinois Power Agency (IPA) was tasked with meeting a goal of 40 percent renewable energy by the year 2030 and 100 percent sustainable energy by 2045.

For the IPA to achieve this, the agency collects funds from the state’s three largest utility companies, who make their money from paying customers like you. The extra money getting pulled from customers’ utility bills can only go to Illinois residents who use solar energy.

So, how does this process — known as Illinois Shines or the solar renewable energy credits (SREC) market — work for you?

The value of each SREC is pre-determined annually on a schedule set by the Illinois Power Agency. As more Illinois residents elect to go solar and soak up the allocated funding, SREC amounts dwindle. SREC blocks fill up on a first-come, first-serve basis. The sooner you have a signed agreement with an approved Illinois Shines vendor — like Midwest Solar Solutions — the likelier you are to receive the higher SREC value.

Homeowners’ solar systems that run with fewer than 25 kilowatts receive their payment in one lump sum. This amount is paid out typically 12 to 18 months from the approval date and solar system power being put on. Homeowners with systems that use higher than 25 kilowatts receive their incentive payments in quarterly installments during the course of a five-year period. Check out our case studies to see how the SRECs and ITCs save our customers thousands of dollars.