Introduction:
For Florida homeowners considering going solar, the financial benefits can be significant. With the rise in energy costs and growing concerns about sustainability, installing solar panels is becoming an increasingly popular choice. However, the initial cost of a solar system can still be a hurdle for many homeowners. Fortunately, there are several solar incentives and tax credits available that can help reduce those upfront costs. These incentives, offered at the federal, state, and local levels, make it more affordable than ever to switch to solar energy. In this blog, we will break down the key solar incentives available in Florida, explain how they work, and guide you on how to qualify for and apply for them.
The Federal Solar Investment Tax Credit (ITC)
One of the most impactful incentives available to homeowners is the Federal Solar Investment Tax Credit (ITC). The ITC allows homeowners to claim a credit of 26% of the total cost of installing a solar energy system, including installation costs. This tax credit significantly reduces the financial burden of installing a solar system, offering thousands of dollars in savings depending on the size and cost of your installation.
For example, if your solar installation costs $20,000, you could receive a $5,200 tax credit, which you can apply to your federal taxes. This makes it a great option to reduce the overall cost of going solar.
The ITC is set to step down in the coming years, so now is a great time to take advantage of this incentive before it decreases:
- 2023-2025: 30% credit
- 2026: 26% credit
- 2027: 22% credit
- 2028 and beyond: No ITC (unless extended by the federal government).
To qualify for the ITC, the solar system must be installed on your primary or secondary residence, and you must own the system (leasing doesn’t qualify). The credit is applied to your federal taxes, and if the credit exceeds your tax liability, you can carry it over to future years.
Florida’s State-Specific Solar Incentives
While Florida doesn’t have statewide rebates for residential solar installations, there are still several incentives that can significantly reduce your installation costs.
Sales Tax Exemption
Florida offers a sales tax exemption for solar equipment. This means that homeowners are not required to pay sales tax on the purchase of solar panels, inverters, batteries, and other solar-related equipment. In Florida, sales tax is 6%, so this exemption can save you a substantial amount of money when installing your solar system.
Property Tax Exemption
Another great benefit for Florida homeowners is the Property Tax Exemption for Solar Energy Systems. When you install a solar system on your home, the increase in property value resulting from the installation will not be taxed. Typically, home improvements such as solar installations would increase your property taxes, but thanks to this exemption, your home’s increased value due to solar panels will not be assessed for property tax purposes.
This is a significant financial advantage that makes going solar even more appealing for Florida homeowners.
Additional Local Rebates or Programs
In addition to the federal and state incentives, some local governments and utility companies offer rebates or incentives to encourage solar adoption. These programs can vary depending on your location, but they can be a valuable source of additional savings.
- Utility Company Incentives: Some utility companies in Florida, such as Florida Power & Light (FPL), may offer rebates or incentives for installing solar panels or energy-efficient systems. While these programs are often limited in scope and may change over time, it’s worth checking with your local utility provider to see if there are any available rebates that can help reduce installation costs.
- PACE Financing: The Property Assessed Clean Energy (PACE) program is a financing option available in many counties throughout Florida. PACE allows homeowners to finance their solar installations through their property taxes, with long repayment terms (up to 20 years). This program allows homeowners to install solar with no upfront costs and repay the cost through property tax assessments, making it an attractive option for some.
- Local Grants and Incentives: Some municipalities or counties in Florida may offer additional rebates, low-interest loans, or grants to help offset the cost of solar installation. These programs can vary widely by location, so it’s essential to check with local government offices or community solar programs to see if there are any available incentives.
How to Qualify for These Incentives and Apply for Them
To qualify for the Federal Solar Investment Tax Credit, you must own the solar system, and the system must be installed on your primary or secondary residence. You can claim the ITC when filing your federal income taxes by filling out IRS Form 5695.
For the Florida Sales Tax Exemption and Property Tax Exemption, you do not need to apply separately. When you purchase your solar system, your installer should ensure that the system is eligible for the sales tax exemption and that your property is exempt from tax increases due to solar installation.
Local utility company incentives, PACE Financing, and municipal grants may require a separate application process. Contact your utility provider or local government office to determine the specific steps involved in applying for these incentives. Often, your solar installer can help you navigate the application process for any available rebates or financing options.
Conclusion
Solar incentives and tax credits can make going solar much more affordable, and Florida residents have access to some fantastic opportunities to reduce their installation costs. The Federal Solar Investment Tax Credit (ITC), Florida’s sales and property tax exemptions, and potential local rebates all work together to significantly decrease the financial burden of installing solar. However, these incentives won’t last forever. As the ITC is set to decrease in the coming years, and other local programs may change, now is the perfect time to take advantage of these opportunities and invest in a solar system for your home.
By taking full advantage of available incentives, you can make a more cost-effective decision while helping the environment and reducing your long-term energy costs. Don’t wait—start the process today and enjoy the benefits of solar energy for years to come.