How Investing In Solar Energy Can Impact Your Taxes

October 27, 2022

Rooftop solar power systems are projected to be used by one in seven U.S. homeowners by 2030, according to the Department of Energy. With this on the horizon, the tax advantages to solar power have become a popular topic. If you're pondering switching to solar power, you can potentially save money on your taxes. Let's explore how it works.

State Tax Deductions

Part of the tax benefits of solar is the tax credits! Solar Tax Credits are available for homeowners in all states except Louisiana (which does offer a tax deduction). The amount changes contingent on where you live and whether you own your home. If you happen to lease instead of buy, there are other ways to get tax benefits from using solar power.

Some states allow taxpayers who lease their solar panels to deduct a percentage of the payment from their yearly state taxes as part of their standard deductions. These deductions vary widely from state to state. Some offer as little as 5%, while others have no cap. For example, if your lease payment is $100 per month and your state offers a 10% deduction, then $10 will be deducted automatically from your state taxes yearly.

Alternative Minimum Tax (AMT)

Additional tax advantages to solar power include AMT. Your solar systems may qualify your household for AMT treatment, which allows you to claim up to $1,500 in credits per year without having to pay an AMT. If you have already paid this on your system, you can retroactively take advantage of this provision by filing an amended return.

Reduced Taxable Income from Depreciation

If you buy solar panels or a wind turbine, you can deduct their cost as an expense on your taxes, reducing your taxable income. This reduces the amount of yearly taxes you'll have to pay because only what's left over after your deductions will be taxed. For example, let's say you spend $10,000 on solar panels. It may take three years for you to recoup that investment in savings on your electric bill, but during those years your taxable income would be lower because depreciation reduces taxable earnings from other sources, such as salary or dividends from investments. Under an Internal Revenue Code Section, you can claim depreciation for residential and commercial systems.

Fewer Taxes Owed from Tax-Free Income

Investing in solar energy can lower your tax bill because the government allows investors to receive tax credits for producing energy from renewable sources. This may enable you to keep more of your earnings in your pocket to have more money available for other investments or personal expenses. The amount of money you save depends on how much you invest in the project, but it could be a significant portion of your total investment.

It's possible to write off certain costs associated with owning and operating a solar power plant. These include property taxes, maintenance costs, and installation fees paid out during the plant's life span. However, there are limits on these deductions depending on what entity owns the plant (an individual versus a corporation).

Reduced Property Taxes After Solar Panel Installations

The federal government offers a 30% tax credit for solar energy systems, according to the Department of Energy. In addition, many states offer additional incentives and tax credits for installing solar panels on your home or business property. By installing solar panels on the property you own, you can reduce your property taxes over time by decreasing the amount of electricity that you need to purchase from local utilities.

If you install solar panels on your home, you may be eligible for a property tax exemption in some states. This exemption typically applies to the value of the system itself and not the added value of the energy produced by it (although there are some exceptions). The exact rules vary by state, but you may qualify if you satisfy any of the following.

You own the home (not renting or leasing)
It's your primary residence
The system was installed after 1986

The bottom line is that many tax advantages to solar power are available to homeowners who want to invest in this industry. In addition to the money you'll save at the end of every year, you'll get to put a positive footprint on your local environment. Solar energy is one of the ways we can help combat the climate crisis while making a profit. Ensure you add it to your list of goals this tax season and contact Northwind Solar today for more information!

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Solar Update for Businesses - Powering Forward

June 20, 2025

Right now, the federal Investment Tax Credit (ITC) offers a 30% tax credit to businesses that install solar energy systems. Originally scheduled to continue through 2033, the current Senate version of the bill maintains this 30% rate only through the end of 2025. After that, the credit is set to step down sharply: 18% in 2026, 6% in 2027, and 0% in 2028 and beyond. Don’t Miss the Safe Harbor Window Fortunately, there’s a way to lock in the full 30% credit before it’s reduced. Under the IRS’s "safe harbor" provision, you can preserve the full ITC by beginning physical work on your project or making a minimum 5% down payment by the end of 2025 — even if your system is completed in 2026. This is a powerful opportunity to secure long-term financial benefits while the full federal incentive is still available. Stackable Incentives Make the Financials Even Better Beyond the ITC, there are several additional programs that can dramatically reduce your project’s net cost: 10% Domestic Content Bonus: Earn an extra 10% tax credit for using U.S.-made solar components. Focus on Energy Rebates: A Wisconsin-based program offering upfront cash rebates for solar projects. MACRS Accelerated Depreciation: A federal tax benefit that allows you to recover the cost of your solar system more quickly through tax deductions. Solar Central Wisconsin Grow Solar Group Buy: Group pricing and additional resources that make going solar more affordable for local businesses. When stacked together, these incentives can cover a significant portion of your total investment, all while reducing your energy bills for decades to come. Why Act Now Solar has always been a smart investment, but today’s environment is uniquely favorable. With utility energy costs rising and key federal credits sunsetting, 2025 is the year to take action. Whether you’ve previously explored solar or are just getting started, revisiting your project now could mean locking in tens of thousands of dollars in savings. Northwind Solar can help you navigate every step, from incentive qualification to project design and installation. Improve your profitability by making a high-performing energy investment in your business. Achieve energy independence, support local businesses, and contact Northwind Solar today! REQUEST A FREE ESTIMATE Reach out anytime at: 715‑630‑6451 ___________________ Additional Resources: Update on Residential Solar Incentive Changes Solar Incentives Overview Grow Solar Central Wisconsin Group Buy Program

Is Solar Power Worth It? Breaking Down the Myths and Real Benefits

June 11, 2025

Do you have questions about solar system benefits? Read this blog to learn more about breaking down the myths and real benefits of solar power.

2025 Grow Solar Central Wisconsin Group Buy Program

June 10, 2025

Northwind Solar is proud to continue its partnership as the official installer for the 2025 Grow Solar Central Wisconsin Group Buy Program , in collaboration with the Midwest Renewable Energy Association ( MREA ). This initiative offers homeowners and small businesses in Portage, Marathon, Waushara, Waupaca, Wood, and Lincoln Counties an exceptional opportunity to invest in solar energy at below-market rates through a limited-time group purchasing program. However, a critical deadline is approaching. Recent legislative developments indicate that the 30% federal Residential Solar Tax Credit —a significant incentive that substantially reduces the cost of solar installations—may expire on December 31, 2025, nearly a decade earlier than previously scheduled. This potential change underscores the urgency for homeowners to act swiftly to secure both the group buy discounts and the federal tax credit. “We’re excited to once again be working with the Grow Solar program to expand solar access in our region,” said Woody Bolton, employee-owner at Northwind Solar. “With the possibility of the federal tax credit ending soon, it's more important than ever for our neighbors to take advantage of these combined savings.” The Grow Solar program facilitates community members joining forces to leverage bulk pricing for solar installations, significantly reducing the cost of going solar. The program features free educational events, called Solar Power Hours, which help residents learn about solar energy, how it works, available incentives, and what to expect from an installation. “In times of uncertainty and climbing prices, one thing remains the same: we all need electricity,” said Evonne Waugh, program manager at MREA. “Investing in solar means securing lower bills for many years ahead.” Since its inception, Grow Solar Central Wisconsin has helped over 250 households and businesses make the switch to solar, adding nearly 2 megawatts of clean energy capacity to the local grid and generating millions of kilowatt-hours of renewable power annually. REQUEST A FREE ESTIMATE TODAY! ATTEND A SOLAR POWER HOUR INFO SESSION