July 2023 Overview: Solar Power Incentives, Tax Credits, and Rebates in Florida
Florida has consistently secured a position among the top three states for solar energy implementation since 2019, with the capacity to power well over 1.2 million homes using solar energy, as per the Solar Energy Industries Association (SEIA). The abundance of sunshine in the state is not the only advantage for homeowners; Florida provides a range of solar incentives that can significantly reduce costs.
Our team at Guides Home has compiled a comprehensive list of the top solar incentives available in Florida to assist you in saving on the purchase and installation of solar panels. From sales tax and property tax exemptions for solar energy to net metering and other local perks, find out how you can reduce your solar installation costs and consequently, your energy expenses.
Federal Solar Tax Credit The nationwide Incentive called the federal solar tax credit, officially termed the Investment Tax Credit (ITC), allows homeowners to claim a tax credit on the costs of solar installation. This credit corresponds to a 30% deduction on the total cost of their solar system and can be clubbed with other local incentives such as sales tax and property tax exemptions in Florida.
In 2020, the solar federal tax credit was reduced to 26%, but the Inflation Reduction Act reinstated the original 30% rate in 2022. This credit will remain in place until 2034 and then be gradually phased out as per the following schedule:
The credit will decrease to 26% in 2033. The credit will decrease to 22% in 2034. Unless renewed by Congress, the credit will phase out entirely in 2035. This credit can only be claimed once in the tax year during which the solar installation occurs. For instance, if you install a 5-kilowatt (kW) home solar system costing $13,000, the applicable ITC would be $3,900. This sum can be deducted from your next annual federal tax return. If the tax credit exceeds the taxes you owe, you can carry forward the surplus to the next year.
Section 25D of the U.S. Internal Revenue Code covers the solar investment tax credit for residential owners, while Section 48 pertains to the solar tax credit for businesses.
Florida State Solar Incentives As of 2023, Florida offers a sales tax exemption and a property tax exemption for solar energy systems. Currently, Florida does not provide solar rebates and grants.
The Solar and CHP Sales Tax Exemption Estimated savings: Applies to the Florida sales tax or 6% of solar photovoltaic (PV) system costs. How to claim: It’s a one-time incentive that’s automatically applied when you purchase a solar energy system. In July 1997, Florida introduced a sales tax exemption for solar energy and combined heat and power (CHP) systems. Initially, this benefit was set to last only five years, but later, the state converted it into a permanent incentive. The sales tax exemption applies to:
The retail price of solar panels, solar heaters, and combined heat and power systems. It is applicable for residential, commercial, and agricultural uses. Residents of Florida are exempt from paying sales tax on the purchase of a solar energy system, irrespective of its size. However, to qualify for the exemption, the solar equipment must be certified by the Florida Solar Energy Center. The solar sales tax exemption doesn’t involve any complicated process — you simply won’t be charged the 6% sales tax when purchasing an eligible solar panel system in Florida.
Property Tax Abatement for Renewable Energy Property Estimated savings: Dependent on your county’s property tax rate. How to claim: Your solar system is automatically excluded from your property tax value. Typically, improvements to a home can lead to an increase in property value and hence, higher property taxes. However, Florida’s Property Tax Abatement for Renewable Energy Properties ensures that homeowners aren’t taxed for any increase in home value resulting from solar panel installations. This exemption operates as follows:
If your home’s value rises due to the installation of solar panels, your property taxes remain unchanged. This incentive was introduced in July 2013 and will remain available through December 2037. For example, if you own a home valued at $400,000 in a Florida county with a 1.02% property tax (equivalent to $4,080 per year), your annual property tax would still remain at $4,080 even if the value of your home increased to $425,000 after installing solar panels. In comparison, another home upgrade worth the same value ($25,000) would result in an additional $255 to your annual tax load.