Are you a Florida resident considering making the switch to solar and want to know what sort of incentive programs are available for you to take advantage of? If so, continue reading to get a comprehensive list of the tax credits, tax exemptions, and other incentives currently available. To speak to a Florida solar expert directly, please contact our team today. We’re happy to answer any and all questions you may have!
Solar Deals in the Sunshine State
Bathed in generous sunlight all year round, Florida is an ideal location for tapping into solar energy’s potential. Recognizing the ever-growing demand for clean and sustainable power, the Sunshine State has taken significant strides by offering a myriad of solar power tax credits, exemptions, and incentive programs to persuade residents and businesses to embrace this eco-friendly energy solution.
This article sheds light on Florida’s many opportunities and discusses the vital role these incentives play in accelerating solar energy adoption, ultimately benefiting the state’s economy and the environment.
Whether you are a homeowner or business owner considering solar power investments or simply intrigued by Florida’s commitment to promoting green energy, read on to uncover a broad spectrum of financial incentives that render going solar an enticing and practical option for a wide range of individuals and businesses.
Florida’s Solar Power Potential: A Bright & Sustainable Future
Graced with copious sunshine, Florida boasts an impressive 237 sunny days per year on average, rendering it a prime location for capitalizing on solar energy. Yet, the state’s aptness for solar panel deployment is not merely rooted in its abundant sunlight. Financial incentives and an escalating dedication to green energy have placed Florida at the forefront of solar power capacity, securing the third position among all states, as per a 2021 report by the Solar Energy Industries Association.
In spite of this remarkable standing, a mere five percent of Florida’s overall energy output is currently derived from solar power. This figure is set to shift as utility companies ramp up their renewable energy investments and solar panel installation expenses continue on a downward trend. As a result, Florida’s solar power landscape is anticipated to experience substantial growth in the near future.
Cost of Solar & Payback Period
One key element influencing solar power adoption in Florida is the installation cost. The estimated payback period for a 5kW solar panel system in Florida is slightly above 10 years. This implies that after about a decade, the initial outlay for solar panels will have been recouped, allowing users to genuinely reap the rewards of diminished utility bills each month.
Furthermore, the financial incentives available in Florida can significantly alleviate the initial solar power investment, making it a more appealing option for prospective adopters. These incentives, together with the state’s plentiful sunlight and burgeoning commitment to clean energy, pave the way for a bright future for solar power in Florida.
As solar energy increasingly becomes more affordable and accessible, a growing number of property owners are expected to transition to this renewable source, ultimately fostering a more sustainable and eco-friendly energy environment in the Sunshine State.
Federal Solar Tax Credit
A tax credit furnishes a dollar-for-dollar deduction in your income tax liability that you would ordinarily be obligated to pay, occasionally known as an Investment Tax Credit (ITC) at the federal level. The federal residential solar energy credit represents a tax credit that taxpayers can claim on their federal income taxes, corresponding to a percentage of the solar PV system’s cost they have financed.
To be eligible, the installation must transpire entirely within the tax year. Solar PV systems set up in 2020 and 2021 are eligible for a 26 percent tax credit.
In August 2022, Congress enacted an ITC extension, escalating it to 30 percent for installations occurring between 2022 and 2032. This credit will subsequently diminish to 26 percent for systems implemented in 2033 and further drop to 22 percent for installations in 2034. The tax credit expires starting in 2035 unless renewed by Congress.
You may be eligible for this tax credit if your solar PV system was installed between January 1, 2017, and December 31, 2034, is located at a residence of yours in the United States, and you own the system or purchased an interest in an off-site community solar project. The credit can only be claimed on the “original installation” of the solar equipment.
Eligible expenses include solar PV panels or PV cells, contractor labor costs for onsite preparation, assembly, or original installation, balance-of-system equipment, energy storage devices with a capacity rating of 3 kWh or greater, and sales taxes on eligible expenses.
Various incentives can affect the federal tax credit. Under most circumstances, subsidies provided by your utility to install a solar PV system are excluded from income taxes through an exemption in federal law. In this case, the utility rebate for installing solar is subtracted from your system costs before calculating your tax credit. Payments from a public utility to compensate for excess generated electricity not consumed by the taxpayer but delivered to the utility’s electrical grid do not affect the taxpayer’s credit qualification or amounts.
Unlike utility rebates, rebates from state governments generally do not reduce your federal tax credit. State tax credits for installing solar PV generally do not reduce federal tax credits – and vice versa.
However, when you receive a state tax credit, the taxable income you report on your federal taxes may be higher than it otherwise would have been because you now have less state income tax to deduct. The end result of claiming a state tax credit is that the amount of the state tax credit is effectively taxed at the federal tax level.
Florida’s Solar Tax Credits & Rebates
While Florida does not offer statewide solar panel rebates, tax credits can still render installations more budget-friendly.
Sales Tax Exemption
Floridians benefit from the Solar and CHP Sales Tax Exemption, which exempts them from the six percent sales tax typically levied on solar panels.
Florida law grants exemption from sales and use tax for solar energy systems and all their components.
A “solar energy system” refers to the necessary equipment and hardware used to collect, transfer, convert, store, or utilize solar energy for applications such as water heating, space heating and cooling, or other uses that would typically rely on conventional energy sources like petroleum products, natural gas, or electricity.
Net metering is a program that enables utility customers who have installed approved renewable energy generation systems, like solar panels, to purchase and sell electricity back to their provider. When you produce electricity for your home or business using solar panels, you decrease your reliance on utility company-supplied energy, thereby reducing your monthly electric expenses.
If your solar panels generate surplus energy, this excess is returned to the grid, leading to a deduction from your monthly bill or a credit applied towards upcoming bills within the same calendar year.
Eligible renewable energy sources for net metering include:
- Solar energy (photovoltaic)
- Wind energy
- Biomass (landfill gas or methane)
- Hydroelectric power
- Ocean energy (tidal power or ocean currents)
- Waste heat
- Geothermal energy
Xando assists all customers with the net-metering process from prequalification through completion. The process is done in tandem with the solar installation.
Florida Solar Property Tax Exemption
Florida’s solar property tax exemption presents a substantial opportunity for property tax savings to homeowners who choose to implement renewable energy improvements. A full 100 percent exemption from property taxes is granted for residential properties with solar renewable energy installations.
Properties that qualify include those with solar photovoltaic systems, solar PV systems combined with storage, and solar water heaters that were installed on or after January 1, 2013.
The list of approved equipment features:
- Solar energy collectors
- Photovoltaic modules
- Storage tanks
- Supplementary storage systems (excluding swimming pools repurposed as storage tanks)
- Various control devices
- Heat exchange devices
- Independent thermal containers, pipes, ducts, wiring, structural supports, and power conditioning Storage apparatuses that employ solar energy to create electricity or mechanical power
Assessments conducted as of January 1, 2014, are subject to the residential Florida solar property tax exemption.
Local Solar Programs & Incentives
Certain local electric cooperatives and municipal utilities provide solar rebate programs that aren’t mentioned here. To discover all the possible financial incentives throughout Florida that could help reduce the expense of your solar system even more, consult the Database of State Incentives for Renewables & Efficiency via the link below.
See a full list of solar programs and tax incentives available in your part of Florida: Local Incentives for Solar & Renewable Energy
In summary, the abundant sunshine and dedication to promoting green energy make Florida an ideal place for solar power adoption. In the Sunshine State, a plethora of financial incentives such as tax credits, exemptions, and diverse programs are at the disposal of residents and businesses, making solar energy increasingly attainable and cost-effective.
As Florida forges ahead in championing renewable energy alternatives, the state’s solar power prospects grow brighter. By capitalizing on the myriad financial opportunities available, homeowners and enterprises alike can contribute to cultivating a sustainable and eco-friendly energy environment throughout Florida.
For further insight into the extensive selection of solar incentives and initiatives accessible in your region, reach out to a Florida solar specialist at Xando for a free solar consultation.