Illinois solar rebates and tax credits calculator

Summary of Illinois solar incentives 2021

Solar makes you a lot of money in Illinois. Yes, we said "makes!" Even though electricity prices are relatively low, the state gets enough sun that solar power saves you big money from day 1.

Since home solar is cheaper than ever before, which, combined with the Feds' 26% solar tax credit and Illinois's new direct SREC payments, means a solar panel system pays itself back quickly and makes you lots of money over its 25-year warrantied life!

Illinois’ adjustable solar block grant program, aka “Illinois Shines”, continues to produce strong results for homeowners and installers alike in 2020. However, there’s a need for state lawmakers to get more aggressive here with a solar energy harvesting requirement for utilities so the state can hit its 25% renewable energy goal by 2025.

Regardless, it's still a very wise move to go solar as a homeowner here. Take a good look at our rundown of Illinois solar power incentives below.

Federal solar investment tax credit

The federal solar investment tax credit will have the biggest impact on the cost you will face to go solar in Illinois

This perk is commonly known as the ITC, short for “Investment Tax Credit”. If you install your photovoltaic system in 2020, the federal tax credit is 26% of the cost of your solar panel system. This is 26% off the entire cost of the system including equipment, labor and permitting.

Example: If your solar energy system costs $20,000, your federal solar tax credit would be $20,000 x 26% = $5,200.

The federal tax credit falls to 22% at the end of 2022.

Net energy metering in Illinois

With net metering in some states, you get full retail rate credit for the amount of electricity you send back into the grid with your solar panels.

With net metering in place, your utility is required to track your renewable energy production and consumption during each monthly billing cycle. Any surplus you produce is carried over as a credit onto your future bills. Net metering is required to be available for you under Illinois law, unless your electricity is supplied by a cooperative or municipal cooperation. So far so good.

Illinois’ net metering policy would be just about perfect, if those credits hung around indefinitely, but they don’t. At the end of every annual period all remaining credits expire and revert back to the utility without compensation.

You may select an annual period that ends with the last day of either their April or October billing period, so at least you have a bit of flexibility to maximize your credit usage. What this means is that you need to make sure your solar system isn’t so big that you generate more electricity in a year than you use, not that you would want to anyway.

Note: Illinois is studying whether changes should be made to the net metering program. If the program is changed or done away with, it could have serious negative consequences for the financial returns of a solar installation here. Check here for updates.

Illinois solar rebates

Illinois does not offer any direct cash rebates for solar panels, but does offer an excellent solar program called "Illinois Shines" that pays solar system owners a lump sum based on the expected value of the energy their systems will produce over time. 

The Illinois Shines adjustable block grant program

The Illinois Shines adjustable block solar grant program provides a bunch of upfront cash when you go solar. When combined with the Federal 26% Solar Tax Credit, it can slash your solar installation costs by up to 65% on an average sized 6kW solar system!

Funds are paid out upfront to your solar installer, based on the expected amount of solar renewable energy certificates (SRECs) your system is projected to produce over 15 years.

To get this grant, you need to sign over your SREC rights to an approved vendor, or solar installer. The best installers will guarantee your payment is received out of the program. This may increase their quoted cost of your installed system, as installers usually take the Illinois Shines amount off your quoted install cost.

If you’re in Chicago and other places served by ComEd, you (or your installer) can expect to receive $70 for each SREC your solar system produces. An average 6kW home solar system cranks out about 110 SRECs over 15 years, netting a grant amount of almost $8,000.

Advantageous property tax treatment

Illinois has a property tax incentive to encourage solar power use. When you register your solar system with the chief county assessment officer, your solar equipment will be valued at no more than the value that would be given to a conventional energy system. That’s not as clear-cut as the 100% property tax exemption we’ve seen in a lot of states, but money saved is money saved, right?

If you live in other parts of the state, SREC prices are slightly higher at $82, for even more upfront savings.

We are not tax advisors, but there are no official letters from the federal government that state the value of the SRECs should be taken before the 26% federal solar tax credit.

Since the SRECs are actually paid out up front over a 15 year period, it would not match the yearly income threshold, and no 1099 will be issued. Basically, for most quoting calculations, you can expect to see the federal tax credit taken off of the complete system price and then see the SRECs amount deducted. Your installer will probably refer to them as SRECs or RECs instead of a grant or rebate, because of the tax implications, and they are specifically “Energy Certificates”.

Regardless, while you are selling your SRECs, it could be considered income. We recommend connecting with your tax preparer for more guidance.

Useful links

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