Solar incentives in Indiana to bring down the costs

Updated: Mar 04, 2025
8 min

Julia ZaraevaAuthor

Indiana is a fairly sunny state, where a solar system can substantially cut your electricity bills and help save money. And to save some more, read our article on solar incentives in Indiana.

Key takeaways

In Indiana, building your residential solar panel system can offer you not only clean energy, but also energy efficiency and lower electricity bills year by year, especially with many solar incentives and rebates your solar project is eligible for. Read for more information.
Indiana residents can claim a 30% federal tax credit on the total cost of their solar system installation.
Investor-owned utilities and electric cooperatives offer net metering for systems under 1 Megawatt. Credits are valued at the retail electricity price. Unused credits have no expiration date with the same provider. Requires an interconnection agreement approved by the Indiana Utility Regulatory Commission (IURC).
The added value of a solar PV system is exempt from property taxes. Property value increases by approximately 4%. Form 18865 must be filled out and given to the county auditor.
Certain components of a solar system are exempt from sales tax. This includes items directly involved in electricity production, such as racks and inverters.
Solar easements protect solar systems from shading. Voluntary agreements between property owners. Must be a written and legal contract.

Save 30% of your PV system cost with Federal Solar Tax Credit

The US government wants more people to go solar: it’s a modern and green way of getting energy. This is why the Solar Investment Tax Credit (ITC) program was developed. It allows American citizens to claim 30% of the cost of their installation as an income tax deduction. The cost here is not only solar panels, but also shipping, installation expenses and more. For example, if your system overall made you spend $10,000, the government returns you $3,000. To claim the ITC, complete all the necessary forms and submit them when filing your taxes.

Sell excess electricity with net metering program

Solar laws in Indiana allow customers of investor-owned utilities and electric cooperatives to join net metering programs with solar systems under 1 Megawatt. This gives solar owners an opportunity to put the excess electricity into the utility grid instead of storing it in batteries. When you sell your solar power to the grid, you receive credits that can be used to offset your next bills.

The credit value in Indiana is equal to the retail rate of your utility electricity price which will vary depending on your provider. Unused credits have no expiration date as long as you stay with your provider. Before you can start net metering, you must submit an interconnection agreement with your utility provider approved by the Indiana Utility Regulatory Commission (IURC).

Raise your property value but not your taxes

Indiana residents invested in a solar energy system will not have to pay any additional property taxes on the added value they bring to their homes. Due to the property tax exemption for renewable energy systems, the Indiana Code ensures any new PV system installed will not be part of your property tax. However, any such home improvement will definitely make it about 4% more valuable on the property market, says the Zillow report. In order to claim the exemption, property owners must fill out Form 18865 and file it with the local county auditor.

this is how much solar panels increase the value of your house

Indiana sales tax exemption makes solar equipment cheaper

Many components are exempt from your sales tax under Indiana’s sales tax exemption for electrical generating equipment when you install a solar energy system. According to the law, you don’t have to pay sales tax on products directly involved in the production of electricity on your solar modules, for example, racks, and inverters.

Solar Easements will protect your solar panels from shade

A solar easement contract is a written agreement between you and another party, for example, your neighbor. This type of contract helps to ensure that your PV system will always have adequate sun exposure, protecting you from potential obstacles. It is voluntary, but cannot be canceled unless a specific clause is included in the document. Any such agreement must be created in written form and must meet the general requirements for legal contracts.

Incentive/ Program	Description	Benefits	Eligibility/ Requirements	Notes
Federal ITC (30%)	30% tax credit on the total cost of solar system installation.	Reduces overall system cost, accelerates payback period.	Must own the system, meet IRS guidelines.	Applies to installation, equipment, and other associated costs.
Net Metering	Allows homeowners to sell excess solar energy back to the grid for credits.	Reduces or eliminates electricity bills.	Systems under 1MW; interconnection agreement with IURC approval.	Credits at retail rate, no expiration with the same provider.
Property Tax Exemption	Exemption on added property value from solar.	No increase in property taxes due to solar.	Form 18865 filed with the county auditor.	Property value increases by ~4%.
Sales Tax Exemption	Exemption on specific solar equipment.	Reduces upfront costs.	Purchase of solar equipment.	Applies to components directly involved in electricity production.
Solar Easements	Legal agreements to protect access to sunlight.	Ensures optimal solar panel performance.	Negotiated between property owners.	Must be a written and legal contract.

What are solar incentives, and why do they exist?

Solar incentives are government-backed financial programs designed to encourage the adoption of solar energy systems for homes and businesses. These incentives aim to reduce the upfront cost of solar installations, which often presents a significant financial barrier.

These incentives take various forms:

Tax credits: These allow individuals and businesses to deduct a portion of the solar system's cost from their federal or state tax liability. This direct reduction in taxes owed can significantly lower the overall expense. In some instances, refundable tax credits may result in a direct refund.
Rebates: Offered by state or local governments, or utility companies, rebates provide a cash refund after the solar system is installed. This can either be a direct payment or a reduction in the system's purchase price.
Feed-in tariffs (FITs): These programs enable solar system owners to sell surplus electricity generated back to the grid. This creates a revenue stream, offsetting the initial investment and providing ongoing financial benefits.

Governments implement these programs for several key reasons:

Environmental protection: Solar energy reduces reliance on fossil fuels, thereby decreasing greenhouse gas emissions and air pollution.
Economic growth: The solar industry creates jobs in manufacturing, installation, and maintenance, stimulating economic activity.
Energy security: Increased solar adoption reduces dependence on imported fossil fuels, enhancing energy independence.
Public health: Reduced pollution contributes to improved air quality and public health outcomes.

For homeowners and businesses, solar incentives offer substantial advantages:

Reduced upfront costs: Tax credits and rebates significantly lower the initial investment required for solar installation.
Lower electricity bills: Solar systems generate electricity, reducing or eliminating reliance on traditional utility power.
Potential income generation: Feed-in tariffs provide an opportunity to earn revenue by selling excess electricity.

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Julia Zaraeva

Author

Years of experience in translation and a love of nature help Julia find the right words to encourage going solar. She joined the team in 2023 and is happy to make her contribution to a greener future.

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