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State solar incentives

Solar incentives in Iowa: Make your switch easy

Edited by: Andrei Gorichenskii

Iowa has enough sunshine to let your PV system pay for your electricity bills, or at least significantly cut them. To cut the upfront solar panel installation costs, use solar incentives in Iowa — read about them in this article.

Key takeaways

  • Iowa has more than enough sunshine to make your solar energy system pay for your electric bill, or at least drive your and energy costs down.Time to review the key ones.
  • Iowa residents can claim a 30% federal tax credit on the total cost of their solar system installation. This energy system tax credit applies to both home and business solar projects.
  • Net metering is available for customers of investor-owned service utilities, covering nearly 90% of residential customers. Excess energy is credited at the full retail rate. Unused credits are purchased annually at the avoided cost rate. 
  • Solar equipment of different applications in Iowa is eligible for sales tax exemption from the state's 6% sales tax. More information can be provided by the Iowa Department of Revenue.
  • 100% of the added value from a solar PV system is exempt from property taxes for 5 complete assessment years. 
  • Solar easements can be established to protect access to sunlight. Disputes can be taken to a solar access regulatory board or district court.

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 Iowa allow customers of all investor-owned utilities to join net metering programs. In total, the program is available to almost 90% of residential customers in Iowa. Hence, households have the option to send the excess electricity back to the grid instead of storing it with battery banks. When you sell your solar power to the utility, you receive credits that can be used to offset your next bills. In Iowa, their value is equal to full retail electricity price. If you accumulate any unused credits, they will be purchased from you annually at the avoided cost rate. Check to see if the service company has any kw requirements for your system.

Buy solar equipment tax-free and save 6%

In Iowa, solar equipment is exempt from the state’s sales tax, meaning these additional 6% stay in your pocket. Solar equipment includes any device used to convert sunlight into energy. Anything needed to prepare the energy for storage or put it to use is also subject to the exemption. Thus, everything you need to build a PV system of any scale can be bought tax-free in Iowa.

Freeze your property tax with Exemption for Renewable Energy Systems

A solar PV system installed in a home increases its value by about 4%, says the Zillow report. In Iowa you don't have to pay extra taxes during the first few years. According to state laws, 100% of the value added as a result of a solar PV system installation shall be exempt from taxation for 5 full assessment years.

4%

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

Protect your solar panels from shade with Solar Easements

A solar easement contract is a written agreement between you and another party, for example, your neighbor. This type of contract helps to ensure a stable supply of sunlight for your PV system for years to come. A solar easement protects your panels from potential impairments, such as vegetation and structures. It is voluntary and must contain the description of protected space, a list of restrictions and a clause on revision or termination of the contract. Once signed, it is tied to the land, not the owner.

Any such agreement must be created in written form and must meet the general requirements for legal contracts. If a solar easement can’t be obtained in a voluntary manner, the issue may be taken to the solar access regulatory board or to the district court.

Incentive/
Program
Description
BenefitsEligibility/
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.
Customers of investor-owned utilities.
Credits at full retail rate, annual purchase of unused credits at avoided cost.
IA Sales Tax Exemption
Exemption from state sales tax on solar equipment.
Reduces upfront costs.
Purchase of solar equipment.
6% sales tax exemption.
Property Tax Exemption
Exemption on added property value from solar for 5 years.
No increase in property taxes for 5 years.
Installation of a solar PV system.
100% exemption for 5 assessment years.
Solar Easements
Legal agreements to protect access to sunlight.
Ensures optimal solar panel performance.
Negotiated between property owners.
Disputes can be taken to a regulatory board or court.


What are solar incentives, and why do they exist?
The drive to integrate solar energy into our power systems is heavily supported by a range of incentives. These incentives, including tax credits and rebate. Governments worldwide implement these programs to expedite the transition away from fossil fuels. Solar energy, while abundant and clean, requires initial investments that many cannot manage without assistance. Incentives therefore act as a catalyst, making solar a practical and appealing choice.

These policies also serve broader national interests. By fostering the solar industry, governments stimulate economic growth, creating new jobs and driving innovation. Furthermore, reducing reliance on imported fossil fuels strengthens energy security and resilience. In essence, solar incentives are a critical policy mechanism, addressing both environmental imperatives and national economic objectives by making solar energy a financially accessible option.

Check out solar panels near you!

Looking to build a home solar system? Check out solar panels that we have for sale in Iowa

SHOP SOLAR PANELS

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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