Solar Energy 2024: The Regulations and Incentives You Need To Know

If investing in solar in the near future has crossed your mind, there are a few things you should know to make an informed decision about your energy options.

In 2023, the U.S. saw a 50% increase in solar production capacity compared to the previous year. This means that more and more people are embracing energy independence. 

But is it worth your time and money to follow the trend sooner rather than later? 

Below, we’ll discuss solar tax credits, other incentives, and industry changes so you can choose what works best for you and your clean energy needs.

Solar Regulations and Incentives To Consider for 2024

Rebates and tax credits for solar panel installation have been around for a while. However, guidelines, regulations, and details regarding these incentives — such as the Inflation Reduction Act of 2022 — have changed and may continue to change per the Treasury Department and other regulatory agencies. 

Federal solar tax credit

According to the Office of Energy Efficiency & Renewable Energy, the Federal Tax Credit for Solar Photovoltaics (referred to as the Investment Credit, ITC) has been extended until 2032. 

Unless additional legislation is passed, a homeowner who gets a solar photovoltaic (SP, otherwise known as solar panels) system installed for their home by 2032 can receive a 30% tax credit that can be claimed on their federal income taxes for the year it was installed. 

This legislation also extended what is covered. Solar storage and equipment costs related to solar energy systems are now included as part of the total cost that can receive the 30% tax credit. 

Keep in mind that solar panel systems installed between 2033 and 2034 will receive a smaller percentage tax credit, with the legislation expected to expire entirely by 2035.

The Office of Energy Efficiency & Renewable Energy believes that the typical homeowner who purchases a solar panel system can receive a tax credit of more than $7,500 and will receive an additional $9,000 on average in electric bill savings over the lifetime of their solar panel system. 

Local solar rebates and credits

The savings for solar energy users don’t stop at the federal level. The benefits of solar installation right at your doorstep include:

Arizona solar tax credit

In addition to your federal tax credit, you can receive a 25% tax credit from Arizona (up to $1,000) for the year your solar energy system was installed. What if you owe less to the state of Arizona than your entitled tax credit? Not a problem! You can “roll over the credit into subsequent tax years, up to five years from your installation” date. 

Technically speaking, installing a solar system will increase the value of your home, thus increasing your property taxes. However, Arizona law exempts property tax liability increases for solar panel installation. Some cities in Arizona also offer rebates and other savings for switching to solar. 

Arizona utility solar rebates and programs

The Arizona Public Service (APS) has a buyback program in which you sell excess solar energy to APS in exchange for bill credits. The exact terms and rates depend on what was selected during your application process.

Additional Considerations for Solar Energy in 2024

Several policy changes could benefit homeowners who wish to purchase clean energy solutions this year.

Domestic solar manufacturing

In December 2023, the Department of the Treasury and the Internal Revenue Service proposed changes to the Inflation Reduction Act that offer domestic manufacturers a significant tax credit for producing clean energy products domestically.

With this in mind, production could triple in 2024 compared to 2023. This may impact you because it could potentially drive down equipment prices, making solar products more affordable for installers and consumers.

Lower federal interest rates

The Federal Reserve has announced that it may lower interest rates up to three times in 2024. This could make previously daunting loan rates more digestible for those wishing to get a loan to purchase their solar solution.

Net metering (net billing) rollbacks

For Arizonians, the compensation you get for sending unused solar energy to the grid is expected to decrease. 

Luckily, you can lock in your rate for the next 10 years when you join the program. This means the sooner you go solar, the more money you’ll receive for selling your excess solar energy. 

Still Wondering if You Should Get Solar Energy in 2024?

Converting to solar can feel complicated, but it’s important to understand your potential 2024 solar rebates and incentives to weigh your options and ease your decision-making process. 

At Sun Valley Solar, we have your back.

To find out what other factors impact your return on investment (ROI) and how to determine if solar is right for you and your home, download our complimentary Residential Solar Guide.