What are Kentucky Solar Tax Credit & Incentives in 2023?

What are Kentucky Solar Tax Credit Incentives

There’s a sunny spot in Kentucky’s renewable energy landscape, and it’s all about solar energy! Prior to any incentives, the majority of Kentucky households spend around $25,740 on solar panels Kentucky, or about $18,018 if the federal investment tax credit (ITC) is taken into account. This is reported by the EcoWatch in 2023. Other incentives can further reduce the actual cost of converting to solar power.

Despite ranking among the slower states for solar adoption by Solar Energy Industries Association (SEIA), Kentucky still boasts a handful of incentives. This makes converting to solar power more affordable and accessible for residents via solar panel installation. The one shining bright on the horizon? The Solar Tax Credit 2023. Let’s explore this sunny prospect together.

A Glimpse of the Federal Solar Tax Credit

The Federal Solar Tax Credit 2023 is a splendid financial perk available to solar enthusiasts in the Bluegrass State. This federal credit is not a cash-back incentive; instead, it provides a discount on your income tax liability for 30% of your whole solar system value. Think of it as a solar deduction from the money you owe the federal government.

Introduced in the early 2000s, this credit was set to retire in 2024. But the Inflation Reduction Act extended the program in 2022. This means that for solar systems installed between 2022 and 2031, a 30% credit rate applies. The rate then gently descends to 26% in 2033 and further dips to 22% in 2034. After 2034, this credit will expire.

So, if you’re a typical Kentucky homeowner planning to install a solar system of around 11 kilowatts, you stand to earn a tax credit of around $7,722.

Note:If you want to learn more about the benefits of solar panel installation in Kentucky, click here!”

How to Claim Solar Tax Credit in 2023?

But how do I claim this solar tax credit? Here’s how to claim solar tax credit in 2023:

  • Print and Complete IRS Form 5695: When tax season rolls around, all you need to do is print IRS form 5695. Fill it out with information about your solar panel system, including cost, size, and installation address. Please remember you can only claim the credit for the tax year following your solar system installation.
  • File Your Taxes: Simply file this form along with your tax returns. It’s crucial to gather some elementary information about your solar system, like the cost, system size, and the address where it’s installed. If you’re using tax software like TurboTax, it’ll automatically ask if you’ve installed a solar system. Just affirm, and it’ll guide you through the process.
  • Roll It Over: After completion, file the form along with your taxes, or have your accountant do it for you. If you’re using tax software like TurboTax or H&R Block, you’ll be prompted about any solar installation. Simply affirm that you have installed solar and let the software guide you through the rest.

What are the Kentucky Solar Incentives Beyond the Federal Tax Credit?

While the federal tax credit is the main component of Kentucky’s solar incentives, there are other programs in place that are worth to be noted. Commercial customers can leverage the Kentucky PACE Financing Program and the Kentucky Incentives for Energy Independence.

The PACE program is a fantastic financing opportunity that allows commercial entities to install solar energy systems without an enormous upfront cost. If you qualify for this program, the monthly charges for your system are conveniently added to your property tax bill.

The Kentucky Incentives for Energy Independence, on the other hand, provide perks like tax exemptions, severance tax incentives, and wage incentives on a per-employee basis.

Kentucky PACE Financing Program: An Overview

PACE, an abbreviation of Property Assessed Clean Energy, is an innovative financing way for Kentucky solar customers to make the leap to solar energy without the steep upfront costs. This program ensures low-interest rates and minimal down payments, making renewable energy more attainable. The savings you can net with PACE financing can be considerable, transforming solar from an expensive dream to a realistic goal.

However, please be aware that PACE financing is presently only available for commercial customers in Kentucky. There is state legislation underway to extend this option for residential purposes, so keep an eye out for updates.

Kentucky Incentives for Energy Independence: A Must for Commercial Customers

If you’re a commercial customer, the Kentucky Incentives for Energy Independence program is a boon. With the potential for up to 100% tax exemption for sales tax and use tax and significant tax credits for the cost of the system, the financial burden of solar array installation can be significantly lightened.

Application for this program, while simple, does require a non-refundable application fee of $1,000. However, with the savings you could make, this cost can quickly become a worthwhile investment.

Local Solar Incentives in Kentucky

Kentucky homeowners can also take advantage of several other local incentives that, while not explicitly for solar, can still make energy-efficient home improvements more affordable.

Homeowners have various local initiatives such as the Blue Grass Energy Cash-Back Incentive, Duke Energy Rebates, and Louisville Gas & Electric Company (LG&E) and Kentucky Utilities (KU). Taking advantage of the federal solar tax credit is very easy and simple as well. 

What is the SRECs/TRECs Scenario in Kentucky?

While some states offer Solar Renewable Energy Certificates (SRECs) as an incentive for producing solar energy, Kentucky does not currently have this system. This could change if the state implements a Renewable Portfolio Standard (RPS) goal in the future, but there are currently no signs of that happening.

What is the Future of Solar Incentives in Kentucky?

Solar incentives vary from state to state and change regularly, so it’s always possible that the incentives discussed above will improve or become less appealing in the future. At present, there is no plan in place for changes to incentives in Kentucky.

However, one thing is certain – the solar tax credit 2023 is the prime thing that you don’t want to miss as a resident of Bluegrass State. It’s a bright spot in a state with a general lack of solar incentives, making it a cornerstone for anyone considering going solar in Kentucky.

Pro Tip:Explore the solar panel 2023 pricing and savings in Kentucky- Here!”

Conclusion

The path to greener living and sustainable energy consumption is becoming more straightforward and affordable due to the various incentives and financing programs available, like the solar tax credit 2023. Even in states like Kentucky, where solar incentives are not as robust compared to other states, there are opportunities for both homeowners and commercial entities to embrace solar power.

When you’re considering going solar, make sure to explore all the available options. At Ohio Valley Solar, we understand what fits best for your situation. As you transition into a cleaner energy future, we will keep you up-to-date with the latest tax credits, financing programs, and other incentives that can be beneficial. We are already contributing to the future of solar energy in the Bluegrass State through our solar panel installation Kentucky services.

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