What happened to the federal solar tax credit?
The federal solar investment tax credit (ITC) previously let homeowners deduct 30% of installation costs from their federal taxes. It was phased out with the “One Big Beautiful Bill Act” (OBBBA) in 2025. Homeowners installing solar systems now no longer qualify.
What to know about net metering in Arkansas
Net metering is a way for homeowners with solar panels to get credit for extra electricity they send to the grid. Your home uses the solar power it needs first, and any leftover electricity flows back to your utility.
Arkansas now handles this a little differently for most new solar customers. Instead of receiving a full retail-rate credit for excess electricity, you generally receive a lower credit based on your utility’s avoided-cost rate — essentially, what the utility would have spent to produce or buy that electricity elsewhere.
Here’s how it works:
- Your solar panels power your home first.
- If you produce more electricity than you use, the extra goes to the grid.
- Your utility gives you a bill credit for that excess power at its avoided-cost rate.
- Because that rate is typically lower than the retail electricity rate, you’ll usually save more by using your solar power at home than by sending it back to the grid.
Some Arkansas solar customers are still covered by the state’s older net-metering rules. Customers who qualified for legacy or legacy-transitional status before the Sept. 30, 2024, deadline can continue receiving kilowatt-hour-for-kilowatt-hour credits under the previous system until June 1, 2040.
Most customers who did not qualify for legacy status are now covered by their utility’s nonlegacy net-metering tariff, which uses the avoided-cost credit system described above.
Solar panel costs in Arkansas
Average solar panel costs in Arkansas generally range $11,900 for a 5-kW system to $23,800 for a 10-kW system.
System size is a major cost factor of going solar. A typical Arkansas household needs about a 14.39 kW solar system, which costs $34,248 on average. Depending on your energy needs, you might need a smaller or larger system.
Your total price also depends on whether you add battery storage to your system. Solar batteries cost $7,000 to $18,000, which can nearly double the total system price.
Solar panel costs by system size in Arkansas
| 5 kW | 6 kW | 7 kW | 8 kW | 9 kW | 10 kW | |
|---|---|---|---|---|---|---|
| Statewide average | $11,900 | $14,280 | $16,660 | $19,040 | $21,420 | $23,800 |
How can I pay for solar panels?
Going solar is like buying a car. You could pay cash, but a lot of people finance or lease with minimal upfront costs.
- Solar loans work like any other home improvement loan. There’s an application and approval process. You pay it back over time (with interest) each month.
- Leasing solar panels lets you set up a system without high upfront costs. A solar company installs and maintains the panels on your property, and you pay a monthly fee to use them.
Federal mortgage options for solar panels
Arkansas doesn’t offer a state solar tax credit or rebate, but some homeowners may be able to finance solar or other energy improvements through federally backed mortgages.
- FHA solar financing: FHA borrowers may be able to add the cost of a new, borrower-owned solar panel system to their mortgage when buying or refinancing a home. The system and borrower must meet FHA requirements.
- VA Energy Efficient Mortgage: Eligible VA borrowers can finance up to $6,000 in qualifying energy-efficiency improvements as part of a VA purchase or refinance loan. For improvements costing $3,000 to $6,000, the lender considers whether the expected energy savings justify the higher mortgage payment.
Compare solar companies in Arkansas
Working with a local solar company in Arkansas makes it easier to understand local incentives.
| Company | Customer rating | Pro install | Max. panel efficiency | Panel warranty | Payment options | Year founded | |
|---|---|---|---|---|---|---|---|
 Abundant Energy of Arkansas | Learn More | 5.0 |  | Varies | 25 years | Undisclosed | 2017 |
 Project Solar | Learn More | 3.8 |  | 20.9% | 25 years | Cash, loan | 2020 |
 ShopSolar | Learn More | 4.3 | | Varies | Varies | Cash, loan | 2018 |
FAQ
Are there any incentives for homeowners to add solar storage batteries in Arkansas?
No, Arkansas doesn’t have any residential incentives for battery storage.
Are solar panels worth it in Arkansas?
Going solar is often worth it for many Arkansas homeowners for the long-term savings on utility bills. Over 25 years, Arkansas residents with solar panels can avoid an average of $44,741 in utility costs.
Your current electric bill is the starting point for assessing the financial benefits of transitioning to solar energy. Your average energy consumption tells you what size solar system you need. Once you know this, you can figure out potential savings and how long it should take for your solar installation to pay for itself.
Is my house a good candidate for solar?
Solar panels work best on large, unshaded roofs that face south or west. The condition of your roof matters too — if it needs replacement soon, do that before installing solar panels. Installing solar panels on an old roof might mean you have to remove the panels, replace your roof and then reinstall the panels. This will cost around $5,000 for a 19-panel setup.
What has Arkansas’ investment in solar been so far?
Total solar investments in the state amount to $5.4 billion, according to the Solar Energy Industries Association.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- DSIRE, "Programs." Accessed July 28, 2026.
- University of Arkansas System, "Net Metering Policies." Accessed July 28, 2026.
- United States Environmental Protection Agency, "Energy Efficient Mortgages." Accessed July 28, 2026.
- Solar Energy Industries Association, "Arkansas." Accessed July 28, 2026.
