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 who installed solar systems before the deadline may still claim the credit, but systems installed in 2026 or later no longer qualify.
What to know about net metering in Arkansas
Net metering allows homeowners with solar (or other small renewable systems) to use the electricity they produce first and send any extra power back to the grid. In return, the utility credits the homeowner’s bill for that excess electricity, typically at the same retail rate they pay for electricity.
Arkansas technically uses a “net billing” system, which works a bit differently from traditional net metering. Instead of getting a full retail credit for the extra electricity you send back to the grid, you’re compensated at a lower, utility-determined rate. In simple terms:
- Your solar system powers your home first.
- If you produce extra electricity, it goes to the grid.
- The utility gives you a bill credit based on the avoided cost rate, which is usually lower than the retail electricity rate.
Older solar customers (called “legacy” customers) may still receive full retail credits for their extra power, but most new customers receive the lower avoided-cost credit.
Solar panel costs in Arkansas
Average solar panel costs in Arkansas generally start between $12,339 and $24,677.
System size is a major cost factor of going solar. A typical Arkansas household needs about a 8.1 kW solar system, which costs $20,007 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.
Average solar panel costs by system size in Arkansas
| 5 kW | 6 kW | 7 kW | 8 kW | 9 kW | 10 kW | |
|---|---|---|---|---|---|---|
| Statewide average | $12,339 | $14,806 | $17,274 | $19,742 | $22,210 | $24,677 |
Federal solar loan programs
Energy Efficient Mortgages allow homeowners to finance energy-saving upgrades, including solar systems, as part of their mortgage, often with support from federal programs like FHA or VA.
Types of Energy Efficient Mortgages
- FHA Energy Efficient Mortgages are available to many homebuyers. This lets you add money to your mortgage for energy upgrades. The upgrade cost must be less than the expected energy savings, and a home energy assessment is required first.
- VA Energy Efficient Mortgages are available to military members, veterans and reservists. This lets you add up to $6,000 if energy savings justify the cost.
- Conventional Energy Efficient Mortgages are offered by private lenders (not government-backed). You can borrow up to 15% of a home’s value for energy upgrades. This may help borrowers qualify by adjusting debt-to-income rules.
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 | 4.3 |  | 20.9% | 25 years | Cash, loan | 2016 |
 ShopSolar | Learn More | 4.6 | | 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.
» EXPLORE: Solar incentives by state
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 avoid an average of $16,822 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.
» COMPARE: Best solar companies
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.
» SOLAR PANELS: Lease vs. buy
Is my house a good candidate for solar?
Solar panels work best on large, unshaded roofs that face south or west. We suggest using NREL’s PVWatts Calculator to estimate how much electricity a solar panel can produce over a year on your house. Project Sunroof is a reliable online solar savings estimator.
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.
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, "Arkansas Programs." Accessed March 12, 2026.
- University of Arkansas System, “Net Metering Policies.” Accessed March 12, 2026.
- United States Environmental Protection Agency, "Energy Efficient Mortgages." Accessed March 12, 2026.
