Arkansas solar incentives, tax credits and rebates
Resources to make solar panels more affordable in 2024
Other states have plenty of programs to help residents offset the cost of installing solar panels, but Arkansans only get the federal incentives. Here’s everything you need to know about how different incentives can help make installing panels more affordable in the Natural State.
In Arkansas, a typical residential solar panel system costs $9,345 to $26,700, depending on the size of your system and what financial incentives you qualify for.
Jump to insightThe federal solar investment tax credit (ITC) is the best financial incentive for most Arkansas homeowners to buy solar panels.
Jump to insightIn 2023, Arkansas lawmakers reduced the rate at which homeowners with rooftop solar panels will be compensated for the additional electricity their systems generate.
Jump to insightResidential solar panel incentives in Arkansas
Arkansas currently does not have residential solar panel incentives, but you can still take advantage of the 30% federal solar investment tax credit (ITC).
The ITC drops to 26% in 2033 and then 22% in 2034.
The ITC reduces your federal tax liability by 30% of the cost of installing solar panels. For example, if you spend $10,000 installing a solar panel system, the ITC is worth $3,000. If, in the year your system becomes operational, you owe $15,000 in taxes, the ITC reduces what you owe to $12,000.
The solar tax credit is not a rebate or refund — you must claim it when you file federal taxes in the year that your solar panel system becomes operational. To do this, you have to complete Form 5695. Any unused portion rolls over into the next tax year.
Additional solar incentives available in Arkansas
Check DSIRE for the most comprehensive source of information about solar incentives and policies in Arkansas.
| Incentive type | Amount | Eligible solar equipment | Applicable sectors | Administrator | |
|---|---|---|---|---|---|
| Sustainable Building Design Revolving Loan Fund | Loan program | 100% project financing based on available funds | Solar water heat | State government | Department of Transformation & Shared Services, Division of Building Authority |
| Residential Energy Conservation Subsidy Exclusion | Personal tax exemption | 100% of subsidy | Solar panels, solar water heat, solar space heat | Residential, multifamily residential | U.S. Internal Revenue Service |
| Residential Energy Conservation Subsidy Exclusion | Corporate tax exemption | 100% of subsidy | Solar panels, solar water heat, solar space heat | Residential, multifamily residential | U.S. Internal Revenue Service |
| Energy-Efficient Mortgages | Loan program | Varies | Solar panels, passive solar, solar space heat | Residential | Federal government-sponsored enterprises, lending institutions, state government agencies and local governments |
What to know about net metering in Arkansas
Net metering lets homeowners with solar panels sell any excess electricity they generate to their local power grid. Arkansas overhauled its net metering policy in 2023. The new net energy billing policy doesn't let you bank excess electricity within a billing cycle. Instead, you can use the electricity you generate in real time and sell any extra to the utility grid at a lower rate.
According to the University of Arkansas System’s Cooperative Extension Service, the policy changes are expected to affect the financial viability of solar installations, potentially leading to a decrease in solar adoption due to reduced incentives for new installations.
» BEST STATES FOR SOLAR: Arkansas ranked 49th in 2024
How much are solar panels in Arkansas?
After the federal solar tax credit, solar panel costs in Arkansas typically range from $9,345 to $18,690.
Your system size greatly affects how much you pay overall. The typical system size for solar systems in Arkansas is 11.19 kW (kilowatts). You might need a larger or smaller system, depending on your average household energy use.
Average solar cost by system size in Arkansas
| 5 kW | 6 kW | 7 kW | 8 kW | 9 kW | 10 kW | |
|---|---|---|---|---|---|---|
| Before federal tax credit | $13,350 | $16,020 | $18,690 | $21,360 | $24,030 | $26,700 |
| After federal tax credit | $9,345 | $11,214 | $13,083 | $14,952 | $16,821 | $18,690 |
Solar resources in Arkansas
Below are some additional resources that can help you go solar in Arkansas.
Find solar companies in Arkansas
A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for Arkansas’s top solar companies to learn more.
| Company | Customer rating | Pro install | Payment options | Year founded | |
|---|---|---|---|---|---|
 | 2.9 | Yes | Cash, loan | 2017 | Learn more |
 | 2.1 | Yes | Cash and loan | 2015 | Learn more |
 | 4.7 | No | Cash, loan | 2018 | Learn more |
FAQ
How can I pay for solar panels?
You can pay cash, but most people finance solar panels with a solar loan. It works a lot like any other type of loan — there’s an application and approval process, and you pay it back over time (with interest). You also have the option of leasing solar equipment.
» SOLAR PANELS: Lease vs. buy
Can I get free solar panels in Arkansas?
You can lease solar equipment with little to no upfront costs, but it’s not totally free. Solar leases generally require a flat monthly fee. In the best-case scenario, it’s cheaper than your current electric bill.
» FREE SOLAR PANELS: Are they really free?
How much can I save with solar panels in Arkansas?
On average, Arkansas homeowners with solar panels avoid $67,139 in utility costs over 25 years. Even if you don’t generate 100% of your energy needs, you can still save a lot of money versus paying traditional utility bills. In Arkansas, solar panels usually pay for themselves within 9.5 years.
» EXPLORE: Where your solar savings go the furthest
Is my HOA allowed to restrict solar panels?
There are no laws stopping homeowners associations from restricting solar panels in Arkansas.
What has Arkansas’s investment in solar been so far?
Total solar investments in the state amount to $1.6 billion, according to the Solar Energy Industries Association.
Bottom line
The ConsumerAffairs Research Team conducted an in-depth analysis to determine the average costs of going solar and incentives in other states. Turns out, it’s worth it in most places, including Arkansas.
Solar costs vs. savings: Arkansas and nearby states
| 6-kW system cost (before incentives) | 10-kW system cost (before incentives) | Typical system size needed* | Average cost per watt | Total utility power cost savings** | |
|---|---|---|---|---|---|
| Arkansas | $16,020 | $26,700 | 11.19 kW | $2.67 | $67,139 |
| Louisiana | $17,580 | $29,300 | 10.97 kW | $2.93 | $54,636 |
| Mississippi | $18,840 | $31,400 | 11.5 kW | $3.14 | $59,530 |
| Missouri | $17,400 | $29,000 | 10.98 kW | $2.90 | $55,374 |
| Oklahoma | $14,220 | $23,700 | 11.35 kW | $2.37 | $65,916 |
| Tennessee | $19,560 | $32,600 | 12 kW | $3.26 | $51,774 |
| Texas | $12,600 | $21,000 | 10.32 kW | $2.10 | $61,774 |
Article sources
- DSIRE, "Arkansas Programs." Accessed March 29, 2024.
- EnergySage, "The cost of solar panels in Arkansas." Accessed March 29, 20
- Solar Energy Industries Association, "Arkansas Solar." Accessed March 29, 2024.
- SolarReviews, "How much do solar panels cost in Arkansas?" Accessed March 29, 2024.
- Arkansas Democrat-Gazette, “Solar power bill sent to governor's desk.” Accessed Aug. 30, 2024.
- University of Arkansas System, “Net Metering Policies.” Accessed Aug. 30, 2024.
