Illinois solar incentives, tax credits and rebates

Resources to make solar panels more affordable in 2024

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Do you own or rent?

solar panels on the roof of a house with a chimney and trees in the background

There’s no way around it: Installing solar panels is expensive. On the bright side, Illinois residents can take advantage of federal and state incentives that help make going solar more affordable.

Here’s everything you need to know about how state and federal solar incentives can make installing panels more affordable in the Prairie State.


Key insights

In Illinois, a typical residential solar panel system costs $11,018 to $31,480, depending on the size of your system and what financial incentives you qualify for.

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The 30% federal solar investment tax credit (ITC) is the most significant financial incentive for most homeowners buying solar panels in Illinois.

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The Illinois Shines and Solar for All programs help reduce upfront costs and ensure long-term savings on energy bills.

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Residential solar panel incentives in Illinois

The Illinois Shines and Solar for All programs both help reduce upfront costs and ensure long-term savings on energy bills. But the federal solar investment tax credit (ITC) is still the best way for many homeowners to save money when going solar in Illinois. It reduces your federal tax liability by 30% of how much it costs to install solar panels. This is different from a deduction, which lowers your taxable income. ITC is a credit, meaning it directly decreases the amount of taxes you owe.

The ITC drops to 26% in 2033 and then 22% in 2034.

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.

Tax credits offset your tax liability, so it’s only useful if you owe federal income taxes in the first place. However, the credit rolls over to the next tax year if you don’t use the full amount. You don’t get these benefits automatically, though. You must claim your solar equipment, labor and permits on your federal taxes for the same year you started using your system on Form 5695.

Illinois Solar for All program

The Solar for All program offers financial support to underserved communities, covering all upfront costs and significantly reducing energy bills. Funded by a $15.6 million grant from the U.S. Environmental Protection Agency, the program is available to households earning 80% or less of the area median income (AMI).

For example, a family of four living in Cook County, Illinois, with a household income at or below $83,350 qualifies for the Solar for All program. 

The program, which began June 1, 2024, provides financial support for solar projects with key submission windows for four different project types. Residential solar projects can be submitted from June 24 to July 9, 2024, for the upcoming project year.

Illinois Shines program 

The Illinois Shines program was established by the Future Energy Jobs Act (FEJA) and offers financial benefits through Solar Renewable Energy Certificates (SRECs). Homeowners earn SRECs based on the amount of electricity their solar panels generate and can sell them to utilities for cash. Utilities are required to purchase the SRECs from solar projects.

The program is designed to move incentive payments through contractors in its Approved Vendor model rather than directly to consumers, creating potential for misuse. The program came under scrutiny in 2023 after some contractors were accused of fraud. This led to residents not receiving their promised incentive payments.

The Illinois Power Agency is considering a customer restitution fund to better protect consumers and restore confidence in the solar incentive program.

Illinois solar property tax exemptions

  • Property tax exemption: Illinois ensures that the added value of a solar energy system does not increase property taxes for homeowners and commercial property owners. This exemption applies to residential and commercial solar installations, excluding the value of the solar system from property assessments for a period of ten years.
  • Special assessment: The Special Assessment for Solar Energy Systems tax incentive values solar installations at the same cost level as conventional energy systems, preventing property tax increases once the 10-year property tax exemption is finished.

Additional solar incentives in Illinois

Check DSIRE for the most comprehensive source of information about solar incentives and policies in Illinois.

What to know about net metering in Illinois

Net metering lets you sell the extra energy that your solar system produces to your local electric company for a credit on your bill. The Illinois net metering initiative kicked off in 2008. As part of this program, Commonwealth Edison, Ameren Illinois and MidAmerican Energy Company have to pay customers with credits on their electric bills for the electricity produced by solar. Applications for net metering are considered on a first-come, first-served basis.

Virtual net metering in Illinois allows residents to subscribe to a community solar array and receive credits on their electricity bills for the energy generated by their share of the project. Under Illinois net metering laws, subscribers earn a one-to-one credit for the excess electricity they generate, which can significantly reduce their monthly electricity bills.

If a resident’s share of a community solar project generates more electricity than they use in a given month, the excess credits roll over to the next month, further reducing future bills.

» GREENEST STATES: Illinois ranked No. 34 in 2024

How much are solar panels in Illinois?

After considering the federal solar tax credit, solar panel costs in Illinois typically range from $11,018 to $22,036. Your system size greatly affects how much you pay overall. The typical system size for solar systems in Illinois is 10.12 kW (kilowatts).

How do you know if the average size system is enough for your home or if you need a bigger one? Check the amount of electricity you used last year in kilowatt-hours (kWh). You’ll find this information in your electricity account dashboard online. Then, divide your annual kWh by 1,200 to find the system size you need. For example, if your home used 15,000 kWh last year, you would need a 13-kW system.

Average solar cost by system size in Illinois

Solar resources in Illinois

Below are some additional resources.

Find solar companies in Illinois

A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for Illinois’s top solar companies to learn more.

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FAQ

How much can I save with solar panels in Illinois?

On average, Illinois homeowners with solar panels avoid $48,565 in utility costs over 25 years. Your current electric bill is the starting point for assessing your potential savings with solar energy. Once you know your average energy consumption, you can calculate how long it should take for the solar panels to pay for themselves.

Can I get free solar panels in Illinois?

No, but you can lease solar equipment or enter a power purchase agreement (PPA) with little to no upfront costs. Still, neither is totally free. Solar leases generally require a flat monthly fee; PPAs make you pay per unit of electricity.

» FREE SOLAR PANELS: Are they really free?

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 getting a lease or power purchase agreement.

» SOLAR PANELS: Lease vs. buy

How do I know if my house is a good candidate for solar?

It’s best to have plenty of unshaded roof space that faces south or west for optimal sun exposure. It’s also smart to upgrade any old, inefficient appliances first. Reducing your electrical loads now means you can get a smaller system, which will be cheaper.

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.

Solar photovoltaic (PV) technologies, more commonly known as solar panels, absorb sunlight and convert it into usable electricity. If you have a lot of shading around your house, they might not get enough sun to power your home.

What has Illinois’s investment in solar been so far?

Total solar investments in the state amount to $5.2 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 for many homeowners, particularly in Illinois.

Solar costs vs. savings: Illinois and nearby states

*For 100% usage offset; **Over 25 years

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:
  1. DSIRE, "Illinois Solar Programs." Accessed March 29, 2024.
  2. EnergySage, “The cost of solar panels in Illinois.” Accessed March 29, 2024.
  3. Solar Energy Industries Association, "Illinois Solar." Accessed March 29, 2024.
  4. SolarReviews, “How much do solar panels cost in Illinois?” Accessed March 29, 2024.
  5. Illinois Commerce Commission, “Electric Utility.” Accessed June 12, 2024.
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