Indiana solar incentives, tax credits and rebates
Resources to make solar panels more affordable in 2024
There’s no way around it: Installing solar panels is expensive. On the bright side, Indiana residents can take advantage of federal and state solar tax breaks. Here’s everything you need to know about how state and federal solar incentives can make installing panels more affordable in the Hoosier State.
In Indiana, a typical residential solar panel system costs $10,850 to $31,000, depending on the size of your system and what financial incentives you qualify for.
Jump to insightAs of publishing, NIPSCO feed-in tariffs are no longer open to new solar applications. The statewide property tax exemption on solar equipment still applies.
Jump to insightExcess distributed generation (EDG) has replaced net metering for most new solar panel installations in Indiana.
Jump to insightResidential solar panel incentives in Indiana
The federal solar investment tax credit (ITC) is a significant financial incentive for most homeowners buying solar panels in Indiana. It reduces your federal tax liability by 30% of how much it costs to install solar panels.
The ITC drops to 26% in 2033 and then 22% in 2034.
The ITC is a credit, meaning it directly decreases the amount of taxes you owe. 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 credit is nonrefundable, meaning any unused portion carries over to the next tax year. However, it is possible to get a refund check if the credit means you overpaid during the year.
Property tax exemption
A solar property tax exemption means that — for tax purposes — the addition of a solar energy system won’t result in an increase in your property's assessed value. Essentially, your property tax bill won’t go up because your solar panels increase the market value of your home.
It doesn’t make going solar cheaper up front, but it’s nice knowing that you won’t be financially punished on future property tax bills. To claim this incentive, fill out Form 18865 and file it with your local county auditor.
More solar initiatives in Indiana
Check DSIRE for the most comprehensive source of information about solar incentives and policies in Indiana.
| Incentive type | Amount | Eligible solar equipment | Applicable sectors | Administrator | |
|---|---|---|---|---|---|
| City of Bloomington Sustainable Development Incentives | Green building incentive | 100% waiver of filing fees | Solar panels, solar water heat | Construction | Department of Economic and Sustainable Development |
| Sales and Use Tax Exemption for Electrical Generating Equipment | Sales tax exemption | Not specified | Solar panels | Industrial, tribal government | Indiana Department of Revenue |
| Community Conservation Challenge | Grant program | Up to $80,000 | Solar panels, solar water heat, geothermal electric, solar thermal electric | Commercial, industrial, nonprofit, schools, agricultural, institutional | Indiana Office of Energy Development |
What to know about net metering in Indiana
Indiana’s net metering policy has been replaced by a system called “Excess Distributed Generation” (EDG). Since 2022, residents have earned a much lower rate for any extra energy their panels produce: around two to three cents per kilowatt-hour, compared to closer to 15 cent under the old net metering policy.
You can still earn credits on future bills through the new “Excess Distributed Generation” (EDG) system. Most systems installed before 2022 were “grandfathered” into the old system.
How much are solar panels in Indiana?
After the federal solar tax credit, solar panel costs in Indiana typically range from $10,850 to $21,700. Leasing is often cheaper upfront, but you won’t be eligible for the federal solar tax credit.
Average solar cost by system size in Indiana
| 5 kW | 6 kW | 7 kW | 8 kW | 9 kW | 10 kW | |
|---|---|---|---|---|---|---|
| Before federal tax credit | $15,500 | $18,600 | $21,700 | $24,800 | $27,900 | $31,000 |
| After federal tax credit | $10,850 | $13,020 | $15,190 | $17,360 | $19,530 | $21,700 |
Solar resources in Indiana
Below are additional resources that can help you go solar in Indiana.
Find solar companies in Indiana
A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for Indiana’s top solar companies to learn more.
| Company | Customer rating | Pro install | Payment options | Year founded | |
|---|---|---|---|---|---|
 | 4.7 | Yes | Cash, loan, lease, PPA | 2014 | Learn More |
 | 2.9 | Yes | Cash, loan | 2017 | Learn more |
 | 4.7 | No | Cash, loan | 2018 | Learn more |
FAQ
Can I get free solar panels in Indiana?
No, but you can lease a system with minimal upfront costs. Solar leases generally require a flat monthly fee.
» 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 much can I save with solar panels in Indiana?
On average, Indiana homeowners with solar panels avoid $56,472 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 compared with traditional utility bills. In Indiana, solar panels usually pay for themselves within 12 years.
» EXPLORE: Where solar savings go the furthest
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.
» SOLAR PANELS: Lease vs. buy
Is my HOA allowed to restrict solar panels?
A law passed in 2022 made it more difficult for homeowners associations (HOAs) to restrict solar panel installations. Homeowners can now override an HOA’s denial by petitioning other HOA members and getting the requisite number of signatures.
What has Indiana’s investment in solar been so far?
Total solar investments in the state amount to $2.9 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 for Hoosiers.
Solar costs vs. savings: Indiana 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** | |
|---|---|---|---|---|---|
| Illinois | $18,420 | $30,700 | 10.12 kW | $3.07 | $48,565 |
| Indiana | $18,600 | $31,000 | 11.01 kW | $3.10 | $56,472 |
| Kentucky | $16,380 | $27,300 | 11.47 kW | $2.73 | $54,204 |
| Michigan | $18,900 | $31,500 | 9.81 kW | $3.15 | $53,663 |
| Ohio | $15,960 | $26,600 | 10.95 kW | $2.66 | $52,568 |
Article sources
- DSIRE, "Indiana Programs." Accessed March 29, 2024.
- EnergySage, "The cost of solar panels in Indiana." Accessed March 29, 2024
- Solar Energy Industries Association, "Indiana Solar." Accessed March 29, 2024.
- SolarReviews, "How much do solar panels cost in Indiana, 2024?" Accessed March 29, 2024.
- NIPSCO, “Excess Distributed Generation Tariff.” Accessed Sept. 26, 2024.
