Iowa solar incentives, tax credits and rebates

Financial resources for going solar in 2024

Author pictureAuthor picture
Author picture
Written by
Author picture
Edited by

Do you own or rent?

two-story house with solar panels in winter

After tax credits, the average cost for a solar energy system is $17,451 in Iowa, which is more expensive than in many other states. The national average is $16,715. Unlike some other states, though, Iowa offers many solar incentives that help make up for the higher price of going solar.


Key insights

  • The average federal solar tax credit value is $7,479 in Iowa.
  • Residents can also take advantage of solar tax breaks and rebates.
  • Iowa homeowners with solar panels save an estimated $17,572 over 25 years.

Solar incentives in Iowa

The federal solar investment tax credit (ITC) is the biggest factor in reducing the cost of going solar in Iowa. If you install a residential solar panel system by the end of 2032, you will receive a federal income tax credit equal to 30% of the system's total cost, including equipment, labor and permits.

The federal solar investment tax credit drops to 26% in 2033 and 22% in 2034.

For example, the average system in Iowa costs around $24,930. At that price, you can get a $7,479 credit when you file your taxes.

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. The credit is also nonrefundable, meaning any amount that exceeds your tax liability rolls over into the next tax year.

» MUST-KNOW: The tax benefits of owning a home: deductions and secrets

Residential solar incentives in Iowa

Iowa residents receive state and local solar incentives on top of the federal tax credit:

  • No sales tax: Solar energy systems bought in Iowa are exempt from sales tax.
  • Property tax exemption: The market value added to your home by a solar energy system is exempt from state property tax for five years.
  • Solar water heater rebate: Waverly Utilities customers can participate in a rebate program for their solar water heaters. With the rebate program, you can save up to $3,500.
  • Solar panel rebate: The city of Ames offers residents rebates on their solar energy systems. You can earn $300 per coincident peak kilowatt (kW).

What to know about net metering in Iowa

Net metering is when you sell the extra energy that your solar energy system makes to a local electric company instead of storing it in a solar battery.

Only two electric companies offer net metering in Iowa: MidAmerican Energy and Interstate Power and Light (IPL). The Iowa Utilities Board says that net metering is available to 89% of residential customers in Iowa. Solar energy systems under 500 kW in capacity are eligible to participate.

Iowa's net metering rule requires utility providers to purchase a customer's net excess generation at the utility's avoided cost rate. This means that customers get credit for the extra electricity their panels produce, further offsetting future bills.

Solar resources in Iowa

Below are additional resources that can guide you through transitioning to solar in Iowa.

» GREENEST STATES: Iowa ranks No. 11

Find solar companies in Iowa

Compare popular solar companies available in Iowa below. Read our guide to finding the best solar companies for more.

Do you own or rent?

FAQ

Can I get solar panels for free in Iowa?

There are no programs offering free solar panels in Iowa, but you can lease solar equipment or enter a power purchase agreement (PPA) with minimal 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 buy your system outright, but most people finance solar panels. A solar loan 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). If you are considering a solar loan, lease or power purchase agreement, always ask:

  • Is there a down payment?
  • How much will I pay per month?
  • Will monthly payments increase, and by how much?

» SOLAR PANELS: Lease vs. buy

How much can I save with solar panels in Iowa?

In Iowa, the average savings is $17,572 over 25 years. Even if you don’t generate 100% of your energy needs, you can still save money versus paying traditional utility bills.

Are there any commercial solar incentives in Iowa?

Yes, Iowa has commercial solar sales tax, property tax and loan incentives and rebates.

» MORE: Commercial solar panel installation

Is my HOA allowed to restrict solar panels?

Iowa has no state laws that prohibit homeowners associations from restricting solar panels.

Bottom line: How much are solar panels in Iowa?

While it may cost a little more to go solar in Iowa than in other states, there are some great solar incentives that help make it more affordable. Be sure to take advantage of the federal solar investment tax credit, sales and property tax exemptions and rebates to get the most savings.

The ConsumerAffairs Research Team conducted an in-depth analysis to determine how much it costs to go solar in Iowa and the average solar costs in other states.

Solar costs: Iowa vs. nearby states

*Before the federal investment tax credit (ITC); **When you pay in full upfront

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, “Iowa Programs.” Accessed Nov. 18, 2023.
  2. DSIRE, “Net Metering in Iowa.” Accessed Nov. 18, 2023.
  3. EcoWatch, “Solar Panel Cost in Iowa.” Accessed Nov. 18, 2023.
  4. United States Environmental Protection Agency, “Summary of Inflation Reduction Act provisions related to renewable energy.” Accessed Nov. 18, 2023.
  5. Solar Energy Industries Association, “Iowa Solar.” Accessed Nov. 18, 2023.
Did you find this article helpful? |
Share this article