Iowa solar incentives, tax credits and rebates
Resources to make solar panels more affordable in 2025
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New residential solar systems are no longer eligible for state tax credits, but there are still exemptions on sales and property taxes for residents going solar. You can also take advantage of local rebates and generous net metering policies.
Here’s everything you need to know about how state and federal solar incentives can make installing panels more affordable in the Hawkeye State.
After the federal solar tax credit, the average residential solar panel system costs $10,920 to $21,840 in Iowa.
Jump to insightThe federal solar investment tax credit (ITC) is usually the best financial incentive for Iowa homeowners buying solar panels.
Jump to insightIowa residents can get the retail rate when they sell excess solar power to the local grid through net metering.
Jump to insightResidential solar panel incentives in Iowa
The federal solar investment tax credit (ITC) is the most significant financial incentive for most homeowners buying solar panels in Iowa. 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.
For example, let’s say you spend $10,000 going solar. The ITC would be worth $3,000. If you owe $15,000 in federal taxes the year your system becomes operational, the ITC would cut that down to $12,000.
The ITC is a nonrefundable credit, meaning you can only claim up to the amount of taxes you owe. However, it rolls over to the next tax year if you don’t use the full amount. So, if you only owed $2,000 the year you went solar, you could claim the remaining $1,000 when you file the next year.
More solar incentives
Check DSIRE for the most comprehensive source of information about solar incentives and policies in Iowa.
| Incentive type | Amount | Eligible solar equipment | Applicable sectors | Administrator | |
|---|---|---|---|---|---|
| Residential Energy Efficiency Rebate Programs | Rebate | $100 per installed kilowatt (kW) | Solar panels | Residential, multifamily residential | Ames Electric Department |
| Property Tax Exemption for Renewable Energy Systems | Tax exemption | 100% for five years | Solar panels, solar water heat, solar space heat, solar thermal electric, passive solar | Residential, commercial, industrial, agricultural | Iowa Department of Natural Resources |
| Renewable Energy Equipment Exemption | Sales tax exemption | 100% of sales tax | Solar panels, solar water heat, solar space heat, solar thermal electric | Residential, commercial, agricultural | Iowa Department of Revenue |
| IADG Energy Bank Revolving Loan Program | Low-interest loan | Up to $300,000 | Solar panels, solar water heat, solar space heat, solar thermal electric, passive solar | Commercial, industrial | Iowa Economic Development Authority and Iowa Area Development Group |
| Waverly Light & Power Residential Solar Thermal Rebates | Rebate | Up to $3,500 | Solar Water Heat | Residential, multifamily residential | Waverly Light & Power |
What to know about net metering in Iowa
Net metering is a system of give-and-take between you and your utility company. It lets you access power from the grid when your panels don’t generate enough electricity. Net metering also lets you earn credits for sending excess solar energy to the grid. MidAmerican Energy and Interstate Power and Light (IPL) offer net metering. Some rural electric cooperatives also have their own programs.
Homeowners with solar panels typically save $20,000 to $90,000 over 25 years.
Most utilities offer a 1-to-1 credit, which means you receive one credit for each kWh sent back to the grid. At the end of the year, any unused credits are generally rolled over to the following year or, in some cases, may be reimbursed at a predetermined rate, typically the utility's avoided cost rate.
» GREENEST STATES: Iowa ranked 13th in 2024
How much are solar panels in Iowa?
After the federal solar tax credit, solar panel costs in Iowa typically range from $10,920 to $21,840.
Your system size greatly affects how much you pay overall. The typical system size for solar systems in Iowa is 10.19 kW (kilowatts). You might need a larger or smaller system, depending on your average household energy use.
Average solar cost by system size in Iowa
| 5 kW | 6 kW | 7 kW | 8 kW | 9 kW | 10 kW | |
|---|---|---|---|---|---|---|
| Before federal tax credit | $15,600 | $18,720 | $21,840 | $24,960 | $28,080 | $31,200 |
| After federal tax credit | $10,920 | $13,104 | $15,288 | $17,472 | $19,656 | $21,840 |
Solar resources in Iowa
Below are additional resources that can guide you through transitioning to solar in Iowa.
Find solar companies in Iowa
A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for Iowa’s top solar companies to learn more.
| Company | Customer rating | Pro install | Payment options | Year founded | |
|---|---|---|---|---|---|
 | 4.4 |  | Cash, loan | 2013 | Learn More |
 | 3.0 | | Cash, loan | 2017 | Learn more |
 | 1.8 | | Cash and loan | 2015 | Learn more |
 | 4.8 | | Cash, loan | 2016 | Learn more |
 | 4.7 |  | Cash, loan | 2018 | Learn more |
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?
On average, Iowa homeowners with solar panels avoid $46,588 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 Iowa, solar panels usually pay for themselves within 10 years.
» EXPLORE: Where your solar savings go the furthest
What has Iowa’s investment in solar been so far?
Total solar investments in the state amount to $1.1 billion, according to the Solar Energy Industries Association.
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.
» BEST STATES FOR SOLAR: Iowa ranked 35th in 2024
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 Iowa.
Solar costs vs. savings: Iowa 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 |
| Iowa | $18,720 | $31,200 | 10.19 kW | $3.12 | $46,588 |
| Minnesota | $18,540 | $30,900 | 10.1 kW | $3.09 | $59,279 |
| Missouri | $17,400 | $29,000 | 10.98 kW | $2.90 | $55,374 |
| Nebraska | $13,440 | $22,400 | 9.28 kW | $2.24 | $53,725 |
| South Dakota | $14,340 | $23,900 | 10.09 kW | $2.39 | $54,751 |
| Wisconsin | $18,600 | $31,000 | 10.26 kW | $3.10 | $54,553 |
Article sources
- DSIRE, "Iowa Programs." Accessed March 29, 2024.
- EnergySage, "The cost of solar panels in Iowa." Accessed March 29, 2024
- Solar Energy Industries Association, "Iowa Solar." Accessed March 29, 2024.
- SolarReviews, "How much do solar panels cost in Iowa?" Accessed March 29, 2024.
- Iowa Department of Revenue, “Solar Energy System Tax Credits.” Accessed Aug. 20, 2024
- City of Ames, “Installing a Solar Energy System.” Accessed Aug. 20, 2024
