Minnesota solar incentives, tax credits and rebates
Resources to make solar panels more affordable in 2024
After the federal solar investment tax credit, the average residential solar panel system costs $15,904 in Minnesota, which is cheaper than in many other states.
There are also two significant state tax incentives for residents installing solar panels: Solar equipment is exempt from sales tax, and homeowners get a property tax exemption for the value your solar energy system adds to your home.
Key insights
- The average federal solar investment tax credit (ITC) value is $6,816 in Minnesota.
- Residents can also take advantage of solar tax breaks, rebates and loan programs.
- Minnesota homeowners with solar panels get an estimated net savings of $17,546 over 25 years.
Solar incentives in Minnesota
Using the federal solar investment tax credit (ITC) is the most significant way to reduce the cost of going solar in Minnesota. If you install a residential solar panel system by the end of 2032, you can 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 Minnesota costs $22,720. With a system at that price, you can get a $6,816 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 nonrefundable, so any unused portion rolls over into the next tax year.
» MUST-KNOW: Tax deductions for homeowners
More residential solar incentives in Minnesota
Minnesota offers more solar incentives than most states. In addition to tax breaks, residents can take advantage of solar rebates and loan programs.
Solar rebates
Utility companies across the state offer rebates for customers who invest in solar panels, solar water heating and other renewable energy technologies.
- Austin Utilities: Customers can get a rebate of up to $1,200 on their solar water heaters.
- Marshall Municipal Utilities: MMU customers can get a rebate of up to $2,000 on solar water heaters.
- Owatonna Public Utilities: Customers can get rebates up to $500 for solar panels and up to $1,200 for solar water heating.
- Dakota Electric Association: Customers can get rebates of $500 for solar energy systems.
- Rochester Public Utilities: Customers can get rebates of $500 for solar energy systems.
Solar loans
If you can’t pay cash for your solar energy system, the Minnesota Housing Finance Agency's (MHFA) Fix Up program offers low-interest solar loans of up to $75,000. The loans do not require significant home equity and have no income limits.
What to know about net metering in Minnesota
When your solar energy system makes more electricity than your home can use and it isn’t stored in a solar battery, you can sell it to your local electricity company. This is called net metering.
In Minnesota, residents can get paid with a check or credits on their electricity bill. For example, when customers of Xcel Energy get a credit of more than $25 in one month for net metering, the company will send a check to the customer.
Solar resources in Minnesota
Below are some additional resources that can guide you through transitioning to solar in Minnesota.
Find solar companies in Minnesota
Compare popular solar companies available in Minnesota below. Read our guide to finding the best solar companies for more.
| Companies | Customer rating | Free consultation | Payment options | Warranty |
|---|---|---|---|---|
| SunPower | 3.4 | Cash, loan, lease | 25 years | |
| Blue Raven Solar | 4.7 | Cash, loan, lease, PPA | 25 years | |
| Green Home Systems | 2.9 | Cash, loan | 25 years | |
| ShopSolar | 4.7 | Cash, loan | Varies |
Bottom line: How much are solar panels in Minnesota?
The ConsumerAffairs research team conducted an in-depth analysis to determine how much it costs to go solar in Minnesota and the average solar costs in other states.
Solar panel costs: Minnesota vs. nearby states
| Upfront cost* | Federal tax credit value (30%) | Typical system size | Average cost per watt | Payback period** | Estimated net savings | |
|---|---|---|---|---|---|---|
| Iowa | $24,930 | $7,479 | 9 kW | $3.49 | 12 years | $17,572 |
| Minnesota | $22,720 | $6,816 | 8 kW | $3.29 | 12 years | $17,546 |
| North Dakota | $26,620 | $7,986 | 11 kW | $2.42 | 12 years | $26,028 |
| South Dakota | $25,094 | $7,528 | 10.5 kW | $2.39 | 11 years | $22,923 |
| Wisconsin | $18,200 | $5,460 | 7 kW | $3.34 | 11 years | $21,005 |
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:
- DSIRE, “Minnesota Programs.” Accessed Dec. 22, 2023.
- EcoWatch, “How Much Do Solar Panels Cost in Minnesota?” Accessed Dec. 22, 2023.
- United States Environmental Protection Agency, “Summary of Inflation Reduction Act provisions related to renewable energy.” Accessed Dec. 22, 2023.
- Solar Energy Industries Association, “Minnesota Solar.” Accessed Dec. 22, 2023.
- DSIRE, “Minnesota Solar Programs.” Accessed Dec. 22, 2023.
- MinnPace, “MinnPACE makes it easy to finance energy efficiency and renewable energy projects.” Accessed Dec. 22, 2023.
- Minnesota Public Utilities Commission, “Net Metering & Compensation.” Accessed Dec. 22, 2023.
- Office of Minnesota Attorney General Keith Ellison, “Residential Solar Systems.” Accessed Dec. 22, 2023.
