South Dakota solar incentives, tax credits and rebates

Financial resources for going solar in 2024

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house with solar panels on a farm

After tax credits, the average system is $17,566 in South Dakota, which is more expensive than in many other states. The national average is $16,715. Luckily, federal and local incentives can help make going solar more affordable in the Mount Rushmore State.


Key insights

  • The average federal tax credit value is $7,528 in South Dakota.
  • Residents can also take advantage of a property tax exemption in South Dakota.
  • South Dakota homeowners with solar panels see estimated net savings of $22,923 over 25 years.

Solar incentives in South Dakota

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

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

For example, a system in South Dakota costs an average of $25,094. After buying a system at that price, you can get a $7,528 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, so any unused portion rolls over into the next tax year.

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

Statewide residential solar incentives in South Dakota

While South Dakota doesn’t have as many solar incentives as some states, it does have a big one that can save you thousands of dollars. The South Dakota Department of Revenue exempts up to $50,000 or 70% of the assessed value of an eligible property (whichever is greater) from property taxes.

The following solar technologies are eligible for this property tax exemption incentive:

  • Solar panels
  • Solar water heating
  • Solar space heating
  • Solar thermal electric
  • Solar thermal process heating
  • Solar pool heating

What to know about net metering in South Dakota

Net metering is when you sell your excess solar energy to your local electric company instead of storing it in a solar battery. This lets homeowners make a little money with solar while providing the electric companies with a source of clean energy.

Unfortunately, South Dakota doesn’t offer net metering. Some companies, like Xcel Energy, offer programs similar to net metering, so be sure to check with your local power company.

If there isn’t a buyback program, you might be better off investing in a solar battery along with panels.

Solar resources in South Dakota

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

» GREENEST STATES: South Dakota ranks No. 5

Find solar companies in South Dakota

Compare popular solar companies available in South Dakota below. Read our guide to the best solar companies for more information.

Do you own or rent?

FAQ

Can I get solar panels for free in South Dakota?

There are no programs for free solar panels in South Dakota, but you can lease solar equipment for minimal upfront costs. It’s not free, though — 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. A solar loan works 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 or lease, always ask:

  • Is there a down payment?
  • How much will I pay per month?
  • Will monthly payments increase, and by how much?
  • Will there be a lien put on my house?

» SOLAR PANELS: Lease vs. buy

How much can I save with solar panels in South Dakota?

In South Dakota, the average savings is $22,923 over 25 years. Even if you don’t generate 100% of your energy needs, you can still save a lot of money versus paying traditional utility bills.

Are there any commercial solar incentives in South Dakota?

Yes, there is a commercial property tax incentive for businesses going solar in South Dakota.

» MORE: Commercial solar panels

Is my HOA allowed to restrict solar panels?

No laws prohibit homeowners associations from restricting solar panels in South Dakota.

Bottom line: How much are solar panels in South Dakota?

South Dakota may not have many solar incentives to lower the slightly higher cost of solar in the state, but what it does have will save big. Make sure to take advantage of the ITC and the property tax exemption to save thousands of dollars.

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

Solar costs: South Dakota 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, “South Dakota Solar Programs.” Accessed Nov. 19, 2023.
  2. EcoWatch, “Solar Panel Cost in South Dakota.” Accessed Nov. 19, 2023.
  3. United States Environmental Protection Agency, “Summary of Inflation Reduction Act provisions related to renewable energy.” Accessed Nov. 19, 2023.
  4. Solar Energy Industries Association, “South Dakota Solar.” Accessed Nov. 19, 2023.
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