Arkansas solar rebates and incentives: 2025 guide

Solar panel systems in Arkansas are expensive, but incentives from the state and federal governments can help you reduce the upfront cost. Between the federal tax credit and other state-specific incentives, you can save thousands on solar panels, making them well worth the investment. Here's how you can lower the cost of solar if you live in Arkansas.

Arkansas doesn't have any state-specific tax credits or rebates. But, as an Arkansas homeowner, you have access to the federal Residential Clean Energy Tax Credit, which can substantially improve your return on investing in solar panels.

The Residential Clean Energy Credit, formerly known as the federal investment tax credit (ITC), can reduce your solar panel system's cost by 30%. Your entire system qualifies for this incentive, including equipment, labor, permitting, and sales tax.

When you file your federal income taxes, you can claim this incentive as a credit towards your federal tax bill. Just keep in mind that to qualify for the ITC, you need to purchase your system either with cash or a solar loan–if you lease your system, you won't be eligible. 

You also need a high enough tax bill, though you can roll over any remaining credit year-to-year until the end of 2034 when the ITC expires. The only time you might be eligible for a direct payment for the ITC is if you're a tax-exempt entity, like a nonprofit organization.

Unfortunately, Arkansas doesn't offer any sales or property tax exemptions for solar.

At the end of 2024, Arkansas transitioned from net metering to net billing, which means the credits you earn will unfortunately now be worth a lot less than before. This is similar to what happened in California. 

With net billing, you earn credits when you send excess electricity from your solar panels to the grid. When the sun isn't shining and you need to pull electricity from the grid, your utility will apply the credits to your bill. However, the credits are worth a lot less with net billing compared to net metering. In Arkansas, your excess energy is now credited at the avoided cost rate, which is a little less than half the retail rate, so you won’t save as much on your electric bills as you used to.

But if you installed solar panels by September 30, 2024, you’re grandfathered into net metering for the next 20 years.

Arkansas doesn't offer any state-specific battery incentives. However, all batteries above 3 kWh are eligible for the 30% federal tax credit. Batteries are great for increasing your energy independence and providing protection from blackouts in Arkansas. 

Since Arkansas no longer offers net metering, installing a battery with your solar panels is the best way to increase your savings. This way, you can store excess solar energy in your battery for use later on instead of sending it to the grid.