Indiana solar rebates and incentives: 2024 guide

Hoosiers looking to power their homes with clean, sustainable energy have access to a few cost-cutting solar incentives that can help speed up their payback period.  While there aren’t many state-level incentives, the federal solar tax credit and the state’s tax exemptions can still save you thousands on your solar panel system.

As an Indiana homeowner, the federal solar tax credit, formerly known as the ITC, is the most impactful way to reduce your solar costs.

Residential Clean Energy Credit

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. 

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.

In addition to the great rebates and incentives above, Indiana offers tax exemptions for solar panel systems. Solar panels generally raise a home's property value, but thanks to Indiana’s solar property tax exemption, you won’t have to pay extra tax on that added value. The solar sales tax exemption ensures you won't have to pay a sales tax on most of your system’s equipment.

Utility companies in Indiana—including NIPSCO, Indiana Michigan Power, AES, other electric co-ops, and municipal providers—do offer solar buyback programs through the state’s Excess Distributed Generation (EDG) policy. 

While the sun is shining, your solar panels might produce more electricity than your home needs at any given moment. Under the net billing solar buyback programs in Indiana, you can sell that excess power back to the grid for credits on your electricity bill. 

The catch is that the utility companies only offer partial credit for every kWh—you’re selling the electricity to them at a significant discount, compared to what they’ll charge you to buy that electricity back later. 

The exact rates depend on the utility company, but it’s generally about half of the retail rate. (Technically it’s 125% of the average wholesale price of electricity for the prior year, before the utility company adds their markup). NIPSCO, for example, pays about $0.08 cents per kWh sent to the grid based on their 2023 prices.

If you want to squeeze the most possible value out of your solar panels under net billing, consider installing a solar battery.

(Indiana previously offered a net metering program, which was more consumer-friendly in several important ways. But as of 2022, utility companies in the state are no longer required to offer true net metering for new solar installations.)

Indiana doesn't offer any state-specific battery incentives. However, all batteries above 3 kWh in size are eligible for the 30% federal tax credit. 

Solar batteries paired with solar panels can make good financial sense in Indiana. It boosts your energy independence and provides backup power during an outage, and it helps you keep more of your own (free) solar power rather than letting the utility company take it at a steep discount.

If you're looking for solar installers in Indiana, here are some popular suggestions: