Unlocking Thousands in Solar Savings for Indiana Homeowners

Installing solar panels is on the rise across the Hoosier State. Over 8,000 Indiana homes have already gone solar, with adoption growing at a rapid 29% annual clip. And by switching to solar power, Indiana homeowners are collectively saving a total of $57 million a year on their electricity bills. Does tapping into the power of the sun to shrink your electric bill sound appealing? If so, this comprehensive guide covers all the insider tips to maximize solar savings as an Indiana resident.

Why Indiana Homeowners Are Turning to Solar

Due to Indiana‘s mixed solar incentives and policy landscape compared to leading renewable states, you may be skeptical about whether solar panels can truly pay off here. But the incentives that are available, combined with fast-dropping equipment costs, mean solar arrays can yield solid bill savings for Hoosier homeowners.

On average, Indiana residents that install solar panels save $1,536 per year on their electricity bills. For a typical 6 kW system that means a full payback in under 10 years. And across the 25+ year lifespan of your panels, your total lifetime savings add up to over $20,000!

So while the economics may not be quite as sunny as Arizona or Florida, solar panels in the Hoosier State can still pay major dividends over time if you take advantage of all possible savings opportunities.

overview of Indiana‘s Current solar Incentives

While Indiana may lag behind certain leading renewable states in terms of robust government incentives, there are still plenty savings avenues to lower the cost of going solar if you know where to look and how to optimize them. Here is a high-level overview:

• 30% Federal Solar Tax Credit – Applying this credit will save you $4,478 on the average 6 kW Indiana solar installation.
• Property/Sales Tax Exemption – Tax savings on purchase and installation costs for your solar equipment.
• Net Metering – Receive credits for excess power sent back to Indiana‘s electricity grid. Changes coming in 2023 will impact savings potential.
• 10% Renewables Goal (Voluntary) – This shows Indiana‘s intent is there to support continued solar growth, even if current incentive programs remain modest.

Now let‘s do a deeper dive on how to take advantage of each Indiana solar savings opportunity available.

Maximize Federal Solar Tax Credit – Up to 30% Off!

Without a doubt, the heftiest solar savings opportunity Indiana homeowners should tap into is the federal Investment Tax Credit (ITC). This program offers new solar panel system owners a whopping 30% back as an income tax credit on your next IRS tax filing.

• The solar ITC will deduct 30% off the total costs involved with installing your new solar array, including:
  • Solar modules/panels
  • Inverters
  • Wiring
  • Labor
  • Permitting fees

To qualify for the full 30% credit, you must:

• Purchase (not lease) a new solar array
• Install the system on a residential property you own
• Live in the home where the solar panels are placed

Starting in 2033, this solar tax credit will step down incrementally over a 4 year period before ending completely in 2035 unless renewed by Congress:

• 2033 – 26% tax credit
• 2034 – 22% tax credit
• 2035 – Expires

So act now to maximize savings off your Indiana solar panel installation while the getting is good at 30%!

2027 Indiana Solar Stats: 

* Avg. System Size: 6 kW
* Avg. Install Cost: $14,940 
* Avg. Federal ITC Savings: $4,478

Indiana Property & Sales Tax Exemptions

Most states that support renewable energy growth offer either state tax credits, solar rebates, or a combination of both financial incentives. Unfortunately Indiana does not currently have any state-level financial incentives in the form of direct tax credits or rebates.

While that is a bummer for residents eager to tap into solar savings, Indiana does at least offer both property tax and state sales tax exemptions when you purchase solar equipment or install an array on your home. So while you won‘t directly earn money back through state tax credits or rebates, you at least won‘t need to pay the standard taxes.

• Sales Tax Exemption – Saves you 7% on the purchase price of solar panels, inverters and other system equipment. Every little bit helps lower the overall installation cost!

• Property Tax Exemption – Installing solar panels increases the value of your home. But Indiana doesn‘t consider your new solar array in calculating your overall property value for tax purposes. This prevents your property taxes from going up.

While 7% sales tax savings and no property tax increases aren‘t as lucrative as direct cashback incentives you’d find in other regions, exemptions symbolize Indiana‘s support for renewable adoption. Expect even better programs down the road as solar continues rapid growth across the state.

Understanding Indiana‘s Solar Net Metering Transition

Over 40 states have implemented net metering programs to incentivize greater residential solar adoption. Net metering allows solar households to earn credits from their utility company on excess power their panels send back to the electric grid throughout the day. So not only does your solar array lower your overall electricity bill by directly powering your home, you also get paid back a little extra for the unused solar electricity exported capacity.

Previously Indiana had statewide net metering standards requiring utility companies to compensate solar homes at the full 1:1 retail rate for their excess generation sent to the grid. Unfortunately however, changes taking effect in July 2022 will reduce the value of those net metering credits substantially.

How net metering works in Indiana as of mid-2022:

• Excess solar electricity exported to grid will be compensated at wholesale rate
• 1:1 retail rate net metering no longer mandated
• Existing solar households grandfathered for up to 15 years

So while net metering savings potential takes a hit going forward, homeowners that install solar arrays in 2022 still have many years ahead to benefit from elevated rates before the 15 year transition period ends. Speak to potential solar installers about how to maximize net metering savings over the next decade plus.

And as we’ve stressed throughout this guide, be sure focus more on tapping into federal tax credits, property tax exemptions and leveraging market competition among installers to drive down costs – rather than solely relying on net metering payouts to justify going solar in Indiana.

Weighing Solar Ownership vs. Leases in Indiana

When exploring your solar options, you may come across solar companies offering lease arrangements. The appeal is no large upfront installation cost. But generally speaking, solar leases fail to provide much if any real cost savings for Indiana homeowners compared to owning your system.

• Monthly solar lease payments often end up more expensive than the energy bill savings produced
• Locked into 20+ year contract with escalating monthly payments
• Forfeit eligibility for the critical 30% federal solar tax credit incentive

To maximize savings over the long haul, purchasing and owning an Indiana solar array outright is highly advisable:

• Pay off system in under 10 years with full bill offset
• Qualify for federal tax credit plus all other incentives
• After payoff, 20+ years of free solar electricity from the sun!

Ownership vs Leasing Indiana Solar Panels

SOLAR PURCHASE:
* Pay Off in 9.7 Years 
* $15,000+ Lifetime Savings
* Tax Credit Eligible

SOLAR LEASE:  
* Pay more over 20 Years   
* Minimal Bill Reduction
* No Tax Credit Benefits

While buying solar panels in Indiana does require more cash up front compared to zero-down leasing, you’ll unlock far greater lifetime savings by owning your array.

How Do Indiana‘s Solar Incentives Stack Up to Other States?

To put Indiana’s current solar policies and financial incentive landscape into perspective, let’s benchmark our renewable energy support against some other leading states.

The key metric we can compare is each state’s Renewable Portfolio Standard (RPS). A strong RPS signals a long-term commitment to further solar and renewable growth through robust state-administered programs.

As shown above, heavy hitting renewable states like California, New Jersey and others have implemented strong RPS laws mandating high percentages of their overall electric generation come from solar and other renewables within the next decade. Most also supplement their aggressive standards with additional financial incentives.

Comparatively, Indiana’s 10% voluntary RPS by 2025 is quite modest. And without any mandated rebates or state tax credits included in the policy, it ranks among the lower tier of leading solar states in terms of financial incentives. But while Indiana renewable laws are lagging for now, continued growth will hopefully spur more robust legislation supporting home solar in the coming years.

Even if state support remains lighter compared to elsewhere nationally, remember – thanks to an affordable Midwest solar payback period plus the sizable 30% federal tax credit – going solar in Indiana absolutely can still pay!

Indiana Solar Rankings Nationally:  

State Solar Tax Credits: None (Bottom 22%)
State Solar Rebates: None (Bottom 28%)   
Installer Cost per Watt: $2.49 (Top 20%)
Payback Period: 9.7 Years (Top 25%)

Indiana Resident Solar Success Stories

“As environmentally conscious Carmel residents wanting to cut energy costs, we researched installing solar panels for a couple years before pulling the trigger on buying a system for our home in 2021. Thanks to shopping around for the best installation quote and leveraging the federal tax incentive, we were able to break even on our 14 panel, 4 kW system within 9 years while eliminating our electric bill entirely! Couldn’t be happier we went solar here in Indiana.”

– David R, Carmel Homeowner

“I’ll be honest, when my son first floated the idea of outfitting our Ranch house here in Fort Wayne with solar panels, I was skeptical it would pay off in Indiana without much sun. But after crunching the numbers together on the 30% tax credit along with today’s low solar panel pricing, a sub 10-year payoff timeline for near free power for 25+ years actually seemed like a smart play! We’re now over a year in of reaping the solar rewards.”

– Amy F, Fort Wayne Homeowner

Tips to Unlock the Maximum Indiana Solar Savings on Your Home

Ready to explore whether adding solar panels makes financial sense for your home in Indiana? Follow the tips below to ensure you maximize potential savings.

Check your specific solar potential – Use Google Project Sunroof or a similar free analysis tool. Input your address to see how much sun exposure your roof gets, space available, and estimated savings possible based on factors like locality and typical Indiana weather patterns.

Research federal/state/local incentives – Now that you know roughly what size system you can accommodate and associated costs, dig into all possible Indiana solar incentives available from the federal government, state, and your utility.

Get quotes from at least 3 installers – Local market competition is key. Reach out to several top rated Indiana solar companies for detailed quotes based on your minimum required solar output. Compare pricing packages. Aim for complete turnkey installation quotes under $3 per Watt.

Apply for the 30% federal tax credit – Whatever Indiana solar installer you select, be sure to have them include all documentation and info needed such as proof of purchase amounts to claim the Investment Tax Credit which will lop 30% off your system cost.

Crunch 20+ year cost vs savings – Using your selected solar array size, installation quote, projected annual energy output and electricity rates, calculate total 20+ year lifespan savings. Determine your complete solar payback period. Target under 10 years to maximize ROI.

Pull the trigger and go solar – With your Indiana solar panels now ready to unlock decades of free renewable power courtesy of the sun, it’s time to put your array into action! Feel good about reducing your eco-footprint while padding your wallet.

Closing Thoughts

Thanks for taking the time to read this comprehensive guide to maximizing your potential savings as an Indiana homeowner looking to install solar panels. While incentives may not be as robust as leading solar states quite yet, the economics can absolutely make sense by utilizing federal tax credits and low Midwest equipment pricing.

I encourage you to check your home’s solar potential ASAP to map out the panels and savings customize to your property. Please reach out with any other questions!