Alabama Solar Incentives: Tax Credits & Rebates Guide (2022)

By Britt Olizarowicz

Alabama power does not come cheap, and truly the only way to lower your electricity rates is to produce some of your own electricity. The problem, of course, is that a solar power system in Alabama could cost more than $30,000. If you are looking for all of the best Alabama solar incentives, our guide will provide the following:

The state of Alabama does not currently have a state incentive to help you save money on your energy consumption, but there are federal programs and some local ones that can help to lower total costs.

Why Go Solar in Alabama?

Alabama currently ranks 29th in the nation according to the SEIA regarding solar friendliness. The problem with this is that in 2021 Alabama was ranked 19th in the nation. This means that some programs have expired, and financial incentives in other states have gotten better, making it so that Alabama drops down the ranking a bit. Although 29th in the nation is certainly not the worst, Alabama residents should be prepared that the Federal Tax Credit will probably be their best savings option or incentive.

The reasons to go solar in Alabama can range from a commitment to a Renewable portfolio standard, money savings, or to taking advantage of the resources that we have. People have both financial and personal reasons for going solar.

Solar power for your Alabama home is a large investment, but one that can continue to pay off because of interconnection and incentives from green power providers.

Alabama Solar Cost

Alabama solar costs are a little higher than average, ranging from around $20,000 to more than $30,000. The large differences in the costs of solar panel installations will be primarily due to the size of the home you have and how much geothermal or photovoltaic power you need to power your home. Some people use very little electricity while others with large homes and many people using them need to rely on quite a bit.

The solar panels cost money to purchase and install, but overall upkeep and maintenance on the system are not all that intensive. With the Federal Government rebate program still in place, there is quite a bit of money that Alabama residents can still save.

Sold on Solar for your home? Get a free quote from local solar installers.

Solar system on house rooftop

Interested in solar energy but not sure where to start?

Get free quotes from House Method approved solar installers

Get a Free Quote

How Much Can You Save on Solar in Alabama?

The average savings from the Federal Tax savings programs for Alabama homeowners will be around $6,000 to $8,000. There are also loan programs that can help to lower interest rates and a property tax exemption that will save you some money for years to come.

There are also net metering programs in Alabama from some companies like Alabama Power.

The Best Solar Incentives, Tax Credits, & Rebates in Alabama

The Federal Solar Investment Tax Credit (ITC) is the best solar incentive in Alabama. Many state governments are very supportive of energy efficiency and alternate energy sources; unfortunately, the Alabama Public Service Commission does not have any programs currently in place to save money at the state level.

Incentive Summary End Date
Federal Solar Tax Credit (ITC) Alabama residents can take advantage of the Federal Solar Tax Credit and get a discount of up to 26% applied to their tax returns. If you purchase $20,000 worth of solar panels, you can get a credit for more than $5,000 on your next tax return. Remember, this does require you to come out of pocket first. December 31st, 2023
Net Metering Net metering allows homeowners that create excess energy to use it as a credit on their next electric bill. Net metering in Alabama is not mandated, but companies like Alabama power do participate in it. None
Property Tax Exemption The state of Alabama does not increase property taxes for those that have a solar panel installation. This can save thousands in property taxes through the years. None

Alabama Solar Energy Tax Credit

There is currently no state level tax credit for those that install a solar power system in Alabama. This does not, however, mean that it will always remain this way. There are changes to these programs daily, and you should consider doing more research as you get close to your actually installation.

Alabama Solar Sales Tax Exemption

Until 2018, there was a solar sales tax abatement in place, but this has since gone away. If you purchase a solar power system in the state of Alabama, you will have to pay taxes on your purchase.

Alabama Solar Property Tax Exemption

The Alabama Solar Property Tax Exemption helps to make the cost of a solar panel system much more affordable long term. When a solar power system is installed in your Alabama home, it is going to increase the value of the property and the building.

With this property tax exemption, expect that the taxes will remain relatively stable for years to come. This is something that homeowners should also consider if they are planning on selling their homes at some point. An incentive like this will undoubtedly increase the total equity you have in your home.

Alabama Net Metering

Net metering is the process of banking some of the excess energy you create and having the utility company give it back to you at a reduced rate when you need it. Unfortunately, the net metering policies in Alabama are not regulated by the state. Companies like Tennessee Valley Authority (TVA) or Alabama power may offer their own programs, but you cannot always count on net metering, and the rates are not great. This would be a tremendous way for Alabama to move back up the list of solar-friendly states if they were to implement a better net metering policy.

Commercial Alabama Solar Incentives

When it comes to commercial properties in Alabama, most of the incentives for transitioning to solar power are the same as they are for residential, however, there are some other loan-type programs for PV system installation and renewable energy that we don’t see in the residential sector.

Solar Incentives for Nonprofits and Businesses in Alabama

Non-profits and businesses in Alabama will be subject to many of the same programs; there are no specific incentives at the current time to help out a non-profit. One of the few good things that a non-profit can consider is that they may have discounted tax rates on purchasing their system if they are a registered non-profit with sales tax exemption.


The United States Department of Agriculture offers a REAP grant, or Rural Energy for America program is a great loan program for agricultural producers. Agricultural producers are very important members of our economy; however, they also require a lot of power to stay up and running.

With the REAP Grant, agricultural producers can save money on loans for their solar systems.

In addition to the money savings, there are also financing options that may otherwise not be available through providers. If qualifying for a loan is part of the problem, working with a USDA representative could help to make this process considerably easier.

Federal Solar Tax Credit for Businesses in Alabama

For a federal corporate income tax return, there is a 30% credit against the cost of any system that was placed into the building that year. The Federal Solar Tax Credit is the best way for Alabama state businesses and property owners to save the most amount of money on their solar system installation.

Of course, all good things must come to an end, and unfortunately, in the year 2023, you will notice the rate of savings go down to 10%, and in 2024, it will expire. Although a solar system will save you plenty of money on your electric bill, the savings, you can get on the initial purchase help to make the project much easier to justify.

Alabama Commercial Net Metering

The net metering program in Alabama is not the strongest. Local governments and business owners will have to work with their individual electric utility providers to see if there is anything that can be done to work out a net metering deal. However, until the state of Alabama starts mandating net metering, this is likely not going to be a very popular program.

Local Government Energy Loan Program

For local government buildings like schools that want to invest in more renewable energy sources, there is a loan program that can help to keep costs down. These loans will offer $350,000 per local government or school campus and up to $500,000 per school system.

The loan rates will be 0% for up to 10 years with a 3% management fee. The payback needs to happen within 10 years as part of this program, but it is an excellent way for large-scale projects (over $50,000) to get up off the ground.

AlabamaSAVES Revolving Loan Program

The AlabamaSAVES Revolving loan program is for commercial and industrial customers looking for large loans on energy-saving projects. The maximum loan term here is $4,000,000, and the loan term maximum is 10 years. It will require a starting investment of $1,000,000 to qualify for a loan like this.

The 2% fee associated with this loan is considerably lower than the market rate, and there are very few fees and costs involved, considering the size of the loan being discussed.

Key Takeaways: The Best Alabama Solar Incentives

The best Alabama solar incentive is the Federal tax rebate program. This is the only option that will help you save thousands of dollars on the cost of your solar installation in the state of Alabama. Although there are other local loan programs for business and, of course, the property tax exemption, the state of Alabama is still lacking some of these programs for helping customers switch to solar power. Hopefully, we will see a state program from Alabama that will encourage more participation and better savings.

Alabama Solar FAQ

Is solar worth it in Alabama?

Solar in Alabama is worth it because of the money savings and the ability to create your own energy without relying on the grid. Alabama residents that switch to solar power do not regret the money they save and the ease of use to be creating energy without having to do anything.

How much does it cost for solar panels in Alabama?

Solar panels in Alabama are about $30,000, but this will change based on the size of the solar array. Some homeowners will do a partial solar system to help lower the costs of the electric bill but not completely power the home. A solar panel expert and installer can help you determine how much you will need for your home.

Can you get solar panels for free in Alabama?

Solar panels are not offered for free in Alabama. The best saving program for clean energy in Alabama is the Federal ITC program.

What solar rebates are available in Alabama?

Currently, the solar rebates in Alabama include federal rebates, as there is no state tax incentive or rebate. This could change in the future.

How many homes in Alabama have solar panels?

Currently, there are only about 30,000 homes in Alabama with solar power. Hopefully, as more programs are created, and the cost of solar goes down, more houses will be willing to make the switch.

Do solar panels increase property taxes in Alabama?

Solar panels will increase the value of your home, but it will not increase your taxes in Alabama. Luckily taxes in Alabama are not impacted at the residential or commercial level for the installation of green power initiatives.

How much can you write off for solar panels on taxes in Alabama?

The current Federal ITC programs allow a 26% rebate on the total cost of the solar system. There is no additional tax benefit at the state level, and the program is set to decrease in saving percentage in the next few years.

House Method’s Solar Companies Rating Methodology

At House Method, transparency and trust are our most important values for the reader. That’s why we took the time to create an objective rating system and score each solar energy company/service according to our methodology.

Our research team dug deep into the fine print of contracts, combed through more than one hundred customer reviews, and thoroughly investigated all of each solar energy company’s services, costs, and products. We’ve done the homework for you by researching nearly all of the solar energy companies on the market so you can have the information you need to make the best choice for your home.

We developed a formula to objectively determine the best solar energy companies and give each a score out of 100 based on the following criteria:

Plan Options (30): Do they provide a variety of plan options? We looked at the number of plans each solar energy company offered and the flexibility of adjusting the plan.

Services offered (20): How many services are offered in each plan? We looked at whether the company manufactures its own solar panels, whether it contracts out installation, and what additional products each company offers.

Trust (10): What do customers say after their solar panels are installed? Does this company offer a guarantee? We considered how satisfied customers are post-service if the company does what it says it will, BBB accreditation, and service guarantees.

Prices (10): How reasonable are the costs of the plan or service in comparison to the industry average? We compared the costs of each company to competitors that offer the same solar energy services.

Unique perks (10): Does the company offer discounts or special services such as financial incentives, rebates, or a useful mobile app? We looked for extras each company offers that set them apart from the competition.

Customer Service (10): How is the customer experience when contacting the company? We considered the speed of response, weekend/holiday availability, and ease of communication through phone calls, email, and online chat functions.

Nationwide availability (10): How many states does the company offer its services? Companies that operate nationally and in all zip codes are favored over those with limited availability.

More on Solar from House Method

Solar panels on the roof of a building

Top 7 Best Solar Companies in Hawaii

Looking for the best solar companies in Hawaii? Click here to see our top picks, read our reviews of each, and see our guidelines for choosing an installer.

Modern house with photovoltaic solar cells on the roof and a thermal solar heating system for alternative energy production

Florida Solar Incentives: Tax Credits & Rebates Guide (2022)

Did you know that now is a great time to invest in solar if you are a resident of Florida? Click here to learn about solar tax credits and rebates in your state.


How Much Do Solar Panels Save? (Cost & Energy Savings)

Do you want to save on your energy bills and decrease your carbon footprint? Click here to learn how much you can save by installing solar panels on your roof.

Solar Panels on Roof of Home

Indiana Solar Incentives: Tax Credits & Rebates Guide (2022)

Every state has solar incentives to help you get to cleaner energy. This guide outlines the best Indiana solar incentives so you can get started. Check it out!


Ohio Solar Incentives: Tax Credits & Rebates Guide (2022)

Are you looking for solar tax incentives for the state of Ohio? Check out our guide for a breakdown of what you can save with solar panels.

Man installing solar panels on rooftop

Kentucky Solar Incentives: Tax Credits & Rebates Guide (2022)

If you live in Kentucky and worry about rising energy costs, now is the time to buy a solar energy system. Click here to learn about Kentucky solar tax credits and rebates.

Solar system on house rooftop

Missouri Solar Incentives: Tax Credits & Rebates Guide (2022)

Are you a resident of Missouri and looking to purchase a new solar energy system? Click here to learn about what solar tax credits and rebates the state of Missouri has to offer.


How Much Power Does a Solar Panel Produce?

Different solar panel models produce varying amounts of electricity, making some options better for savings and off-grid living. This article shows you how to calculate a solar panel’s energy output to improve your rooftop solar panel system.


New Hampshire Solar Incentives: Tax Credits & Rebates Guide (2022)

Are you a New Hampshire resident looking to purchase a new solar energy system? Click here to learn about solar tax credits and rebates in your state.