Updated Jan 10, 2023
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Arkansas is a great state to live in as it tends to have a relatively affordable cost of living. However, when it comes to the average cost of installing solar panels, some of the rates can be steep. Part of the issue is that Arkansas does not offer many incentives to help homeowners with the costs of solar panels. Our guide features the best Arkansas solar incentives, tax credits, and rebates and:
Even though Arkansas does not have specific state incentives currently, these things can change, so keep checking back to see how federal programs have been updated and enhanced to help you save money.
Arkansas currently ranks 30th in the nation for solar-friendliness. The renewable energy sources that homeowners and business owners are looking for are there but are simply not cost-effective. Electricity rates in Arkansas are still high enough that many people are interested in solar systems, but it just takes a long time to recoup the electricity costs.
However, when you decide to go solar, some impressive net metering policies are in place, as well as federal rebates that can certainly help. Even though the cost of solar panels may be high, you’ll create greener, cleaner energy and reduce the costs of running and maintaining your home.
Sold on solar for your home? Get a free quote from local solar installers.
Solar costs have decreased slightly in Arkansas over the last few years. The pricing tends to decrease as technology improves and becomes more worth it from an energy savings perspective. However, installing an Arkansas solar system costs more than $15,000. Some factors will impact this total cost and the cost of your future utility bills.
The size of the home is a significant factor, and you can get estimates from your current electric company, like Entergy Arkansas, as to how much you are currently using to power your home. The Solar Energy Industries Association also helps customers estimate what a Solar Photovoltaic system will cost in their local area.
Before deciding on financing options or rebates that may be available through your current electric company, it pays to do the research. Some requirements must be in place from the start of the system installation, and missing out on these incentives is a mistake.
Since there is no state initiative to help homeowners save money in Arkansas, you will find that you should still be able to save a few thousand dollars using federal programs. Again, public utilities and local areas are trying to improve the solar incentives in Arkansas; this will just take some time.
The best solar incentive in Arkansas is the Federal Solar Investment Tax Credit. This is a great way to save money on your next tax return, and it will follow you for several years if you opt not to claim it all the first year. Here are a few of the other great options for Arkansas homeowners to consider when it comes to savings.
|Federal Solar Tax Credit (ITC)||Arkansas residents can take advantage of the Federal Solar Tax Credit and get a discount of 30% applied to their tax return. If you purchase $20,000 worth of solar panels, you can get a credit for $6,000 on your next tax return. Remember, this does require you to come out of pocket first.||December 31st, 2032|
|Net Metering||Net metering allows homeowners that create excess energy to use it as a credit on their next electric bill. Although net metering is not mandatory in Arkansas, many providers take advantage of it and offer fair rates.||None|
|Commerical Loan Programs||For government and commercial solar installations in Arkansas, there are various programs to help improve overall rates and availability of funds.||None|
The Federal Solar Investment Tax credit is available in all 50 states, Arkansas included. This program will give you a discount on your next federal tax return.
Through the end of 2032, this program allows you a tax credit of 30% of the cost of your solar installation. You must pay for the solar system out of pocket in full before the credit is applied to your next tax return. Even if your tax burden is not that high for this year, the taxpayer credit will remain in place until you need it.
Unfortunately, Arkansas doesn’t offer a solar energy credit specifically for state taxes. This will apply to areas in Little Rock and across the entire state. If Arkansas decided to implement a solar energy tax credit at the state level, it could be combined with the federal as it is in other states.
There is no tax credit for a residential solar system purchase in Arkansas. This means that you will still be subject to the sales tax rate of 6.50% for your new solar power system purchases.
Property taxes will increase with the installation of a solar system in Arkansas. Unfortunately, Arkansas does not do much to help homeowners with these increasing costs. The rate at which your taxes will increase is typically not the full amount of the cost of the system, but you can expect a 4% increase in taxes with this new solar power system in place.
Arkansas net metering creates more energy than your home needs and supplies some of that energy back to a utility company. One of the great things about net metering is that it allows you to prepare for a cloudy day or a summer afternoon when you may want to turn down the air conditioner.
The net metering program in Arkansas is pretty good, and the state ensures that companies offer the program to residents. With net metering, expect your rates to drop as providers have to let you bank your excess energy and use it in the future.
In Arkansas, net metering is one of the incentives that is helping people become more interested in this solar energy process.
Commercial Arkansas solar incentives are not much better than residential. Still, some financing options exist for things like solar panel systems or solar batteries for commercial or governmental institutions.
There are no specific solar incentives for non-profit organizations in the state of Arkansas. However, there are tax relief programs for nonprofits, such as commercial incentives and loan funding programs.
The United States Department of Agriculture offers a REAP grant or Rural Energy for America program. This is in place to help you secure a loan for renewable energy resources. If you supply your contact information to the USDA, they will help ensure loan financing and grant funding for agricultural producers. The process is laid out clearly for you, but you must do it before installing your system.
In addition, small rural businesses can also access these resources for installing or upgrading renewable energy systems. With this USDA REAP grant, you won’t have to search for funding or try to negotiate; simply lay out your plans, and the USDA will tell you what is available. PACE financing is another option that commercial businesses need to look into.
For a federal corporate income tax return, there is a 30% credit against the cost of any system that was placed into the building during that year. This credit is by far the best option when you are looking for large bulk savings. Even though this comes back as a tax rebate, it will be well worth the effort to get this in place. This program was extended through the end of 2032 as a provision of the Inflation Reduction Act.
Net metering is also available at the commercial level for Arkansas businesses and property owners. Net metering for commercial and governmental institutions not only helps with energy efficiency but it can also make the building more sustainable long term.
The state typically regulates commercial net metering, but there are different programs with individual utility providers. Before investing in a solar energy system, look into the net metering policies and how they will impact your spending once the system is in place.
There is a Sustainable Building Design Revolving Loan Fund for local government, state government, and schools. This program is implemented to help make these solar systems much more affordable. The system must have a cost of more than $250,000 to be eligible, and this is yet another important way to save money on this renewable energy program.
Installing a solar energy system is a big decision but will continue to pay off for years. Arkansas homeowners and business owners should be taking full advantage of the federal government initiatives as these are the best that Arkansas offers. Hopefully, as other companies start to expand what they offer to homeowners, there will be more of a push to increase the total savings available on solar panel installation and operation.
Solar is worth it in Arkansas because of the long-term savings on your electric bill and the ability to produce clean energy for your home. The sun is a tremendous resource, and it is underutilized. Solar power initiatives continue to pop up from the federal, state, and local levels, so solar only becomes more and more worth it.
A complete solar system for a home in Arkansas will typically cost around $15,000 or more. Most homeowners will look into starting with a few panels and eventually building out a complete system. It can take a while to afford the full amount necessary for a complete solar panel installation. However, even a partial installation will save a lot on subsequent energy bills.
Solar panels are not offered for free in Arkansas. There are rebates from the Federal government, but you will still need to pay for your entire system.
Currently, the solar rebates in Arkansas include Federal rebates only, which will be in place through the end of 2032. Keep this in mind if you are currently searching and deciding if it’s time to invest.
There are only about 60,000 homes with solar panels in Arkansas. As we mentioned, this state ranks 30th in the nation, so it has fallen behind other states, primarily due to the lack of a state rebate.
Solar panels will increase property taxes in Arkansas, and there are currently no incentives to decrease these taxes and make Arkansas solar panels less of a property tax burden. Expect your property taxes to increase when you purchase solar panels.
The current Federal ITC programs provide a 30% rebate on the total cost of the solar system. This program is in place through the end of 2032.
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