Home > Solar > Michigan Solar Incentives: Tax Credits & Rebates Guide (2023)

Michigan Solar Incentives: Tax Credits & Rebates Guide (2023)

Updated Feb 2, 2023

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Updated Feb 2, 2023

Home > Solar > Michigan Solar Incentives: Tax Credits & Rebates Guide (2023)

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Michigan is a state where having alternative energy sources could save you a great deal of money. With warm summers and cold winters, ensuring you have a solar panel system in place could help to save thousands of dollars a year. The key is finding a system that you can afford and will continue to lower your electricity rate through the years. In our guide providing the best Michigan solar incentives, we provide:

  • Why solar installations make sense
  • Rebates to help you save money on your solar energy system
  • Tax incentives that can help make a solar system possible

Although Michigan has no state-specific tax rebate program, there are local incentives for solar projects and the federal programs that help to keep down the cost of solar panels.

The Best Solar Incentives, Tax Credits, and Rebates in Michigan

The best solar incentive in Michigan is the Federal Solar Investment Tax Credit (ITC). This program is a great way to help homeowners keep energy costs down and get a sizable tax return the year they put their system in place.

IncentiveSummaryEnd Date 
Federal Solar Tax Credit (ITC)Michigan residents can take advantage of the Federal Solar Tax Credit and get a discount of 30% applied to their tax returns. If you purchase $20,000 worth of solar panels, you can get a credit of $6,000 on your next tax return. Remember, this does require you to come out of pocket first. Read MoreDecember 31st, 2032
Net MeteringNet 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 Michigan, many providers take advantage of it and offer fair rates. None 
Commercial Loan ProgramsFor government and commercial solar installations in Michigan, there are various programs to help improve overall rates and availability of funds. Some of these can help with loans up to $100,000None
Residential Loan ProgramsThe Michigan Saves loan program will help homeowners secure financing ranging from $1,000 to $50,000 for their home energy upgrades and installations. The term of this financing can extend as long as ten years. None
Michigan Residential Property Tax ExemptionProperty taxes go up when a solar system is installed. With the Michigan Residential Property Tax Exemption, the costs are kept down, and you can upgrade your home without the financial burden of taxes increasing. Read MoreNone 

Federal Solar Investment Tax Credit (ITC)

The Federal Solar Investment Tax credit is available in all 50 states, Michigan included. This program will give you a discount on your next federal tax return based on your home solar installation cost. This program was recently extended through the end of 2032 as a part of the Inflation Reduction Act.

The ITC allows you a tax credit of 30% of the cost of your solar installation. The solar system will need to be paid out of pocket and in full, with credit being returned and filed against any taxes you owe for that year. If you do not owe taxes the year that you installed your solar energy system, you can simply have this credit follow you until you need it.

Michigan Solar Energy Tax Credit

Michigan does not have a solar energy tax credit or rebate. Some states have an additional savings program that can be very beneficial and help to save additional money, but Michigan only allows for federal savings in this category. As we have mentioned, these programs can be adopted at any time, so it’s worth checking how they change through the years.

Michigan Solar Sales Tax Exemption

There is no tax credit for a residential solar system purchase in Michigan. You will still be subject to the 6% sales tax for your new solar power system purchases.

Michigan Solar Property Tax Exemption

Property taxes will increase with the installation of a solar system in Michigan. Luckily, a program will make your property taxes stay the same even after your solar installation. The solar property tax exemption ensures that even with this $20,000 or more upgrade to your home, your assessed value does not change, and taxes should remain level.

Michigan Net Metering 

Michigan net metering creates more energy than your home needs and supplies some of that energy back to the utility company or reserves it when you need it the most. Most homeowners find that their solar system does not create enough energy on cloudy days or at night. Therefore you can bank some energy with the local utility company and have it offset your total costs.

The net metering program in Michigan is pretty good. The state does not mandate a certain amount of payment per kilowatt hour, and they don’t even require companies to offer net metering. However, some good programs with companies like DTE energy and others will help lower your total electric cost obligation at the end of every month.

Michigan Saves – Home Energy Loan Program

The Michigan Saves Home Energy Loan Program will help homeowners secure financing for energy improvements to their homes. The size of the loans this program offers range from $1,000 to $50,000, and they have low rates to help save money on interest.

Loan terms on these loans can be as long as ten years.

Lansing Board of Water & Light – Residential Energy Efficiency Rebates

In the city of Lansing, there are additional rebates for homeowners that make their homes more energy efficient. These rebates will vary depending on the type of system you are installing and the size.

The rebate is currently $500 per kW with a max of 4kW. Adding this in addition to the federal tax rebate and a Michigan Saves Home Energy Loan Program, can result in quite a bit of saving.

Commercial Michigan Solar Incentives

The commercial Michigan solar incentives are strong and will allow for a few extra benefits and loan programs that the residential programs do not offer. If a solar panel system could help your company or business with its green initiatives, Michigan is an excellent place to be.

Solar Incentives for Nonprofits and Businesses in Michigan

There are no specific solar incentives for nonprofit organizations in the state of Michigan. However, there are tax relief programs for nonprofits and loan funding programs that will apply to nonprofits and businesses.

USDA REAP Grant

The United States Department of Agriculture offers a REAP grant or Rural Energy for America program. This is in place to help agricultural producers secure renewable energy resources loans. The USDA will help ensure loan financing and grant funding for agricultural producers, making the process straightforward. Simply input your information, and they will be in touch about ways that you can save. Make sure you connect with the USDA at the beginning of your search for solar power, as they can offer tremendous guidance.

Federal Solar Tax Credit for Businesses in Michigan

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 the best option when looking for large bulk savings in the state of Michigan. Most businesses have a tax burden at the end of the year, and this can help offset that considerably.

The Federal Solar Tax Credit is still one of the best ways to save money on solar energy, and is in place through the end of 2032.

Michigan Commercial Net Metering

Net metering is also available at the commercial level for Michigan businesses and property owners. Net metering for commercial and governmental institutions not only helps with energy efficiency but can also make the building more sustainable and profitable long term.

The state of Michigan does not mandate commercial net metering. However, in the commercial and business sector, there are plenty of programs in place from large energy providers that want to ensure that this solar-created electricity is used properly to power as much of the grid as possible. The solar arrays put in place by commercial and business operations can create large amounts of energy.

Refundable Payroll Tax Credit

The refundable payroll tax credit is for businesses that meet specific requirements for alternative energy. Payroll taxes can be considerably reduced for businesses that take these green energy initiatives, saving thousands of dollars annually.

With this refundable payroll tax credit, you will multiply the payroll amount attributable to qualified employees by the income tax rate for that year. A qualified accountant can help with these programs, but it takes time and attention to detail to set this up.

City of Ann Arbor – Green Power Purchasing

The City of Ann Arbor Green Power Purchasing is designed to help local governments with their out-of-pocket expenses on solar initiatives. This program aims to reduce greenhouse gasses and increase the amount of solar and wind power in the city yearly.

To encourage this, the City of Ann Arbor has incentives and programs that help make this more appealing to businesses and government institutions. The four goals of this program include supporting onsite renewables and battery storage, developing more community solar programs, and launching solar landfill projects.

Michigan Saves – Commercial Energy Loan Program

The Michigan Saves Commercial Energy Loan Program can make it easier to afford a solar panel system for a business or commercial property. It’s smart to compare these loans from the PACE program and other sources to determine the best rate and the best term.

The Michigan Saves program offers considerably higher amounts of funding for businesses than they do for residential installations.

Michigan Local PACE Program

The PACE program allows property owners in the commercial or industrial sector to get financing for energy-efficient improvements to their property. The PACE program requires a $10,000 initial investment into energy-saving improvements.

PACE financing must be in place before starting your commercial solar project to ensure you get the best possible financing.

Why Go Solar in Michigan?

Michigan currently ranks 24th in the nation according to SEIA for being solar-friendly. The cost of installing solar options in Michigan has dropped through the years. Local governments have adopted home energy-saving programs to make it more affordable for homeowners that want to become greener. However, there is still no state savings program, which puts Michigan slightly behind.

A PV or Photovoltaic system will help make you less reliant on Michigan power providers and more self-sufficient. Most home solar systems do not produce enough electricity to power your home and electric vehicle completely, so some programs allow you to continue to move away from the grid and have a more evenly distributed generation of electricity in your home.

As great as it is to be dealing with creating your electricity and saving money, many Michigan homeowners want the system to help with environmental issues. Using a natural resource like wind, sun, or water to generate electricity will help the environment.

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

Michigan Solar Cost

Michigan solar costs continue to decrease. We noticed on the DSIRE website that more and more programs were in place for financing installation costs and direct rebates on the programs in place. Essentially you are looking for a solar system at the right time in Michigan.

Expect to pay anywhere from $16,000 to $30,000 for a typical residential installation in Michigan. Some states have an average solar panel installation of up to $28,000, but Michigan is closer to the $19,000 mark. The lower the price you can get for your solar system, the easier it is to recuperate the money invested into the program.

Michigan solar costs can change rather quickly with the adoption and expiration of these consumer energy programs. Keep this in mind as you time the purchase of your solar panel system perfectly.

How Much Can You Save on Solar in Michigan?

The total amount you can save in Michigan with the federal tax rebate program for a new solar power system is around $5,000.

The issue with solar in Michigan is that there are localized incentives that apply to certain areas but depending on if you live in Lansing, the Great Lakes area, or Detroit, these programs vary. Generally, expect to save thousands of dollars on solar in Michigan.

Final Thoughts: The Best Michigan Solar Incentives

Hopefully, you are feeling more confident about how you can save money on solar power in Michigan. There are some great programs out there, but you must do some research before purchasing. You will get one shot to get the best possible deal on your solar system, and it’s worth taking advantage of every single benefit. The best Michigan solar incentives typically are a combination of rebates, tax incentives, and net metering.

Michigan Solar FAQ

Is solar worth it in Michigan?

There are two main reasons why solar is worth it in Michigan. The first is the ability to save money and lower your electricity costs. The second is to ensure that you are helping ensure that the energy used in your home is clean.

How much does it cost for solar panels in Michigan?

A complete solar system for a home in Michigan will typically cost around $19,000 or more. Most homeowners will look into starting with a few panels and eventually building out a complete system. Any solar energy you can add to your home will help to reduce electricity bills considerably.

Can you get solar panels for free in Michigan?

Solar panels are not offered for free in Michigan. There are rebates from the federal government and the state of Michigan, but you will still need to pay for your entire system and get these rebates as part of your tax return.

What solar rebates are available in Michigan?

Currently, the solar rebates in Michigan include federal rebates, as there is no state rebate program. However, this could change in the future. Solar savings programs are continually changing and should be considered when looking at what is available in Michigan.

How many homes in Michigan have solar panels?

There are only about 119,000 homes with solar panels in Michigan. As we mentioned, this state ranks 25th in the nation, so it still has some work to do to increase the availability of solar savings programs, but it has a great start.

Do solar panels increase property taxes in Michigan?

Solar panels will increase property taxes in Michigan, and there are currently no incentives to decrease these taxes. However, if you are an owner of a commercial property, there are property tax exemptions for solar energy producers.

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

The current Federal ITC programs allow a 30% rebate on the total cost of the solar system. This should save most Michigan homeowners about $5000 on their tax returns. This can be considered great savings when looking at the total cost of solar installation.

House Method’s Solar Ranking and Review 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 each solar energy company’s services, costs, and products. We’ve done the homework for you by researching nearly all 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 various plan options? We looked at the number of plans each solar energy company offered and the flexibility of adjusting the plan.
  • Services (20): How many services are offered in each plan? We looked at whether the company manufactures its solar panels, whether it contracts out installation, and what additional products each company offers.
  • Trust (10): What do customers say after installing solar panels? 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.

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