Illinois solar incentives, tax credits and rebates
Resources for going solar in 2023
Illinois doesn’t have a statewide solar tax exemption for homeowners, but you can still take advantage of the federal investment tax credit (ITC), which is good for 30% of your total costs when you file your taxes.
After the ITC, the average system costs $14,333 in Illinois, which is cheaper than in many other states. The national average cost of a residential solar system is $16,715.
The Prairie State also has grants and other incentives that make going solar easier to afford, but most of these are intended for nonresidential properties.
Key insights
- You can take advantage of solar tax breaks and grants in Illinois.
- The average federal tax credit value is $6,143 in Illinois.
- Estimated 25-year savings with solar panels are $16,585.
Solar incentives in Illinois
The federal solar investment tax credit (ITC) is a significant incentive for homeowners in Illinois considering making the transition to solar energy. If you install a residential solar panel system by Dec. 31, 2032, you’re eligible for a tax credit that equates to 30% of the complete cost of the system. This includes the expenses for equipment, labor and necessary permits.
The federal solar investment tax credit drops to 26% in 2033 and 22% in 2034.
For instance, if you invest in a solar panel system that costs $20,000, you can anticipate a $6,000 tax credit. It's essential to understand that this is not a rebate or refund. The amount will be deducted from your federal tax obligations for the year in which the system becomes operational.
To claim this benefit, you are required to complete IRS Form 5695 during your annual tax filing. The process requires some paperwork, but the financial advantages make it worth it. Utilizing this tax credit can significantly reduce the investment required for a solar panel system, making it a more feasible option for many homeowners.
More solar incentives in Illinois
| Incentive type | Incentive amount | Applicable sectors | Administrator | Available statewide | |
|---|---|---|---|---|---|
| Special Assessment for Solar Energy Systems | Property tax incentive | Varies | Commercial, industrial, residential | Illinois Department of Commerce and Economic Opportunity | ✔ |
| Illinois Clean Energy Community Foundation Grants | Grant program | 100% waiver of fees | Local government, nonprofit, schools, state government, institutional | Illinois Clean Energy Community Foundation | ✔ |
| City of Chicago Green Building Permit Programs | Green building incentive | Expedited permitting | Commercial, industrial, nonprofit, residential, schools, multifamily residential, institutional | City of Chicago | X |
| City of Chicago Small Business Improvement Fund | Grant program | Varies | Commercial, industrial, multifamily residential | SomerCor | X |
| Renewable Energy and Energy Efficiency Project Financing | Bond Program | Varies | Commercial, industrial, nonprofit, schools, institutional | Illinois Finance Authority | ✔ |
| Illinois Municipal Electric Agency Electric Efficiency Program | Rebate program | Up to 75% of project cost | Commercial, industrial, local government, nonprofit, schools, federal government, agricultural, institutional | Illinois Municipal Electric Agency | X |
| Improvement Valuation of Commercial Solar Energy Systems | Property tax assessment | Varies | Commercial, industrial, residential, federal government | Illinois Department of Revenue | ✔ |
Statewide residential solar incentives in Illinois
Most of Illinois’ solar incentives are intended for nonresidential uses. The state offers a property tax exemption for residents using solar, though. The amount you can deduct from your taxes varies.
If you’re a Chicago resident, you can also get expedited processing on permits for solar. The city aims for less than 30 days to get your permit through. You must apply to qualify, though.
» LEARN MORE: The tax benefits of owning a home: must-know deductions and secrets
What to know about net metering in Illinois
Net metering lets you sell the extra energy that your solar system produces to your local electric company for a credit on your bill. People who don’t store their excess energy in solar batteries often use this method to prevent waste.
The Illinois net metering initiative kicked off in 2008. As part of this program, Commonwealth Edison, Ameren Illinois and MidAmerican Energy Company have to pay customers with credits on their electric bills for the electricity produced by solar. Applications for net metering are considered on a first-come, first-served basis.
The process can be somewhat complicated, according to Allison in Sycamore.
“They don't tell you that you have to reapply for net metering through your local electric company,” Allison said. “And it's practically impossible to find all the information you need to complete the net metering application (what's the capacity of the system, the installer license number, etc.).”
Illinois net metering regulations
Following Illinois regulations, renewable energy generators with a capacity of 40 kW or less are entitled to a one-to-one retail rate credit. Eligible customers receive compensation for any surplus electricity generated by their renewable energy systems at the same rate they would pay when purchasing electricity from their utility company. These earned credits will roll over from month to month.
Net metering in Illinois can save a lot of money. A resident of Commonwealth Edison, for example, can offset an estimated 32% of annual consumption. That’s about $248 in a year.
Solar resources in Illinois
Below are some additional resources that can guide you through transitioning to solar in Illinois.
- Illinois Solar for All
- Illinois Solar Energy Association
- Illinois Solar Panel Installations: 2023 Pricing & Savings
- Illinois Introduction to Rooftop Solar
- Is Solar Worth It in Illinois? (2023 Homeowner's Guide)
- Exploring Community Solar in Illinois
» GUIDE: Solar panel installation
Find solar companies in Illinois
Compare popular solar companies available in Illinois below. Read our guide to finding the best solar companies for more.
| SunPower | Sunrun | Palmetto Solar | ||||
|---|---|---|---|---|---|---|
| Primary |  | READ REVIEWS | Customer Ratings 4.3 | Free quote | Payment options
Cash, loan, lease
| Warranty
10 to 25 years
|
| Primary |  | READ REVIEWS | Customer Ratings 4.1 | Free quote | Payment options
Cash, loan, lease
| Warranty
25 years
|
| Primary |  | READ REVIEWS | Customer Ratings 3.7 | Free quote | Payment options
Cash, lease, loan, PPA
| Warranty
25 years (product and performance)
|
FAQ
Can I get solar panels for free in Illinois?
Currently, there are no programs that provide free solar panels in Illinois. You can get a lease or enter a PPA with little to no upfront costs, though.
How much can I save with solar panels in Illinois?
In Illinois, the average savings with solar is $16,585 over 25 years. Even if you don’t generate 100% of your energy needs, you can still save a lot of money going solar versus paying traditional utility bills.
Are there any commercial solar incentives in Illinois?
There are quite a few commercial solar incentives in Illinois. Commercial properties can benefit from a property tax incentive, a green building incentive, a grant program and a rebate program.
Are there any disadvantages to going solar in Illinois?
The state doesn’t offer many incentives for residential properties, unlike other states. This can make getting solar harder for those on a budget.
» MORE: Solar energy pros and cons
Can I put solar panels on my condo?
Maybe. Check with your condo association to find out the rules and regulations.
Is my HOA allowed to restrict solar panels?
According to the Illinois Homeowners' Energy Policy Statement Act, homeowners associations can not prevent you from adding solar to your home.
How can I pay for solar panels?
Most people finance solar panels through a solar loan instead of paying cash. You can also get a lease or PPA (power purchase agreement) to obtain solar for your home.
» SOLAR PANELS: Lease vs. buy
Bottom line: How much are solar panels in Illinois?
Though there aren’t many solar incentives for homeowners in Illinois, getting solar is still cheaper here than in other states.
The long-term savings makes the initial investment worth it. You can expect to save around $16,585 over the next 25 years. Plus, you can take advantage of net metering to get credits on your electricity bill, which is particularly nice if you don’t plan on being 100% reliant on solar.
The ConsumerAffairs research team conducted an in-depth analysis to determine how much it costs to go solar in Illinois and the average solar costs in other states.
Solar costs: Illinois vs. nearby states
| Average cost per watt | Typical system size | Upfront cost* | ITC value (30%) | Payback period** | Estimated net savings | |
|---|---|---|---|---|---|---|
| Illinois | $2.73 | 7.5 kW | $20,476 | $6,143 | 12 years | $16,585 |
| Michigan | $2.81 | 7 kW | $19,670 | $5,901 | 10 years | $23,652 |
| Ohio | $2.56 | 9.5 kW | $23,040 | $6,912 | 12 years | $19,272 |
| Wisconsin | $2.60 | 7 kW | $18,200 | $5,460 | 10 years | $21,005 |
Article sources
- Environmental Protection Agency, “ Summary of Inflation Reduction Act provisions related to renewable energy .” Accessed Aug. 31, 2023.
- EcoWatch, “ Solar Panel Cost in Illinois .” Accessed Aug. 31, 2023.
- Office of Energy Efficiency & Renewable Energy, “ Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics .” Accessed Aug. 31, 2023.
- Solar Energy Industries Association, “ Solar State By State .” Accessed Aug. 31, 2023.
- DSIRE, “ Illinois Solar Programs .” Accessed Aug. 31, 2023.
- U.S. Energy Information Administration, “ 2021 Average Monthly Bill- Residential .” Accessed Aug. 31, 2023.
- EnergySage, “ Illinois solar panels: local pricing and installation data .” Accessed Aug. 31, 2023.
- Illinois Attorney General, “ Net Metering and Interconnection .” Accessed Aug. 31, 2023.
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