Indiana Solar Incentive Programs

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Indiana experiences a varied climate with around 186 sunny days annually, providing a reasonable amount of sunlight for solar energy initiatives. While not leading in terms of the number of sunny days, Indiana’s weather conditions still present opportunities for viable solar power projects. Indiana has several financial incentives for installing a solar photovoltaic system. Here are some of the incentives available to Indiana home and business owners:

Federal Incentives

Federal Investment Tax Credit (ITC)

Commercial solar energy systems installed in Indiana can take advantage of the Federal Investment Tax Credit 48E, which provides a tax credit of 30% of the total cost of the system, provided prevailing wage and apprenticeship requirements are met. 

Residential systems can no longer claim any federal solar tax credit, as the One Big Beautiful Bill eliminated it for systems installed after January 1st, 2026. 

Commercial Depreciation

Commercial asset owners can write off 100% of a project’s value in depreciation in the first year. The One Big Beautiful Bill reinstated the 100% bonus depreciation, while simultaneously eliminating the Modified Accelerated Cost Recovery System (MACRS) that previously depreciated solar energy systems over 5 years. 

The depreciable basis of a project is reduced by half of the ITC value when combined with the 30% ITC. Here’s a quick example:

• Project cost = $800,000
• 30% credit = $240,000
• Reduced depreciation basis: $800,000 – ($240,000 / 2) = $680,000

A company’s tax rate is then taken into account to calculate the exact amount they’re able to write off. 

Incentive and Rebates

Unfortunately, Indiana does not offer any rebates for people who purchase solar panels for their home3. However, the state does offer tax exemptions to help make solar power more attractive. On November 3, 2023, the Indiana Office of Energy Development (OED) announced a Request for Services (RFS) for potential contractors to assist with planning, designing, and administering the Home Energy Rebate Programs. The allocation for the State of Indiana is $182 million to assist Hoosiers in improving the energy efficiency of their homes through whole-home retrofits and high-efficiency home appliances. The rebate programs are expected to become available to Hoosiers mid- to late- 2024.

Renewable Energy Property Tax Exemption:

For any new solar PV system installed in Indiana, the assessed value of the system is exempt from your property taxes. That means that, even though your solar installation adds value to your property, the added value can’t be counted when property is being assessed for taxes.

Indiana Sales Tax Exemption:

When you purchase a solar energy system in Indiana, many of the components are exempt from sales tax under Indiana’s sales tax exemption for electrical generating equipment. According to the law, you don’t have to pay sales tax on your solar modules, racking, and inverters because they are directly involved in the production of electricity.

Net Metering:

Solar energy systems under 1 megawatt (MW) in size are eligible to participate in net metering, which allows you to send your extra electricity back into the grid and get credits on your electric bill. When your panels aren’t producing all the electricity you need, you can use your credits instead of having to pay for electricity from your utility.

Further information and programs can be found at the Programs.Dsireusa.org