Tennessee experiences a diverse climate with approximately 205 sunny days annually, providing a decent amount of sunlight for solar energy initiatives. While it may not be among the sunniest states, Tennessee’s weather conditions still present opportunities for viable solar power projects. The state actively supports renewable energy through various incentives and programs aimed at encouraging solar adoption.
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Tennessee Tax Incentives
Tennessee offers two tax incentives for solar panel installations. All types of renewable energy equipment are eligible for a partial property tax exemption, and business-owned systems can also receive a sales tax credit however there are no solar rebates in Tennessee as of 2023 .
Furthermore, In addition to the state incentives, there are also federal incentives available to Tennessee residents:
Federal Solar Investment Tax Credit (ITC):
Homeowners that qualify for the Solar ITC can take advantage of a tax credit for 30% of the total purchase price of their solar system, no matter the system size or cost. This credit applies to all solar projects that begin construction in 2023 and will last through 2033, at which point it will drop to 26%.
Forexample as of March 2023 solar cost survey, the average expense for home solar systems in Tennessee stands at $2.79 per watt. This translates to an estimated $16,740 for a 6-kilowatt (kW) solar photovoltaic (PV) system. After factoring in the 30% federal tax credit, which amounts to $5,022, the net cost reduces to $11,718.
In instances where your tax credit surpasses your tax liability, the surplus can be carried forward for up to five years. For instance, if your outstanding tax obligation is $3,000 and your solar tax credit amounts to $5,000, you can offset the entire payment and utilize the remaining $2,000 towards your subsequent IRS filing.
Further information and programs can be found at the Programs.Dsireusa.org
