Vermont Solar Incentive Programs Explained

Vermont ranks 42nd for total installed solar capacity in the US. Before 2020, Vermont was adding substantial utility-scale and commercial solar capacity, but since the pandemic, that capacity has dropped off. 

The state is not home to many solar incentives, but with an average electric rate in 2024 of $0.1747/kWh, which has increased more than 20% over the last 10 years, homeowners and businesses in Vermont can benefit from significant energy savings by switching to solar. A major utility in the state, Green Mountain Power, also has a VPP (Virtual Power Plant) program helping with energy resiliency. 

Below is a breakdown and links to incentives available to homes and businesses making the switch to solar. You can find a full list and more details at https://programs.dsireusa.org/system/program/vt

Federal Incentives

Federal Investment Tax Credit (ITC)

Commercial solar energy systems 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. .

State Incentives & Programs

Local Property Tax Exemption

Vermont allows individual municipalities to vote on whether solar installations are exempt from property tax valuation. If the municipality chooses to exempt, homeowners would not see increased property taxes due to the solar installation, which increases property values anywhere from 5-10%. 

According to Zillow, the average home price in Vermont is $400,247. Installing solar could increase the home’s value anywhere from $20,012 – $40,024, and if exempt, homeowners wouldn’t have to pay any extra property taxes. 

Uniform Capacity Tax Exemption

Vermont has a Uniform Capacity Tax that requires solar and grid-connected storage projects to pay taxes based on the capacity of the system. Solar installations greater than 50 kW in size are required to pay $4 / kW annually, and storage projects over 600 kWh in capacity are required to pay $0.50 / kWh annually. 

Systems under those thresholds, which include most residential systems, are exempt from UCTs. 

Business Investment Tax Credit

Vermont offers tax credits to businesses that make investments in energy production. The credit is equal to 24% of the federal investment tax credit claimed, equivalent to a 7.2% state tax credit. The federal tax credit will not be available after 2027; no word on whether this program will go away as well. 

Sales Tax Exemption

Originally enacted in 1999, Vermont exempts solar equipment from the states 6% sales tax. The exemption applies to systems up to 500 kW in capacity and includes some other renewable energy projects. 

Vermont Economic Development Authority (VEDA) Commercial Loan Program

The Vermont Economic Development Authority (VEDA) offers a loan program to commercial systems. The program is intended to help businesses finance qualifying renewable energy generation and energy efficiency improvement projects. 

The maximum loan size is $6 million with a variable rate and $500,000 with a fixed rate, and is generally limited to 60% of the project cost, but in some cases can cover up to 90%. Funds from this loan must be used for the purchase of land or buildings, construction, installation, design, engineering, and permitting.

Vermont Economic Development Authority (VEDA) Agricultural Loan Program

VEDA, in cooperation with the Vermont Agricultural Credit Corporation, offers a loan program to farmers looking to invest in renewable energy generation. The program has a maximum loan of up to $5 million. 

Green Mountain Power Battery Storage Program

Green Mountain Power, a large energy utility in Vermont, offers a virtual power plant program for homeowners installing battery storage. Homeowners can choose between two different options:

• Energy Storage Lease – have two Tesla Powerwall 2 batteries installed on their home for $55/month or a one-time payment of $5,500. For a 10-year lease term, homeowners can benefit from emergency backup power, but GMP is also able to discharge the batteries to stabilize the grid when needed.
• Bring Your Own Device Program – homeowners installing solar and storage could enroll their qualified device to be discharged 5-8 times per month. In exchange, homeowners can receive between $850-$950 per kW discharge capacity.

Net Metering

Solar panel systems connected to the grid in Vermont can benefit from Net Metering, a program where solar systems send excess power back to the grid. Generally available for projects up to 500 kW in size, customers are credited for their Net Excess Generation at a blended rate that includes rates from multiple electric utilities.

As of 2024, the statewide blended residential rate was set at $0.18398/kWh.

The Future of Solar in Vermont

Without the introduction of new state-level incentives, Vermont’s solar market will likely stay roughly where it is in terms of total capacity. However, expect battery storage to surge with programs like Green Mountain Power’s storage lease leading the way. Overall, homeowners in Vermont can benefit greatly from switching to solar, even in their wintery conditions. 

Homeowners going solar in Vermont should make sure to do their research when going solar and check out all their options. If you’re looking for a high-quality install where your equipment is protected for 30 years, and you’re protected from surprise labor costs, look for a Solar Insure Certified Provider and an SI-30 warranty.