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Indiana Solar Incentives, Tax Credits & Rebates (2025 Guide)

Learn all about Indiana’s solar incentives with our in-depth guide to maximize your solar savings.

Written by
Alexis Carthan
Written by
Alexis Carthan
Updated 12/09/2024

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Installing solar panels at home can be costly, but state incentives such as tax credits and rebates can help lower the cost. Indiana offers several of these programs to make the switch to solar more affordable. Our guide to Indiana solar incentives will help you maximize your savings and find the state’s best solar companies.

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What Are the Solar Tax Credits and Rebates Offered in Indiana?

Indiana offers several financial incentive programs for solar system installation. Learn more about these laws and solar rebates below. 

Indiana Solar Sales Tax Exemption

Many components of your solar energy system are exempt from sales tax in Indiana. This is because the Indiana General Assembly passed a sales tax exemption policy for electrical generating equipment. According to the law, you don’t have to pay sales tax on your solar modules, racking, or inverters because they’re directly involved in electricity production.

More resources: Database of State Incentives for Renewables and Efficiency (DSIRE) page

Renewable Energy Property Tax Exemption

Solar panels increase your home value by roughly $15,000. However, this additional value is exempt from property taxes in Indiana.

More resources: DSIRE page

Solar Easement Laws

The Indiana state legislation has solar easement laws to ensure solar energy devices and passive solar energy systems have access to direct sunlight. These laws help homeowners work with their neighbors to prevent shading that could affect their renewable energy system’s efficiency. Though Indiana doesn’t have preestablished protections on sunlight, homeowners can enter into voluntary solar easement agreements with their neighbors to guarantee unobstructed access to sunlight. This also prevents homeowners associations (HOA) from trying to block your solar power system installation.

More resources: DSIRE page


How Does the Federal Solar Tax Credit Work?

All Indiana residents are eligible for the federal solar investment tax credit (ITC). This tax credit allows you to deduct 30% of your solar system’s installation costs from your federal tax bill. You’ll send in your claim during tax season when you file your taxes. This credit can also roll over to the next tax year if the deduction is greater than what you originally owe. Some restrictions apply, including availability only for those who purchase their solar system using cash or a loan.


Is Net Metering Offered in Indiana?

Net metering is a billing policy that helps homeowners reduce or eliminate their monthly electric bills. This financial agreement lets you pull electricity from the power grid when needed and send excess solar energy back to the grid when you don’t need it. Your utility provider will then apply credits to your utility bill.

Unfortunately, the Indiana Utility Regulatory Commission made net metering for new solar panel installations unavailable in January 2021. However, the state can change its laws around net metering in the future—as it did for residential solar panel owners in 2017—which may result in a grandfathering program.


How Much Do Solar Panels Cost in Indiana?

The average solar panel system costs about $16,129 before factoring in tax incentives or rebates.* Solar installers typically price systems based on wattage, with an average cost of $3–$4 per watt. In Indiana, solar installation tends to be more expensive, with a system averaging $19,891. However, applying the federal solar tax credit reduces costs by $5,967, bringing the total to $13,924.

Your total solar investment and potential return on investment (ROI) depend on your solar financing choice. Explore different payment options below.

  • Cash purchase: An outright cash purchase of the system is the most cost-effective option, leading to the quickest ROI. A cash purchase eliminates possible interest rates, credit checks, and loan fees. It also qualifies you for solar incentives because you fully own the system. 
  • Solar loan: A solar loan is the second-best payment option. You still own the system but avoid paying a large sum of cash. These loans work like home or auto loans, where you pay for the system monthly over a fixed period. Be aware that you’ll pay more over time than an outright purchase due to interest rates.
  • Solar lease: A solar lease is better for homeowners who don’t qualify for loans or have enough up-front cash. However, a solar lease disqualifies you from using any tax incentives and doesn’t increase your property value because you don’t technically own the system. 
  • Power purchase agreement (PPA): This option is a billing arrangement in which you pay for your monthly energy use. Your solar installer and utility company set up a PPA so it’s as if you’re still paying your regular energy bill. Some PPAs also include system maintenance and repairs. This option disqualifies you from any tax incentives. 

*Cost figures are based on a 2023 report from EcoWatch.


Is Going Solar in Indiana Worth It?

Though more expensive than average in Indiana, going solar is still worth it in the state due to the massive amount of money you’ll save on energy costs over time. The average solar payback period is between 9 and 12 years, while solar systems typically last 25–30 years. Unfortunately, Indiana has no quality net-metering program, but solar panels still provide financial savings, increase home value, and have a positive environmental impact with increased energy efficiency. 

We recommend consulting a professional solar installer to explore available incentives and assess your clean energy needs.

Going Solar in Indiana: Step-by-Step Guide

Thinking about going solar in Indiana? Here’s a quick rundown of the process to get you started.

1. Consultation

Start by consulting a few solar installation companies in your area to assess your home’s sunlight exposure and determine your system size. Companies will use tools like Google’s Project Sunroof to assess your property’s solar potential remotely and provide you with a free instant estimate. From there, most companies will send someone to your home for an in-person assessment.

2. Design

After assessing your home, your installer will custom-design a system based on your roof space, energy needs, and budget. Most large installers already have design templates that should satisfy most performance and financing preferences without requiring much customization other than the type of solar panels, inverters, and solar batteries. This takes roughly one to three weeks and includes emails or calls to finalize your choices.

3. Permitting and Approvals

After design approval, the company factors in local zoning rules, HOA guidelines, and utility policies before filing necessary applications. Most Indiana installers report permitting approvals taking anywhere from a few days to eight weeks. Note that the closer your installer is to your permitting office, the faster the process tends to be.

4. Installation

Once your permits are approved, the installation phase begins. This is the most visible step in the process but also the quickest, with most installations taking just one day. It’s a good idea to confirm the expected installation timeline with your provider so you can plan accordingly.

5. Final Inspection and Activation

Once installed, your system will undergo a final inspection before being connected to the electrical grid. At this stage, your installer will walk you through required solar maintenance, system operations and performance monitoring tools, if available. If your utility provider offers net metering, you’ll start receiving credits for the excess energy your panels produce, helping reduce your electricity bill.


Our Conclusion

Solar panel costs are higher than average in the Hoosier State, but the transition is worth it to decrease your electricity bills and boost your home’s value. As electricity rates increase, you’ll save even more with a solar system. We suggest consulting an expert to understand your solar project’s pros and cons and find the best solar panels possible. 


FAQ About Solar Tax Incentives in Indiana

Can a house run solely on solar panels?

Yes, you can use solar energy to power your entire house, especially when you use a solar battery to provide electricity during low sunlight hours and power outages. Some people have used expansive solar panel systems to go off the grid completely.

Does Indiana have solar net metering?

No, Indiana currently does not feature a solar net-metering program. The state has passed laws recently that eliminate Indiana homeowners’ access to net metering. 

Is it unhealthy to live near a solar farm?

Electricity from solar panels and transmission to the power grid emits extremely weak electromagnetic fields. The American Society of Clinical Oncology (ASCO) reports that exposure to low-level electromagnetic fields has no evidence that it harms human health, so you’re safe if you live near one of Indiana’s solar farms.


Our Rating Methodology

We are committed to providing comprehensive and unbiased reviews to our readers. After over a thousand hours of research on solar companies, interviews with experts, and common customer needs, we’ve created a detailed rating system for solar providers based on six factors:

  • Solar equipment, installation, and services (25%)
  • Warranty and performance guarantees (25%)
  • Brand reputation and certifications (15%)
  • Financing options (15%)
  • Experience (10%)
  • Availability (10%)

Total scores are divided by 20 for a final 5-point rating scale.

To share feedback or ask a question about this article, send a note to our team at reviews@thisoldhousereviews.com.

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