Traditionally, Utah hasn’t been known as a solar-friendly state, but that is changing. The state’s above-average sunshine levels offer high solar energy generation and savings, and the solar incentives in Utah may save you even more money. Utah residents are eligible for the state’s sales tax exemption, a federal tax credit, and some utility-based net metering programs.
This guide covers all federal, state, and local solar incentives available to Utah residents switching to solar. The best solar companies will also offer guidance and assistance with incentive applications in Utah.
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What Are the Available Utah Solar Tax Credits and Rebates?
Utah offers some tax rebates and incentive programs to make solar more affordable and accessible. Here’s a look at what it’s offering in 2024:
Solar Easements and Rights
Solar easement laws protect your rights as a solar owner by having you and other involved parties, such as your neighbors or homeowners association (HOA), enter into an enforceable agreement. For example, if your neighbor has tall trees, an easement may prevent them from letting the trees grow above a height that could hinder your panels’ access to sunlight. These contracts are voluntary, but property owners often negotiate by offering some sort of compensation for entering the agreement.
A solar easement will not be terminated unless specified in the contract’s conditions. Any deed, will, or another instrument that creates a solar easement must include the following:
- A description of the affected properties.
- A spatial description of the solar skyspace.
- Any terms or conditions under which the solar easement is granted or may be terminated.
- Any provisions compensating the burdened party or, in the event of interference, the benefitted party.
- Any other provisions that are necessary to execute the agreement.
Utah Solar Sales Tax Exemption
When you purchase a solar panel system in Utah, you are exempt from the state’s sales tax, which amounts to 6.1% of your system’s price tag. For example, if you purchase a system priced at $20,000, you will save $1,220.
More resources: Utah Code 57-13
How Does the Federal Solar Tax Credit Work?
The solar tax credit in Utah allowed solar customers to claim 25% of their system cost on your state taxes, or $400, whichever is less. However, the tax credit was discontinued from December 2023.
Is Net Metering Available in Utah?
The state of Utah does not make it mandatory for its utility companies to offer net metering. However, several utility companies offer some sort of net metering or net billing programs. These programs provide energy bill credits based on how much excess energy your solar panels produce and send back into the power grid.
How Much Do Solar Panels Cost in Utah?
We did some calculations using data from our survey of 1,000 solar homeowners and found that installing a solar system in Utah costs about $1,397.16 per solar panel. For a typical, 6 kW system that uses 15 solar panels, you can expect to pay around $20,957. Note that this number will drop by at least 30% when you apply the available incentives, particularly the federal tax credit.
The solar financing option you select impacts your total investment. We’ve outlined each option below to help you make the best decision for your budget.
- Cash purchase: An up-front cash payment offers the best long-term savings and return on investment (ROI). This option eliminates extra costs from interest rates, credit checks, and loan fees. It also grants you complete system ownership and qualifies you for solar incentives.
- Solar loan: A solar loan is the second most cost-effective payment option. A solar loan gives you full ownership and access to incentives while helping you to avoid a hefty up-front cost. You’ll make monthly payments over a fixed period, but you’ll ultimately pay more for your solar power system due to interest rates.
- Solar lease: If you don’t qualify for loans or can’t afford a large up-front cash payment, a solar lease is a good alternative. However, there are some downsides. A solar lease disqualifies you from incentives because the solar company remains the system owner. Also, the system won’t increase your home value as it would with full ownership since it’s rented. We recommend a solar lease if you primarily care about reducing energy bills and generating renewable energy.
- Power purchase agreement (PPA): A PPA involves only paying for your monthly energy use, similar to an electricity bill. Your contract outlines an expected rate lower than the average grid-tied energy costs. Many solar companies also include system maintenance and repairs with PPA contracts. However, you won’t own the system and are disqualified from using solar incentives.
Is Going Solar Worth it?
Solar panel systems are worth it in Utah, thanks to the state’s net metering laws and tax credits. The state also has ideal conditions to generate clean energy, including open skies and long sunlight hours.
These benefits help Utah residents stay within the average solar payback period, or the time it takes for solar panels to pay for themselves. The national average payback period is between six and 10 years. Solar panels also increase your home value by an average of $15,000.
Our Conclusion
Utah is a great place to go solar. Utah homeowners are protected by the state’s solar easements and rights and can access the federal tax credit and net metering programs to save money. This guide details Utah’s more significant solar incentives, but we recommend researching smaller city- and municipality-specific incentives on the Database of State Incentives for Renewables and Efficiency (DSIRE).
You can check out our guide to top-rated solar companies in Utah to begin planning your system.
FAQ About Solar Tax Incentives in Utah
Is solar a tax write-off?
Yes, solar is a tax write-off. Solar panels give you access to the federal solar tax credit, which allows you to reduce your tax liability. You can claim 30% of your solar installation costs on your federal taxes.
What happens after I pay off my solar panels?
Once you pay off your solar panels, you’ll still get a monthly electricity bill. However, your bill will be lower or might even be just a minimum monthly access charge depending on your energy consumption habits and whether you enter a net metering program.
How does the solar tax credit work in Utah?
The solar tax credit in Utah works by letting you claim 25% of your system cost on your state taxes, or $400, whichever is less.
Do solar panels increase home insurance?
Solar panels generally don’t increase homeowners insurance premiums. However, you will most likely need to raise your coverage limits to match the replacement costs of solar panels, which may slightly increase your premium.