A fully installed solar panel system will set you back anywhere between $17,500 to $25,500. The main things that determine the final price are the size of the system, labor costs, and your location.
But how do taxes affect the cost of your system and will solar increase your property taxes?
Solar panels raise the value of a property. But by how much? Also, there are different classes of taxes that vary by state. But which ones apply to you? If you’re concerned about how these two affect you, then this article should set your mind at ease.
Do Solar Panels Raise Property Value?
Solar panels raise your property value by about 4.1%. The exact amount will vary depending on your location and the solar panels. These two factors greatly influence the value of the solar panels so naturally, they would also tip the scales of the final property value.
On a side note! If you’re in need of a reliable and high-performance portable solar panel, We strongly recommend the Jackery SolarSaga 100W Portable Solar Panel (Amazon Link).
With a high conversion efficiency and foldable design, this solar panel is easy to transport and set up, making it perfect for outdoor activities like camping, hiking, and RV trips.
The US solar cell technology used in this panel ensures that you get the most efficient and reliable solar charging possible.
There is also a 60W option that is more affordable (Amazon Link)
What drives up the price of homes with solar panels? Homes with solar panels are more attractive to prospective homeowners for two reasons. The first is solar savings and the second is sustainability. Let’s look a little closer at what this means. But first, we recommend that you check out our post How Much Does A Solar Roof Cost? Is It Worth It?! (VS Solar Panels)
Cost savings
Homes with solar panels have a higher upfront cost but they more than return the premium paid on them. The return on investment comes in the form of savings on your electricity bill. U.S consumers spend an average of $1,400 on electricity per year. Furthermore, electricity costs have risen by around 4% per year in the last two years.
A solar system has potential annual savings of up to $1500 depending on its size and location. This means you can eliminate your electricity bill and not have to worry about the rising cost of electricity.
Sustainability
Consumers are increasingly conscious of how their lifestyles contribute to climate change. Nowhere is this more apparent than in how they decide which products to buy. In a recent survey, 30% of Americans said they would pay a 25% premium on sustainable energy products. (Source)
The move by consumers toward ethically made products and renewables translates to a higher value placed on those products.
We’ve looked at why homes with solar are more valuable but what determines the final purchase price? The final value depends on where the home is and the solar panels themselves.
Location
Electricity prices vary from state to state. A home with solar panels in a state where electricity prices are higher will be more valuable than a home with solar panels in a state with cheaper electricity. The higher the price, the greater the cost savings from having solar panels.
Solar panel specifics
The size of the solar system is important. The more solar panels you have, the more energy it produces, and the more savings can be realized. According to a Lawrence Berkeley Lab study, each kilowatt installed raises the resale value of a home by $5000. (Source)
You also need to consider the age of the system. An older system will require the replacement of worn-out components like batteries or inverters before the new buyer has had a chance to recoup their investment. The newer the system, the better the value proposition.
Do Solar Panels Devalue Property?
Solar panels do not devalue a property. Although the national average is 4%, solar panels can raise the resale value of a home by as much as 9% depending on what state you live in and the specifics of the solar system.
Homes with solar do not just have a higher resale value but they also sell faster. A home with solar panels will spend 20% less time on the market compared to a home without.
Are Solar Panels a Tax Write Off?
Solar panels have property and sales tax exemptions in some states in the U.S. There is also a federal solar tax credit. That means you can claim solar panels as a deductible on your tax returns.
Three tax statutes apply to solar panels. These are the federal solar tax credit, the solar property tax exemption, and the solar sales tax exemption. Let’s look at how they are applied.
Federal solar tax credit
A tax credit is a reduction in the taxes you owe. Also known as the investment tax credit, the federal tax credit allows you to deduct up to 26% of the total cost of your solar panels from your federal taxes. Given the average cost of a solar system, this could be anywhere between $4,000 to $8,000.
The federal solar tax credit is set to be reduced in 2023 to 22% before it is scrapped in 2024 so now is the best time to invest if you want to reduce the upfront cost of going solar. The federal solar tax credit applies across all U.S states. (Source)
| YEAR IT APPLIES | TAX CREDIT |
| System installed in 2019 | 30% |
| System installed 2020-2022 | 26% |
| System installed in 2023 | 22% |
| System installed in 2024 | 0% |
Solar property tax exemption
Certain states offer property tax exemptions for solar installations. 36 states including the District of Columbia have a 100% exemption. Installing solar raises the value of your home. Normally a rise in the value would also mean you pay more in tax. This is not the case with solar panels. The property value rises, but because solar panels are exempted, your taxes do not rise.
Find out if your state offers a solar property tax exemption here. (Source)
Solar sales tax exemption
In some states, solar panels are exempt from sales tax. This reduces their upfront price. Exemptions vary depending on what state you live in. You can check if there is a sales tax exemption that applies in your state here. (Source)
Do Solar Panels Increase Your Property Taxes in Florida?
Solar panels do not increase your property taxes in Florida. Florida is one of the 36 states in which homeowners have a solar property tax exemption. What this means is that while the value of your home will increase when you add solar panels, the taxes you will pay on your home remain the same.
In states like Alabama, Georgia, and Oklahoma, solar panels will increase your property taxes because they do not have a property exemption for solar.