A SOLAR GUIDE: HOW MICHIGANDERS CAN SAVE ON SOLAR INCENTIVES, TAX CREDITS, AND REBATES FOR SOLAR PHOTOVOLTAIC (PV) PANEL INSTALLATIONS IN MICHIGAN TO BENEFIT FROM RENEWABLE ENERGY (Residential Credit Availability Has Changed — Check Eligibility Before Purchasing.)
Residential tax incentives have changed over time. While this article provides helpful background, current eligibility varies. If you are considering solar, contact us for an up-to-date review specific to your home.
Switching to solar energy is one of the most effective ways for Michigan homeowners and businesses to reduce electricity costs and gain energy independence. While Michigan’s seasons bring both sunny summers and snowy winters, solar technology has advanced to perform efficiently in all conditions, making it a reliable solution year-round.
That said, the upfront cost of solar photovoltaic (PV) system installations can cause some Michiganders to hesitate. Enter incentives, tax credits, and rebates. While Michigan does not currently offer a statewide solar tax credit, homeowners and businesses in Michigan still have access to a range of federal incentives, property tax exemptions, and local programs that reduce the cost of solar photovoltaic (PV) system installations.
The Federal Solar Investment Tax Credit (ITC): 30 Percent Savings Through 2032 for Michiganders
The Federal Solar Investment Tax Credit (ITC) is an incredibly valuable incentive available to Michigan homeowners and businesses ready to switch to solar energy. The federal solar tax credit allows eligible solar system owners to claim 30 percent of their solar photovoltaic (PV) system installation costs as a credit on their federal tax return, reducing the financial burden. Whether purchasing a residential or commercial system, the federal solar tax credit makes solar more accessible by helping to offset costs while encouraging long-term energy savings.
In accordance with the Inflation Reduction Act (IRA), the federal solar tax credit will continue at 30 percent through 2032. The tax credit will then step down to 26 percent in 2033 and then down to 22 percent in 2034, after which it is set to expire unless renewed. This means Michigan homeowners and businesses have a limited window to maximize their savings before the federal solar tax credit begins to decrease. Taking advantage of the federal solar tax credit today ensures the highest possible return on investment, reducing both solar installation costs and long-term electricity expenses.
To qualify for the federal solar tax credit, solar photovoltaic (PV) systems must be purchased outright or financed through a loan — leased solar systems do not qualify. The federal solar tax credit applies in the year the solar system is installed, but if the full amount cannot be used immediately, the remaining credit can roll over to future tax years.
Michigan Solar Property Tax Exemption
One major advantage for homeowners investing in solar is Michigan’s property tax exemption for renewable energy systems. Typically, home improvements increase property taxes, but thanks to legislation reinstated in 2019, solar panel installations do not raise the assessed value of a home for tax purposes. This means homeowners can install a solar system, often a $20,000 or more investment, without worrying about an increase in property taxes.
Michigan Saves: Home and Commercial Energy Loan Programs
For homeowners looking for affordable financing options, the Michigan Saves Home Energy Loan Program provides low-interest, fixed-rate loans specifically for energy-efficient home improvements, including solar installations. Loans range from $1,000 to $50,000, with repayment terms of up to ten years, making it easier for homeowners to spread out the cost of solar energy systems.
Business owners, nonprofit organizations, and government entities can take advantage of the Michigan Saves Commercial Energy Loan Program, which offers larger loans with low interest rates for publicly owned buildings and private businesses, helping commercial properties transition to solar with manageable payment plans. The program is funded by the Michigan Public Service Commission, ensuring long-term sustainability for businesses investing in renewable energy.
Michigan’s Property Assessed Clean Energy (PACE) Financing Program
For commercial property owners, Lean & Green Michigan’s Property Assessed Clean Energy (PACE) Financing Program offers long-term financing options with no upfront costs with payments spread over 25 years, allowing businesses to invest in solar energy without major capital expenditures. The Property Assessed Clean Energy (PACE) Financing Program is available for commercial, industrial, agricultural, and multifamily properties, helping businesses reduce energy costs while promoting sustainability.
Michigan’s MI Solar for All Program
A major step toward making solar energy more accessible in Michigan is the MI Solar for All Program, a $156 million federally funded initiative administered through the U.S. Environmental Protection Agency (EPA). Announced in April 2024, this program is designed to provide direct financial assistance to low-income and disadvantaged communities across Michigan. By reducing the upfront costs of solar installations, Michigan residents can now transition to clean energy without the financial stress.
Michigan’s Rural Energy for America Program (REAP)
For agricultural producers and rural businesses, the USDA’s Rural Energy for America Program (REAP) supplies grants, loan guarantees, and development assistance for renewable energy projects. This program helps farmers and rural business owners offset the cost of solar installations, making it easier to transition to clean energy while lowering operational costs.
Michigan’s Distributed Generation Program (Formerly Net Metering)
Michigan’s Distributed Generation Program allows homeowners and businesses to earn credits on electric bills for excess electricity generated by their solar installations. Although Michigan phased out traditional net metering in 2016, the current inflow/outflow billing system still allows solar installation owners to receive compensation for surplus energy sent back to the grid. Legislation in 2023, Public Act 235 (PA235), increased the maximum allowable system size to 550 kW and allows customers to generate up to 110 percent of their annual electricity consumption.
Michigan’s City-Based Solar Programs
Beyond federal tax credits and statewide programs, Michigan has city-based solar programs that are designed to reduce installation costs and encourage clean energy adoption. These programs are savings opportunities that, when combined with federal tax credits and financing options, make solar energy more financially viable for homeowners and businesses.
Solar Rebates in Lansing, Michigan
Residents of Lansing, Michigan, can benefit from solar rebates offered by the Lansing Board of Water & Light (LBWL). Homeowners who have solar panels installed can receive a rebate of $500 per kilowatt (kW), up to a maximum of $2,000.
Ann Arbor Solarize Program in Ann Arbor, Michigan
One of the most well-established local programs is the Ann Arbor Solarize Program, a community-driven bulk-buy initiative that helps residents secure discounts of up to 15 percent on solar installations. The savings depend on the number of participants, the selected solar installer, and other applicable incentives.
Since its launch, Ann Arbor Solarize has helped hundreds of residents reduce their solar costs while increasing the city’s renewable energy footprint. The program also hosts Thursday Night Energy Events, where homeowners can learn from existing solar users and gain insight into the installation process.
Contact Michigan Solar Solutions, the Solar Photovoltaic (PV) System Installation Experts for Homeowners and Businesses in Michigan
Michigan Solar Solutions is a commercial and residential solar panel installer and electrical contractor that has served Michigan’s lower peninsula since 2007. Our company has installed thousands of solar panels and has many valued and satisfied customers throughout Michigan, including Wayne County, Ingham County, Oakland County, Kent County, and Macomb County. To learn more about the differences between grid-tied and off-grid systems, download our infographic.
Our goal at Michigan Solar Solutions is to make going solar easy financially for homeowners and businesses throughout the State of Michigan. That’s why we help our customers finance such crucial clean energy efforts. Additionally, we are an expert Michigan Saves financing contractor and have received countless awards, including the Michigan Saves Top Solar PV Contractor Award.
Residential homeowners and businesses throughout Michigan interested in having an undeniable impact on their energy costs should call us for a free solar panel consultation at (248) 923-3456 or request a free online solar analysis.