Ohio Solar Tax Credit

When considering the potentially high costs associated with solar panels, Ohio residents can take advantage of several incentive programs, including the Ohio Solar Tax Credit, to make their equipment more affordable. 

On average, a complete solar installation in Ohio can amount to $23,040, taking into account various factors. This includes the state’s average cost per watt of sunlight, which stands at $2.56, and an energy requirement of 9 kilowatts (kW). While this might initially seem expensive, the federal credit alone can bring the cost down to $16,128, on average, before considering additional incentives.

Although Ohio may not offer the most robust solar incentive programs, there are still a few benefit programs available that can help reduce the initial cost of solar installations.


What to Know About the Federal Solar Credit?

The federal credit for solar conversion is one of the most attractive financial incentives in Ohio. All new solar customers automatically qualify for it.

The credit covers 30% of the system value and is applied to your tax burden in the year you install solar equipment. This credit amounts to $6,912. If your system costs $23,040 (the average price for solar in Ohio), the credit will average out at $6,912.

This amount is credited to your income taxes. If you do not owe the government money at the time you file your taxes, you will not be eligible to claim the credit. If you owe less than the full credit amount and have not yet filed your taxes, any credit remaining can be applied to future years for up to five years.

The federal credit has been available since 2005, initially set at 30% of your system value. However, this rate decreased to 26% in 2022 and is expected to further decrease to 22% by 2023. Ultimately, the credit will completely expire in 2024.

The Inflation Reduce Act allowed the credit to be renewed in 2022 at the following rates:

  • 2022 to 2031 – the credit rate will be 30%
  • 2033 – the credit rate will fall to 26%
  • 2034 – the credit rate will fall to 22%
  • 2035 – the credit will be no longer available


How to Claim Federal ITC in Ohio

The federal credit application is easy and takes only a few minutes. Follow these steps to claim the credit and reduce the cost of going green.

  • Step 1: Once it is time to file taxes for the year that you installed your solar equipment, visit the IRS website and print IRS Form 5695. This form is used to report Residential Energy Credits.
  • Step 2: Complete the form. The form will ask for basic information about your system and your solar installers, such as the cost and size of your system and the name of the company that installed it. It should only take a few minutes to complete the form.
  • Step 3: Either file the form along with your taxes or have your tax software or accountant do it for you. TurboTax or HR Block includes a questionnaire that makes it easy to quickly fill out the form.


ESD Solar’s Opinion About the Federal ITC in Ohio

We believe that the federal credit is Ohio’s best incentive. You have a single opportunity to obtain this incentive. Completing the required form only takes a few minutes, and you could receive a credit of up to $6,912.

The incentive comes with a caveat, as briefly mentioned above. You are ineligible to claim the credit if your federal tax return indicates that you owe any amount of money. Additionally, the Ohio solar tax credit is not available if you do not have any federal tax returns. We highly recommend considering this incentive if you anticipate owing more than a few thousand dollars in taxes over the next five years.


Here’s What You Need to Know About SRECs in Ohio

You’ll receive Solar Renewable Energy Credits (SRECs), as an Ohio solar customer. These credits are for the energy that your panels produce. For every 1,000 kWh your panels produce, you get one credit. Your SRECs can be sold on the local marketplace, where electric companies purchase them to offset their fossil fuel consumption in order to reach the state’s RPS goals.

The average cash value for an SREC in Ohio was between $3 and $12 in 2022. Ohio residents can make between $50 and $100 a year from their SRECs, as they generate enough energy to provide them with around one credit each month.

How to Claim SRECs in Ohio

It is easy to claim SRECs in Ohio. Follow the steps below to participate in this incentive.

  • Step 1: Choose a solar panel installer who can enroll you in the SREC program after the installation is complete. ESD Solar is your best choice!
  • Step 2: Install your solar panels.
  • Step 3: Track your earned credits and payments to make sure your production is being credited.

ESD Solar’s Opinion About Ohio SRECs

In Ohio, SRECs hold minimal value, amounting to only $100 per year. While this incentive is easily accessible, it falls short of being a compelling reason for prospective solar customers to transition to solar energy. Nonetheless, it can serve as a pleasant bonus, contributing to your overall energy savings.

ESD Solar is passionate about empowering individuals to take control of their energy consumption and make environmentally conscious choices. While the current value of Ohio’s SRECs may not be compelling enough for some to adopt solar energy, we urge residents and policymakers to consider the long-term benefits and the profound impact it can have on our planet.

Together, let us strive for a future where Ohio shines as a beacon of sustainable energy practices, inspiring neighboring states and leaving a legacy of environmental stewardship for generations to come. ESD Solar is firmly dedicated to promoting this important cause, motivated by our unwavering belief in the transformative power of solar energy.


The Sales Tax Exemption for Solar Equipment in Ohio: What You Need To Know

All sales taxes on solar equipment in Ohio are waived. This includes panels, inverters, solar batteries, and electric vehicle chargers. This reduction in taxes lowers the initial cost of solar panels, making renewable energy sources more accessible.

Considering the state sales tax rate of 5.75% and a typical system cost of $23,040, you can expect this tax exemption to save you approximately $13,325 on your initial system purchase.

How Do I Claim the Ohio Exemption from Sales Tax on PV Equipment?

All solar equipment is exempt from sales tax in Ohio. No specific actions are required to obtain this benefit. By simply purchasing your solar equipment, the entire cost will be exempted from sales tax.

When purchasing your solar equipment, ensure that you inform the seller that the items are intended for solar energy purposes. This will allow them to apply the sales tax exemption at the point of sale. By clearly indicating the purpose of your purchase, you can take advantage of the tax benefit and enjoy the full exemption on the cost of your PV equipment. Remember, no additional actions are required to claim this exemption, as long as the seller is aware of the intended use for solar energy generation.

ESD Solar’s Opinion about Ohio’s Sales Tax Exemption

Another great incentive in Ohio is the sales tax exemption for solar equipment. This means that you can save money effortlessly. When you purchase solar equipment, you will automatically be exempt from paying sales tax. On average, this exemption amounts to over $1,300 in savings based on the prevailing Ohio sales tax rate.


The Net Metering Program in Ohio: What You Need To Know

Net metering, also known as Net Energy Metering (NEM), is a billing arrangement that benefits customers who generate surplus solar energy. When your solar energy production exceeds your consumption, such as on sunny days, the excess power is sent back to the grid. In turn, you can draw energy from the grid during emergencies or times when your solar production is insufficient, such as cloudy days or at night.

Ideally, net metering credits are provided at full retail rates, resulting in maximum energy savings for customers. However, in Ohio, the credit rate is not specifically defined by the Public Utilities Commission (PUC), which mandates net energy metering across all investor-owned utilities and electric cooperatives. Utility companies typically offer an avoided-cost rate for the excess energy, which may be lower than the retail rate but still provides a valuable benefit for customers with surplus production.

How to Enroll in Ohio’s Net Energy Metering

You don’t need to do anything to enroll in net energy metering, but you might have to call your utility provider to confirm that you are eligible. To confirm, you can follow these steps:

  • Step 1: Contact your electric company to verify that you have a bidirectional meter installed at your house. This is required for interconnection which allows you to take part in net electricity metering.
  • Step 2: Ask your provider for one. This should not cost you anything. If you already have a meter, you can now take advantage of net energy metering. Your solar company will apply for you as part of the installation process.
  • Step 3: Although it is not required, it’s a good idea. To confirm that your energy credits have been registered, you should monitor your energy bills for at least three months. Your bill should show a lower net consumption, or indicate how much energy your panels offset during the billing period.

ESD Solar’s Opinion About Ohio’s Net Energy Metering

Ohio’s net energy metering program is a great incentive, especially because it requires very little work to sign up. This policy will reduce your electric bills over time. It also reduces the payback period for the panel, which is approximately 12 years in Ohio.

Because the credits you earn per Kilowatt-hour (kWh), are not set at the retail rate, net energy metering in Ohio isn’t as attractive as in other states. This incentive is still worth considering, as it doesn’t cost much time or money to sign up.


Ohio Solar Incentive Programs

Some homeowners in Ohio will be eligible for local incentives, in addition to the state-wide and federal solar perks. These incentives are available to specific municipalities. Below is a list of the incentives available, with brief descriptions.

  • Cincinnati Property Tax Exemption: This is a tax exemption that is available to residents of Cincinnati. Home improvements such as solar adoption can increase the value of your house, but this exemption stops that from happening. This reduces the financial burden associated with solar.
  • Cleveland Property Tax Exemption: This perk is identical to the one above but it’s only available to residents of Cleveland.
  • Hamilton County Home Improvement Program Hamilton County residents have access to the Home Improvement Program. This program offers financing options up to $50,000 for home improvements that improve energy efficiency. This program has low down payments and lower interest rates to make solar energy more affordable.
  • Ohio Property Assessed Clean Energy Financing (PACE): PACE financing offers a low down payment option and low-interest rates. This adds your monthly loan payment on top of your tax bill to make it easy to repay. This can make your home less desirable to buyers and more difficult to sell. It is generally not recommended for homeowners who intend to stay in their homes for the next 15 to 20 years.


What Tax Incentives Are the Best in Ohio?

You might be wondering which benefits programs are the most valuable and which ones you can pass along. We’ll be sharing a list of the best incentives in Ohio for solar equipment below.

Federal Solar Tax Credit

The federal solar tax credit in Ohio is the best type of incentive. We recommend it above all others. The average credit is over $6,900, which can reduce your system costs by up to 30%. The best part is that filing for this incentive takes only minutes and is very painless. It’s well worth the effort.

Net Energy Metering

Ohio’s net energy metering isn’t the best, as the credit rate for excess electricity isn’t equal to that of retail electricity. It’s an option that Ohio property owners can still use, even though they don’t have to pay anything or do any registrations.

If you pay in cash for your Ohio solar system, the average long-term savings is $19,272. This includes the cost of the panels themselves for the first 12 years. It is a great incentive to use net energy metering, which can increase your savings and reduce your payback time.

SREC Program

Because it is easy to sign up, the SREC program in Ohio is one of our favorite solar perks. While it will net you $90 per annum in energy credits, over the lifetime of your panels which is around $1,800, you can get back almost as much. SRECs’ prices can change over time.

ECO-Link Program

If you are looking to finance your panels, the ECO Link program is a great option. Enrolling is easy and there are very few downsides. You could also save hundreds of dollars or even thousands on your total solar panel cost if you qualify. It is easy and quick to apply.


What Ohioans Need to Know About SRECs

SRECs are credits that you can earn for any solar production. For every 1,000 kWh of solar energy you produce, Ohio requires you to warn one credit. An Ohio 9 kW system will produce an average of 10 credits annually, which is approximately $90 in profit per year.

Signing a contract with an Ohio Solar Installer such as ESD Solar will automatically enroll you into the SREC program. This means that you don’t have to do anything.

Although the local SREC value may fluctuate depending on many factors, each credit was valued at approximately $10 in early 2022.

Is Ohio Taxable for SRECs/TRECs?

Yes, SRECs in Ohio are taxable. They are not cash-back incentives or solar rebates, so you will have to declare them as income. They shouldn’t have a significant impact on your tax burden due to the small amount of money that Ohio’s SREC program earns.


What Is the Near-Term Outlook for Ohio’s Additional Incentives?

There is no evidence to suggest that Ohio property owners will receive additional incentives for solar conversion.

RPS goals are one of the main drivers behind new incentive programs. Ohio currently has an RPS goal to generate 8.5% of electricity from clean sources by 2026. At this point, there are no additional incentives.

New incentives are more likely to be created if Ohio sets a higher RPS goal.


Ready to Reap the Benefits of Solar Energy in Ohio?

ESD Solar welcomes you to experience the power of solar energy right here in Ohio. As the leading provider of solar solutions in the state, we are proud to offer you the opportunity to harness the abundant sunshine and transform it into clean, renewable electricity for your home or business.

At ESD Solar, we understand that every customer is unique, which is why our team of experts will work closely with you to design a customized solar system that meets your specific needs and maximizes your energy savings. We handle everything from the initial consultation to the installation and maintenance, ensuring a seamless and hassle-free experience for you.

Get a FREE solar estimate now!


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