Maximize Your Savings with Tax Credits and Rebates
Between federal tax credits, Colorado state incentives, and utility rebate programs, you can reduce the cost of your solar system by 30-50% or more. Here is a complete guide to every incentive available to you.
30% Federal Investment Tax Credit (ITC)
The federal solar Investment Tax Credit is the single largest financial incentive for going solar. Under the Inflation Reduction Act of 2022, homeowners who install solar energy systems can claim 30% of the total system cost as a credit on their federal income taxes. This is not a deduction from taxable income. It is a dollar-for-dollar reduction in the taxes you owe.
For example, if your solar system costs $25,000, the ITC reduces your federal tax bill by $7,500. If your tax liability for the year is less than $7,500, the remaining credit rolls forward to future tax years until it is fully utilized.
The 30% ITC is available through 2032 for residential solar installations. After 2032, the credit steps down to 26% in 2033 and 22% in 2034 before expiring for residential systems in 2035 (unless extended by Congress).
30%
of total system cost
How to Claim
- Install a solar energy system on your primary or secondary residence
- Complete IRS Form 5695 with your annual tax return
- Claim the credit in the tax year the system is placed in service
- Carry forward any unused credit to future tax years
Eligibility
- Must own the system (cash purchase or loan)
- System must be on your U.S. residence
- New equipment installed after 2006
- Must have sufficient federal tax liability
Example: A $30,000 system qualifies for a $9,000 federal tax credit, reducing your net cost to $21,000.
Colorado State Incentives
Colorado offers some of the best state-level solar incentives in the country. These programs stack on top of the federal ITC to further reduce your total cost.
Property Tax Exemption
Colorado law exempts the added value of a solar energy system from your property tax assessment. This means your home value increases from the solar installation, but your property taxes do not go up. For a system that adds $20,000 in home value, this exemption saves you approximately $300-500 per year in property taxes that you would otherwise owe.
Sales Tax Exemption
Solar energy equipment is exempt from Colorado state sales tax. With a state sales tax rate of 2.9% (plus local taxes that may vary), this exemption saves homeowners hundreds of dollars on their total system cost. For a $25,000 system, the state sales tax savings alone is $725.
Net Metering
Colorado requires most utilities to offer net metering, which allows you to send excess solar electricity back to the grid in exchange for credits on your utility bill. When your system produces more than you use during the day, the surplus flows to the grid and your meter essentially spins backward, offsetting your evening and nighttime electricity usage.
Utility Rebates & Programs
Many Colorado utilities offer additional incentive programs for solar customers. These programs vary by utility and are subject to change, so our team will help you identify all available programs in your area.
Xcel Energy
Denver Metro, Boulder, Fort Collins area
- Solar*Rewards program for residential customers
- Performance-based incentive payments
- Net metering with monthly rollover credits
- Time-of-use rate options for solar customers
Xcel Energy is Colorado's largest utility and serves the Front Range corridor. Their Solar*Rewards program provides additional financial incentives beyond the federal and state programs.
Colorado Springs Utilities
Colorado Springs, Fountain, Manitou Springs
- Solar incentive rebate program
- Net metering up to 120% of annual consumption
- Community solar garden options
- Green Power program participation
Colorado Springs Utilities offers competitive solar incentives for residential and commercial customers within their service territory.
See How Incentives Stack Up
Here is an example of how federal, state, and utility incentives combine to dramatically reduce the cost of a typical residential solar installation in Colorado.
Total savings of $9,712 (34.7% reduction)
Calculate Your Personalized Incentives
Every home is different, and the incentives you qualify for depend on your location, utility provider, and system size. Use our calculator to see your personalized incentive breakdown.