The complete list of Idaho solar incentives and tax credits for 2023, plus how to take advantage.
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Idaho ranks 27th for solar production capacity in the U.S., according to the Solar Energy Industry Association (SEIA). The Gem State generations just 3.98% of its electricity from solar, meaning it has a long way to go to green its energy infrastructure.
The good news is that even in Idaho, the cost of solar has fallen by 50% in the last decade (according to SEIA), and you can save even more on solar in Idaho by claiming the 100% Residential Alternative Tax Deduction!
Major utilities also offer net metering in Idaho, even though the state doesn’t mandate net metering. And, of course, residents of Idaho who go solar can also claim the federal solar incentive tax credit (ITC).
Idaho State Solar Incentives
|State income tax deduction||Idaho offers a 100% state income tax deduction for solar, which could save you over $1,000 in income tax over four years|
|Net metering in Idaho||Net metering is not mandated by law in Idaho, but several utilities offer programs with credits carried forward month to month (most reset annually)|
|Idaho state solar loan program||Idaho offers low-interest loans of up to $50,000 to homeowners who want to install solar|
Idaho state tax deduction for solar
Idaho provides an incredible tax deduction (not quite a credit) worth up to 100% of your total solar energy system cost! This incentive, known as the Residential Alternative Tax Deduction, allows you to deduct 40% of your installation cost from your personal income taxes in the first year after installation. Homeowners can then deduct an additional 20% of the total system cost annually for three years thereafter, to a maximum of $5,000 per year or $20,000 total.
How might this work in practice? Let’s say you install a 6 kW system for $20,000 in Idaho. In the first year, you can deduct $8,000 from your state income for reporting purposes. In the next three years, you can deduct $4,000 from your state income.
This doesn’t mean you get a check for $8,000, then three checks for $4,000. Instead, at typical Idaho personal income tax rates (now 6.5%), you can expect the deduction to be worth about $1,300 over the four years following installation ($520 in the first year, plus $260 for three years thereafter).
To claim the deduction, full-year residents of Idaho calculate their deduction on the Idaho Supplemental Schedule 39R, section B, then transfer the figure to Idaho Form 40. For those living part-time in Idaho or non-residents of Idaho, calculate the deduction using Idaho Form 39NR, section B, then transfer the result to Idaho Form 43. You can find the tax forms and instructions for Idaho residents here.
Solar loans in Idaho
Eligible residents of Idaho can access state-funded low-interest energy loans to install solar through the Idaho Governor’s Office of Energy Resources (OER) State Energy Loan Program. These low-interest solar loans can be for as little as $1,000 or as much as $50,000 for residential and max out at $150,000 for commercial or multi-family solar installations.
The loans come with a flexible payment plan, no payments for the first year, and interest rates capped at 3%. You can borrow the funds for up to ten years.
Be aware, though, that there is a $100 credit analysis fee for all loan applicants for Single Family Housing loans and a $250 fee for Commercial/Multi Family Home/Agricultural/Industrial loans.
Net metering in Idaho
Idaho does not mandate net metering, but the three main utilities in the state all offer net metering programs, as does Idaho Falls Power.
Rocky Mountain Power customers get one-for-one credits for energy exported to the grid within any given month but any excess credits are carried forward at a lower rate. The exact rate depends on when the customer signed up and which tariff they’re on, which makes things a bit confusing. If net metering is a big factor in your cost calculations for going solar, be sure to check with Rocky Mountain Power to work out exactly how net billing will look for you once you’re interconnected. Note, too, that there’s an $85 fee to apply for interconnection.
Customers of Avista Utilities must also pay a fee ($100) for interconnection applications. Once signed up for net metering, you can bank any excess kilowatt hour (kWh) electricity credits and carry these forward month to month. At the end of the billing year, the bank is reset. This means it makes sense to try to get your annual billing period changed to start just after your highest usage months, so you can use up any residual credits. It also means it’s wise to size your home solar array to just meet your energy needs.
Under Idaho Power’s net metering program, customers who send a surplus of energy to the grid get a monthly energy credit in kilowatt-hours (kWh). This credit carries forward to offset energy use in future months. Customers may be able to transfer excess credits between accounts.
Because there’s no statewide net metering mandate, utilities can mostly do what they like when it comes to setting rules for their programs. However, when Idaho Power tried to drop its net metering rate to 50% of the retail rate, the Idaho Public Service Commission (IPSC) prevented the change, keeping the one-for-one credit for customers of the utility.
Final thoughts on state solar incentives in Idaho
Idaho is a great state for residential solar, with more than average sunshine and a state solar tax deduction. You can also take advantage of net metering programs from several utilities and can even finance your solar project with a state-subsidized solar loan.
Sure, the cost of electricity in Idaho is lower than the national average, but with tax incentives and energy savings, your solar payback period could easily be less than half the life of the solar panels. This means you could get well over a decade of free energy by going solar at home in Idaho!