The government is trying to encourage people to switch to more renewable forms of energy. Because of this, there is a range of incentive programs that you will be able to use. Currently, Arkansas doesn’t offer any state-level incentives or tax breaks for those who get solar power.
Though the Arkansas legislature might not offer any incentives, you will be able to tap into the federal solar tax credit (ITC). As the name suggests, this is a tax credit that you can claim when you install one of these systems. This can be applied to your personal income taxes.
Currently, the ITC will allow you to claim a 26 percent reduction. However, you will need to move quickly to claim these credits. They only apply to systems built in 2021 and 2022. If you wait until 2023, the reduction will drop to 22 percent. After 2023, those building residential systems won’t be able to claim any credit at all. When you take this Federal tax credit into account, the costs of installing a solar system will rapidly drop.
As long as you own your solar energy system, you are eligible for the solar investment tax credit. Even if you don’t have enough tax liability to claim the entire credit in one year, you can “roll over” the remaining credits into future years for as long as the tax credit is in effect.
There is a process called Net Metering. This allows you to sell any unused electricity back into the grid. When you do require electricity, you will be able to take it from the grid. This is the most popular arrangement, giving homeowners a lot of flexibility.
Currently, this will give you a return of 1:1. This means that for every kW that you sell to the grid you will earn around 10 cents. This price will continue until at least 2022 when the agreement is scheduled to be reconsidered. While this is unlikely to make you rich, it will allow you to make a little extra money. This will speed up the rate at which the system pays for itself.
On average, only 20-40% of a solar energy system’s output ever goes into the grid, and this exported solar electricity serves nearby customers’ loads.
So far, we’ve talked about the costs associated with the installation of a solar system. However, it’s important to remember that, over the long term, getting solar panels in Arkansas will end up saving you money. You will be able to reduce your electricity bill.
This leads us to the payback date. This is the point at which the savings from solar is more than the cost associated with installing the system. This is easy to calculate, you just need to follow a few simple steps.
Calculate the value of your average electricity bill.
Figure out how much the solar system will cost
Divide the cost of installing solar by the average monthly bill.
This will tell you the number of years it will take for your system to pay for itself. On average, this will be around eight years. However, it might be less once you take into account the tax advantages you will receive.