Indiana Solar Panels

Indiana law (Indiana Code § 6-1.1-12-26) provides a 100% property tax exemption on the increased assessed value that a solar energy system adds to your home. Installing solar typically raises your home’s value, which would normally increase your annual property taxes — but this exemption eliminates that additional tax burden entirely.

The exemption is estimated to save homeowners roughly $124 or more per year in property taxes, which can add up to approximately $3,100 over a 25-year system lifespan. It applies to both residential and commercial systems.

To claim the exemption, property owners must complete State Form 18865 (Statement for Deduction of Assessed Valuation) and file it with their local county auditor after installation. Once approved, the exemption remains in effect for as long as you own the system and does not require annual renewal.

Indiana exempts qualifying solar energy systems from the state’s 7% sales tax. The exemption applies to solar panels, inverters, racking, wiring, and related components when sold as part of a qualifying solar energy system for residential use.

For a typical residential solar system, this exemption translates to immediate upfront savings of roughly $2,300 to $3,200. On a smaller $28,000 system, the savings would be approximately $1,960 at the point of purchase.

The exemption is typically applied automatically by your installer at the time of sale using the Indiana General Sales Tax Exemption Certificate (Form ST-105). No additional paperwork is required from the homeowner in most cases.

Indiana’s five largest investor-owned utilities — AES Indiana, CenterPoint Energy, Duke Energy Indiana, Indiana Michigan Power (I&M), and NIPSCO — no longer offer traditional retail net metering to new solar customers. New installations are enrolled in the Excess Distributed Generation (EDG) program, also known as net billing. Under EDG, surplus electricity sent to the grid earns a bill credit at 125% of the utility’s avoided-cost rate, which typically works out to roughly 3–5 cents per kWh — well below the retail rate of 14–17 cents per kWh. Recent published rates include AES Indiana at about 3.935 cents/kWh and Indiana Michigan Power at roughly 4.6 cents/kWh. Eligible systems must have a maximum capacity of 1 MW.

Customers who installed solar before the end of 2017 keep full retail net metering until July 1, 2047, and those who installed between 2018 and each utility’s transition date keep it until July 1, 2032. If your electricity comes from a rural electric member cooperative (REMC) or a municipal utility instead of one of the five large investor-owned utilities, you may still qualify for more favorable net metering terms — policies vary, so contact your provider.

Enrolling in EDG requires an interconnection application and signed agreement with your utility, which your installer typically handles before your system goes live. Indiana’s net metering and EDG policies are governed by the Indiana Utility Regulatory Commission (IURC). Because EDG credits are well below retail rates, pairing solar with battery storage is increasingly recommended to maximize on-site consumption.

The City of Bloomington’s Green Home Improvement Program (BGHIP) provides cash rebates to Bloomington homeowners who install solar panels. General population applicants receive a rebate equal to 20% of the project cost (up to $5,000), while income-qualified low-income homeowners receive 40% of the project cost (up to $10,000). The minimum rebate is $500, meaning the minimum qualifying project cost is $2,000 for general applicants and $1,250 for low-income applicants.

To be eligible, applicants must own and occupy a home within Bloomington city limits — rental properties are not eligible. Applications must be submitted and pre-approved before starting the project to ensure funding availability. After pre-approval, applicants have 60 days to submit proof of a paid contractor deposit and a completed W9/EFT form. Applications are submitted through the City of Bloomington’s CiviForm website with an uploaded project quote.

BGHIP rebates can be stacked with Indiana’s state sales tax and property tax exemptions, as long as the total of all incentives does not exceed the project cost. The City has also partnered with Clean Energy Credit Union and Hoosier Hills Credit Union to offer loans with a 0.5% bought-down interest rate for BGHIP recipients.

Through the Green Home Improvement Program (BGHIP), the City of Bloomington provides rebates for battery energy storage systems. General population applicants receive 25% of the project cost (up to $5,000), while income-qualified low-income homeowners receive 40% of the project cost (up to $8,000). The minimum rebate is $500.

A key advantage of BGHIP is that a simultaneous installation of solar panels and battery storage qualifies for both rebates at the same time — an exception to the standard one-rebate-per-household-per-year rule. As a result, a low-income Bloomington homeowner installing both solar and battery storage together could receive up to $18,000 in combined rebates.

Applicants must own and occupy a home within Bloomington city limits. Applications must be submitted and pre-approved before beginning work, and after pre-approval applicants have 60 days to submit proof of a paid contractor deposit and a completed W9/EFT form. Rebates can be stacked with Indiana’s state sales and property tax exemptions.

The City of Bloomington’s Sustainable Energy Equity and Leadership (SEEL) Program provides grants to nonprofits and small businesses located within Bloomington city limits to help cover the cost of solar and battery storage installations. Eligible organizations can receive $25,000 to sponsor a solar photovoltaic panel system, $20,000 for a battery energy storage system (nonprofits only), or a combined $45,000 for solar plus battery (nonprofits only).

Battery storage grants are specifically reserved for nonprofits that provide essential social services related to food, health, housing, or similar community needs. This program is distinct from the residential BGHIP rebate and is designed for organizations rather than homeowners. The 2026 program will support up to 9 new solar grants or a mix of solar and battery grants.

Applications are accepted on a rolling basis until all program funding has been allocated. Technical assistance is available to help eligible organizations navigate the solar installation process, from understanding system options to working with contractors.

The USDA Rural Energy for America Program (REAP) provides grants and loan guarantees to agricultural producers and rural small businesses in Indiana to help offset the cost of renewable energy systems, including solar PV and battery storage. IRA-funded rounds can cover up to 50% of eligible project costs, with individual grant awards capped at $1 million for renewable energy systems.

To be eligible, applicants must be an agricultural producer (farmer, rancher, or other agricultural operation) or a small business located in a rural area as defined by USDA guidelines. The solar or battery storage system must be installed at the applicant’s agricultural or business property.

As of 2026, the grant portion of the program is paused and the agency is not accepting new REAP grant applications, but guaranteed loan applications may still be submitted (with loans approved in FY2025 receiving an 80% guarantee). Interested applicants should contact their local USDA Rural Development office, such as the South Bend office at (574) 232-4388 or the Fort Wayne office at (260) 422-2522.