Solar Guide

Indiana’s Property Tax Exemption for renewable energy systems allows homeowners to reduce their annual property taxes by deducting the full assessed value of their solar, wind, geothermal, or hydroelectric equipment from their total property assessment. This means if you install a $5,000 solar system, your property’s assessed value for tax purposes would be reduced by that same $5,000 amount each year, resulting in lower property tax bills.

The program is available to homeowners, renters (lessees), and those buying property under contract who install qualifying renewable energy devices. Once approved, you don’t need to reapply each year – the deduction automatically continues annually as long as you remain eligible. Applications must be filed by January 5th each year using Form SES/WPD, and can be submitted by email, in-person, or regular mail (postmark deadline applies). For geothermal and hydroelectric systems, you’ll also need certification from the Indiana Department of Environmental Management (IDEM) before applying for the tax deduction.

Indiana’s Sales Tax Exemption allows certain businesses and organizations to purchase solar equipment without paying the state’s sales tax. This is a general business tax exemption form that can be used for solar purchases when the buyer qualifies under specific exemption categories. The exemption eliminates the sales tax cost on solar equipment purchases, which can provide meaningful savings depending on the total system cost and Indiana’s current sales tax rate.

To qualify, purchasers must be registered with the Indiana Department of Revenue or their home state’s tax authority and provide proper identification numbers. The exemption applies to several categories including sales for resale, manufacturing equipment used in direct production, sales to contractors working on exempt projects (like government buildings), sales to government units, and sales to qualified farmers for agricultural production. However, this exemption cannot be used by nonprofit organizations and doesn’t apply to utilities, vehicles, watercraft, aircraft, or gasoline purchases. Buyers must complete all sections of Form ST-105 and provide it to the seller, who keeps it on file to support the tax-exempt sale.

Net metering in Indiana is a billing arrangement that allows homeowners with solar panels to receive credit for excess electricity they generate and send back to the electric grid. When your solar system produces more power than your home uses during sunny periods, that extra energy flows to the grid and your electric meter essentially “runs backward,” creating credits on your utility bill.

The financial benefit works through a credit system where you receive retail rate credits for the excess solar energy you contribute to the grid. These credits can then offset the electricity you draw from the grid during times when your solar panels aren’t producing enough power, such as at night or during cloudy weather. However, it’s important to note that Indiana’s net metering policies can vary by utility company, and some utilities may have different compensation rates or structures for solar customers. Homeowners should check with their specific utility provider to understand the exact terms, any system size limitations, and whether there are caps on the number of customers who can participate in net metering programs in their service area.