Solar Guide

Indiana’s Property Tax Exemption for renewable energy systems allows homeowners to reduce their annual property taxes by deducting the full value of their solar, wind, geothermal, or hydroelectric equipment from their property’s assessed value. This means if you install a $5,000 solar system on a home assessed at $200,000, your taxable property value drops to $195,000, resulting in lower property tax bills each year for as long as you own the system.

This deduction is available to homeowners, renters (lessees), and those buying property under contract. The benefit continues automatically each year once approved – you don’t need to reapply annually. For geothermal and hydroelectric systems, you must first get certification from the Indiana Department of Environmental Management (IDEM). 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 counts). The exact tax savings depend on your local property tax rate and the value of your renewable energy system.

Indiana’s Sales Tax Exemption allows certain businesses and organizations to purchase solar equipment without paying the state’s sales tax. This exemption uses a standard state form (ST-105) that covers various types of tax-exempt purchases, including solar installations for qualifying buyers. The financial benefit equals the full amount of Indiana’s sales tax that would otherwise be added to your solar equipment purchase.

To qualify for this exemption, you must be a registered business with either an Indiana Taxpayer Identification Number (TID) or a valid business license from another state. The exemption is primarily designed for retailers, wholesalers, manufacturers, contractors working on exempt projects, government entities, and certain other business categories. Individual homeowners purchasing solar panels for personal use typically do not qualify for this business-focused exemption. You must complete all sections of Form ST-105 and provide proper identification numbers, or the exemption becomes invalid and you’ll be responsible for paying the sales tax.

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 literally runs backward, giving you a credit on your utility bill.

The financial benefit works like a one-to-one exchange – for every kilowatt-hour (kWh) of excess solar energy you send to the grid, you receive a credit equal to the retail rate you normally pay for electricity from your utility company. These credits can then be used to offset the electricity you draw from the grid when your solar panels aren’t producing enough power, such as at night or during cloudy days. Most utilities in Indiana allow you to carry forward unused credits for up to 12 months, helping you maximize your savings throughout the year.

To be eligible for net metering in Indiana, your solar system must be sized appropriately for your property and connected to the utility grid through proper safety equipment. While Indiana has net metering policies in place, the specific terms and availability can vary by utility company, so it’s important to check with your local electric provider about their current net metering program and any capacity limits they may have.