South Bend, IN 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 in South Bend 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.