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Iowa - Energy tax credit, solar rebates and incentives

Iowa Renewable and Solar Energy Incentives

Production Tax Credit for Renewable Energies (Residential/Commercial)

Iowa offers two different production tax programs that are granted for purchasers of wind and other renewable energy systems.

  • Iowa Code 476C: This tax credit is available to wind and other renewable energy systems.  Renewable energy companies grant credit at a production rate of $0.015/kWh.
  • Iowa Code 476B: Only wind energy systems are eligible for this production tax credit.
  • Qualifying systems: Solar panel PV, electricity-generating solar thermal, biomass, wind, etc.  Systems may only qualify for one of the two tax programs.
  • The tax credit is sustained at a fix rate for no more than 10 years past the date at which the system was put into service.

Property Tax Exemption (Residential)

  • Properties that have a renewable energy system installed (wind power or solar PV) are granted a complete property tax exemption comparable to the net value added to the property due to the system.
  • The maximum duration a property may take advantage of this tax exemption is 5 years.
  • Qualifying systems must utilize clean resources to gather, supply and re-dispense generated power.

Equipment Exemption for Wind Power and Solar Panel Systems (Residential/Commercial)

  • Wind and solar renewable energy systems are exempt from sales tax, which incorporates installation costs.

Revolving Loan Program for Alternative Energies (Residential/Commercial)

Iowa state investor-owned utilities and the Iowa Energy Center fund and administer this loan program, which offers combined low-interest and zero-interest loans to people who wish to install a renewable energy system.

  • Qualifying systems: Solar photovoltaic (PV), wind turbine, hydroelectric and biomass.
  • The loan is subdivided and presented in two segments: The first half of the loan is offered by this program at no interest.  A loan company grants the second half of the loan at low rates.
  • Participants will be granted a single loan whereby the amount must be paid back within 20 years.

Farmer’s Electric Cooperative Renewable Energy Rebate – Kalona (Residential/Commercial)

  • The Farmer’s Electric Cooperative grants rebates to subscribers that purchase and install solar PV or wind energy systems.
  • Rebate awards typically are granted at $1,000/kW (peak).  Rebates are capped at $5,000 for a given property.
  • Systems and components must be recently purchased and installed to be eligible.

Independence Light and Power Renewable Energy Rebate (Residential/Commercial)

Subscribers to Independence Light and Power who purchase and install renewable energy systems are offered rebates for those systems.

  • Eligible systems: Solar panel PV, wind power, solar thermal and solar water heating systems.
  • Rebate amounts will differ depending on the size and nature of the system.

Preston Municipal Electric Utility Renewable Energy Rebate (Residential/Commercial)

Subscribers to Preston Municipal Electric Utility who purchase and install renewable energy systems are offered rebates for those systems.

  • Eligible Systems: Solar electric PV, wind energy, solar thermal and solar water heating systems.
  • Rebate amounts will differ depending on the size and nature of the system.

Federal Energy Tax Credit (Residential/Commercial)

Taxpayers and commercial business owners are granted a tax credit of 30% of the total expenses, which include installation of solar-electric (photovoltaic) systems, solar thermal systems, fuel cells and labor expenses.  Residential and commercial wind energy installations and geothermal pumps are also eligible for the Federal energy tax credit.  

  • Solar electric systems and solar thermal heaters have no maximum incentive.
  • If there is excess federal tax credit, it may be carried over to the subsequent taxable year.  
  • This may continue on through consecutive years until 2016, under which unused credit may or may not be expunged.

Federal Energy Conservation Subsidy Exclusion (Residential)

  • Public utilities provide residential purchasers with an exemption of 100% of energy conservation subsidies. 
  • The overall worth of an installation or renewable utility regardless of the energy conservation capacity, will be excluded from the buyer’s gross income. 
  • Customers who participate in a utility company’s energy conservation program may be given a reduced rate of electricity utilized or a nonrefundable credit of the price of electricity on the customer’s monthly electric bill.

Energy-Efficient Mortgages (Residential)

  • With this federal loan program, homeowners may utilize energy-efficient mortgages (EEM) to either supplement or completely fund renewable energy systems.

Example: 4KW System – Residential Installation Cost

Average Electric Bill: $250/mo
Projected Annual Bill Escalation: 5%
Cost Per Watt: $6.50

- Estimated System Cost: $26,000
- Federal/State Tax Credit: $7,800
- State/Utility Rebate: $0
- Net Cost: $18,200
- Cumulative Lifetime Savings (25 Years): $14,744
- Investment Return: 2.0%

Savings of 30% on the total cost of your solar system through incentives

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