Guide to Solar Incentives in America's 12 Biggest Cities

Uncle Sam and many state and local governments and utilities offer financial incentives to homeowners who install a solar power system.

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Uncle Sam and many state and local governments and utilities offer financial incentives to homeowners who install a solar power system. The federal Residential Renewable Energy Tax Credit will reduce your federal income tax bill dollar for dollar for 30% of the up-front cost of a system (the system must be in service by December 31, 2016). States may also offer a tax credit, and states and cities often offer rebates as well as sales and property tax exemptions.

We asked EnergySage.com, which provides comparisons of estimates from solar-panel installers, to estimate the size and cost—before and after incentives—of a solar power system that would cover a $100 monthly electricity bill in America's 12 biggest cities. (If you use more than that, you will have to buy electricity directly from your electric utility to cover the excess.) The site also estimated annual and total savings for both a purchased system and one leased over 20 years, plus the payback period—that is, how long it would take to recoup the up-front cost of a solar power system.

In most areas, homeowners can get credit for any excess electricity that their system produces (called net metering). That credit is baked into the estimated monthly and annual savings.

For more on how to go solar at home, see Money-Smart Reasons to Install Solar Panels at Your Home Now.

State household monthly electricity use: U.S. Energy Information Administration Hours of full sun daily: National Renewable Energy Laboratory Metro-area cost per kilowatt-hour (kWh), estimated system cost after incentives, estimated annual savings over 20 years and time to recoup investment: EnergySage.com Financial incentives: Database of State Incentives for Renewables & Efficiency (dsireusa.org)

Patricia Mertz Esswein
Contributing Writer, Kiplinger's Personal Finance
Esswein joined Kiplinger in May 1984 as director of special publications and managing editor of Kiplinger Books. In 2004, she began covering real estate for Kiplinger's Personal Finance, writing about the housing market, buying and selling a home, getting a mortgage, and home improvement. Prior to joining Kiplinger, Esswein wrote and edited for Empire Sports, a monthly magazine covering sports and recreation in upstate New York. She holds a BA degree from Gustavus Adolphus College, in St. Peter, Minn., and an MA in magazine journalism from the S.I. Newhouse School at Syracuse University.