Solar Incentives Indiana 2026: Tax Exemptions, EDG & Savings Guide

The Big Shift: Federal Solar Tax Credit Is No Longer Available in 2026

If you've been researching solar for Indiana, the most important thing to understand right now is this: the federal residential solar Investment Tax Credit (ITC), Section 25D, expired on December 31, 2025. Homeowners who purchase a solar system outright or through a loan in 2026 will receive zero federal tax credit — not 30%, not 26%, zero.

This is a significant change from recent years, when the 30% ITC was the centerpiece of most solar financial projections. For a typical Indiana system averaging $39,000, that credit used to be worth roughly $11,700. That number is now off the table for direct purchases.

There is one workaround worth knowing: if you go solar through a lease or Power Purchase Agreement (PPA), the solar company — not you — owns the system. As a commercial entity, they can still claim the commercial ITC (Section 48/48E) and often pass those savings through to customers in the form of lower monthly rates. This makes lease and PPA arrangements more financially competitive in 2026 than they were in prior years, when the direct purchase ITC overshadowed everything else.

The bottom line: if you're buying solar outright in Indiana in 2026, your financial case now rests entirely on state-level incentives, utility programs, and long-term electricity savings. Here's what's still available — and it's more meaningful than most people realize.

Indiana's Property Tax Exemption: A Lasting Benefit

One of Indiana's most durable solar incentives is its 100% renewable energy property tax exemption. When you install solar panels, your home's assessed value typically increases — and without this exemption, that would mean higher annual property taxes. Indiana law eliminates that extra burden entirely.

Under Indiana Code § 6-1.1-12-26, any increase in your home's assessed value resulting from a solar installation is fully excluded from your property tax assessment. This applies to all residential and commercial systems installed after December 31, 2011, and it doesn't require annual renewal once approved.

In practical terms, high-efficiency residential solar panels can add $20,000 to $30,000 in home value in Indiana. At the state's average property tax rate of around 0.75%, that exemption saves homeowners an estimated $124 per year — money you keep every single year you own the system.

To claim this exemption, property owners must complete Form 18865 (Renewable Energy Property Tax Deduction) and submit it to their local county auditor's office. Your solar installer can typically help you with this paperwork, but it's worth following up to ensure it's filed correctly after installation.

Sales Tax Exemption: Save Thousands Upfront

Indiana charges a 7% sales tax on most purchases — but solar energy equipment is fully exempt. This means when you buy solar panels, inverters, mounting hardware, and other system components, you pay no state sales tax on those items.

For a typical Indiana residential system priced between $33,000 and $45,000, the sales tax savings range from approximately $2,300 to $3,200. That's real money that comes off your upfront cost automatically, without filing any forms or waiting for a tax refund.

This exemption applies statewide and can be combined with Indiana's property tax exemption and any applicable utility-level programs — making it one of the cleanest, most automatic financial benefits available to Indiana solar buyers in 2026.

Excess Distributed Generation (EDG): Indiana's Net Billing Program

Indiana used to offer traditional net metering, which credited solar owners at the full retail electricity rate for any excess power sent to the grid. As of 2022, however, that policy ended for new installations. Today, most Indiana homeowners are enrolled in the Excess Distributed Generation (EDG) program instead.

Under EDG, when your solar system produces more electricity than your home is using at any given moment, the surplus flows to the grid — and you receive a credit on your bill. The difference from old net metering is the credit rate: instead of the full retail rate (around 14–17 cents per kWh), EDG credits are typically paid at the wholesale or avoided-cost rate, roughly 3–5 cents per kWh.

This matters for system design. Oversizing your system so that you export large amounts of power is less financially rewarding than it once was. The best strategy under EDG is to design a system that closely matches your daytime usage, and to shift energy-intensive tasks (dishwashers, washing machines, EV charging) to midday hours when your panels are producing most.

Pairing solar with hybrid solar inverters that maximize self-consumption allows your system to prioritize powering your home directly before sending any surplus to the grid — which means more of your energy gets used at the full retail value rather than exported at the discounted EDG rate.

One important nuance: customers who installed solar before Indiana's 2022 policy change may still be grandfathered into the old net metering terms until 2032. If you're purchasing a home with an existing solar system, confirm which program applies to that meter before assuming the credit rate.

Utility-Specific Programs Worth Knowing

Because Indiana's statewide incentive landscape is relatively lean, the utility you're served by can make a meaningful difference in your overall solar economics. Here's a brief overview of programs from Indiana's major investor-owned utilities:

Indiana does not have a statewide Solar Renewable Energy Certificate (SREC) market, since the state's Renewable Portfolio Standard is voluntary rather than mandatory. However, Indiana solar owners can explore trading SRECs in adjacent states' markets, and NIPSCO's feed-in tariff offers one of the more structured performance-based options in the state.

Additionally, Indiana Community Action Association (IN-CAA) — serving Indianapolis, Columbus, Fort Wayne, and Gary — received funding through the EPA's Solar for All Initiative, which could open up low-income solar assistance programs in the near future. This is worth monitoring if you're in one of those service areas.

How to Stack Incentives and Maximize Your ROI in 2026

Even without the federal tax credit, Indiana homeowners can still meaningfully reduce the net cost of going solar by stacking the available incentives in the right order:

1. Start with your gross system cost. For a typical 13–14 kW residential system in Indiana, expect a range of $33,000–$45,000 before any incentives.
2. Apply the 7% sales tax exemption. This reduces your upfront cost automatically — no paperwork required — saving roughly $2,300–$3,200 at the point of purchase.
3. File for the property tax exemption. Submit Form 18865 to your county auditor after installation. This locks in annual property tax savings for as long as you own the system.
4. Enroll in your utility's EDG program. This requires an interconnection application and signed agreement with your utility. Your installer should handle most of this, but confirm it's completed before your system goes live.
5. Consider a home battery to increase self-consumption. Adding home solar storage batteries for energy independence allows you to store surplus daytime generation and use it in the evening — at full retail value — rather than exporting it to the grid at the lower EDG rate. This is especially important now that net metering is no longer available for new installations.
6. Check for local utility programs. If you're in NIPSCO territory, confirm whether the feed-in tariff is open to new applicants. Co-op and municipal customers should call their provider directly to ask about buyback terms.

The order matters because each step builds on the last. Getting the sales tax savings right reduces your loan amount if financing; getting the EDG rate and self-consumption ratio right determines how much of your energy is valued at retail versus wholesale.

Is Solar Still Worth It in Indiana Without the Federal Credit?

The honest answer is: for many Indiana homeowners, yes — but the math now requires more care.

Indiana's average electricity rate has risen from 13.4 cents per kWh in 2021 to approximately 17 cents in 2026, a steady upward trend that shows no signs of reversing. A typical household using 876 kWh per month spends roughly $149 per month on electricity today. Over 25 years — the standard warranty period for most solar panels — that adds up to a significant sum, and locking in lower energy costs now provides a meaningful hedge against further rate increases.

Based on real installation and savings data, Indiana homeowners who go solar can expect to save approximately $23,000–$24,000 over 25 years on electricity costs, even after accounting for system costs and the current EDG credit structure. Homes with solar also tend to sell for a premium — research suggests an average increase of around 6.9% in resale value — while Indiana's property tax exemption ensures that premium doesn't translate into higher annual taxes.

The calculus is most favorable for homeowners with higher-than-average electricity bills, south-facing roofs with minimal shading, and access to NIPSCO's performance-based program or a utility with a favorable EDG rate. For homeowners in those situations, solar in 2026 still pencils out clearly — especially when paired with a storage battery that maximizes the value of every kilowatt-hour produced.

If you're ready to explore your options, complete residential photovoltaic system kits sized from 3 kW to 20 kW offer a practical starting point for understanding what system capacity fits your home's actual energy consumption.