Save more than $1,100 on a home solar installation in Idaho

Solar panel costs can be used as an income tax deduction in Idaho.

Idaho has a small but growing home solar industry. As is the case everywhere, the cost of solar panels is cheaper now than ever - and in Idaho, this is helped by generous state tax incentives.

Summary of solar rebates available to Idaho residents:

Federal tax credit30% off system price through 2019
Idaho State Tax Commission Alternative Energy Device DeductionDeduct 40% of the system costs from your reportable income in the first year after purchase, and 20% in years 2 through 4. Maximum $5,000 deduction per year.

Idaho’s solar tax incentive is structured differently than the federal tax credit and other state tax credits. Instead of a straight credit, the incentive is a deduction that is used to reduce your reportable income. In addition, the deduction can be applied every year for four years after your purchase your system.

In the first year, the deduction is calculated as 40% of your total solar system costs, up to a maximum of $5,000. In years 2 through 4, the deduction drops to 20% of your system costs, up to a maximum of $5,000.

Let’s see how this works. Let’s say that your gross system costs are $20,000. (This is your cost before any incentives, including the federal tax credit).

Year 1 rebate:

$20,000 * 40% = $8,000
But the maximum deduction is $5,000, so we will use $5,000 for the next calculation.
$5,000 * 6.925% = $346.25 rebate

Years 2-4 rebate:

$20,000 * 20% = $4,000
$4,000 * 6.925% = $277 rebate (each year)

You can see that with our hypothetical system that cost $20,000, we fell below the $5,000 maximum deduction in years 2 to 4. Your numbers will differ, of course, depending on the cost of your system.

If you add these up, you get a cumulative rebate of $1,177.25 that is paid out over 4 years. Not bad at all!

What qualifies as an alternative energy device?

It was Idaho Statute 63-3022C that most recently signed this deduction into law.

Qualifying devices include:
  • A system using solar radiation, wind, or geothermal resource primarily to provide heating or cooling, or produce electrical power, or any combination thereof
  • A fluid-to-air heat pump operating on a fluid reservoir heated by solar radiation or geothermal resource, but not an air-to-air heat pump unless it uses geothermal resources as part of the system
  • A natural gas or propane heating unit that replaces a non-certified wood stove
  • An Environmental Protection Agency (EPA)-certified woodstove or pellet stove meeting the most current industry anstate standards that replaces a noncertified wood stove

A non-certifieed wood stove is a wood stove that doesn't meet the most current EPA standards.

In other words solar thermal, solar photovoltaic, micro wind turbines, and geothermal heat pumps all qualify for the deduction. In addition, EPA-certified wood pellet stoves and even natural gas or propane furnaces that replace a dirty non-EPA certified wood stove that is used for home heating also qualify. Air-source heat pumps do not qualify.

This is also defined on Line 5 of Form 39R of the 2018 Idaho tax return.

Does Idaho have a sales tax exemption for solar panels?

Some states don’t charge sales tax on solar panel equipment. Unfortunately, Idaho isn’t one of them. This means that the statewide 6% sales tax will be charged on your system equipment such as solar panels, inverters, and racking.

Does Idaho have a property tax exemption for solar panels?

No.

In states that have this exemption, the value of a solar panel system doesn’t increase the home assessment for property taxes. While this is a relatively small rebate on a yearly basis, if you add it up over the life of your solar panels, it can really add up to be a significant rebate.

Unfortunately, Idaho does not have a property tax exemption for solar panels.

Save 30% or more on home solar with current incentives

Photo of a solar home.

Use our calculator to get a financial payback and solar performance estimate customized to your home, including federal, state, and local incentives.

When you’re ready, fill out our form to get up to three estimates from qualified solar installers.

More recent stories



Solar energy is always rapidly evolving. These are the trends to know if you’re thinking of adding home solar in 2020.
A time-of-use (TOU) rate means that the price you pay for electricity changes during the day, which can affect how you plan your home solar system.
If you’re going solar to help the environment, here’s an objective look at solar panels and their impact on climate change.
80% of the home solar inverter market is dominated by two companies. Here’s a side-by-side comparison.
If you have a small-to-medium size house, this article will tell you how many solar panels you need to power it.
In the quest for better solar cell efficiency, manufacturers keep deploying new technologies, and heterojunction cells is one of the latest.
Choosing a solar panel can be confusing, and one of the common decisions is between mono and poly.
Home energy storage is a small but rapidly growing market. While the upfront cost is high, there are significant rebates that bring the cost down.
Solar panels generate DC electricity, but more companies are selling AC solar modules. In this article, we’ll explain what these are.
We’ll address the myth that putting solar panels on your roof puts your home at greater risk of lightning strikes.
Passivated Emitter Rear Cell technology is one of the latest tools that manufacturers are using in the race to make more efficient solar panels.
Across the country, net metering is under attack from utility companies, who claim it’s unfair for non-solar homeowners.
Buying solar panels from a US company doesn’t mean their panels were made in America. Here’s a list of models that were manufactured in US factories.
By shading your roof, solar panels can lower the temperature of your home by several degrees.