Michigan Solar Property Tax Exemption: What Homeowners Need to Know
Michigan property taxes are among the top 15 highest in the U.S., which makes many Northern Michigan residents skeptical about going solar, but Michigan’s solar property tax exemption is a built-in protection for exactly that concern.
How Michigan’s Solar Property Tax Exemption Works
In 2019, Governor Whitmer reinstated the Michigan renewable energy property tax exemption for residential solar after it lapsed in 2012. Michigan law excludes solar panels from being counted as added real property value during a tax assessment. So your assessed value simply doesn’t go up. For your system not to add tax value to your home, your solar installation must be 150 kW or smaller. With most installations in Northern Michigan homes being around 8-10 kW, the majority of Michigan residents who go solar aren’t affected.
What Does Michigan’s Solar Tax Exemption Mean In Real Dollars?
Going solar in Northern Michigan is an investment that proves its worth day after day. The average turnkey solar system installation costs around $35,000 before incentives; however, the exact cost varies based on your home’s energy needs. Here’s where the savings come in: a $35,000 system adds roughly 3-4% to your home’s value. At Michigan’s average property tax rate of 1.25%, that’s roughly $435 a year in avoided taxes. Over the 20-year life of your system, that adds up to roughly $8,700 in avoided taxes. This exemption also stacks with Michigan’s sales tax exemption on solar equipment, meaning you won’t be charged 6% sales tax on your solar system as long as it qualifies under the Michigan Treasury Guidelines.
Curious what your system could save you? Head to our website to request a free quote.
Michigan’s Solar Sales Tax Exemption
The property tax exemption isn’t the only financial protection Michigan offers to solar owners. The state also exempts solar energy systems from Michigan’s 6% sales tax at the point of purchase. On a $35,000 system, that’s roughly $2,100 back in your pocket before your panels ever see sunlight.
Property Tax Exemption vs. Sales Tax Exemption: How They Work Together
The property tax exemption is an ongoing annual savings for as long as you own your solar system and your home, while the sales tax exemption is a one-time savings when you initially purchase your system. Together, they meaningfully reduce both the upfront cost and the long-term carrying cost of going solar in Northern Michigan.
FAQs
Does solar increase my property taxes in Michigan?
No, Michigan law exempts 100% of the added value a solar system brings to your home from your property tax assessment. Your home’s market value increases, but your tax bill doesn’t.
Does the exemption apply to battery storage?
Yes. Michigan’s property tax exemption covers your entire system, including battery storage. Everything from your panels, inverters, racking, and battery units is exempt from adding to your home’s taxable value.
Is there a size limit on the exemption?
Yes. The exemption applies to systems up to 150 kW in capacity. For context, most Northern Michigan residential installations fall between 8-10 kW, so the vast majority of homeowners are well within that limit.
What about the sales tax exemption? Does that cover batteries too?
Yes. Michigan’s sales tax exemption applies to the full solar energy system at the point of purchase, which includes battery storage equipment.
Ready to go solar in Northern Michigan?
Michigan’s solar tax exemptions make going solar a smarter investment than many homeowners realize, and Peninsula Solar is here to help you understand exactly what that looks like for your home. We serve residents and customers across Northern Michigan and the Upper Peninsula, from Traverse City to Marquette and everywhere in between.
See what solar looks like for your home: peninsula-solar.com | (906) 235-0340
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