Kentucky Solar Incentives & Rebates Guide 2026

The federal Investment Tax Credit (ITC) allows Kentucky homeowners to deduct 30% of the total cost of a solar energy system from their federal income taxes. For a typical 6kW system costing $16,260 in Kentucky, that's a direct tax credit of $4,878. This isn't a deduction — it's a dollar-for-dollar reduction of your tax bill.

The 30% ITC is available through 2032 under the Inflation Reduction Act, then steps down to 26% in 2033 and 22% in 2034. There's no maximum cap on the residential credit. If your tax liability is less than the credit amount, you can roll the remaining credit forward to the next tax year. The system must be installed on your primary or secondary residence, and you must own it (leased systems don't qualify for the homeowner credit).

Kentucky does not currently offer a state-level solar tax credit. However, Kentucky homeowners still benefit from the substantial 30% federal ITC, worth $4,878 on a typical 6kW system. Even without a state credit, solar is economically attractive in Kentucky with electricity rates averaging 13.24¢/kWh.

Kentucky does not currently offer a statewide property tax exemption for solar installations. This means the added home value from solar panels may increase your property tax assessment. Some local jurisdictions may offer their own exemptions — it's worth checking with your county tax assessor. Even without this exemption, the energy savings from solar typically far outweigh any marginal property tax increase.

Kentucky does not currently exempt solar equipment from state sales tax. This means you'll pay the applicable sales tax on your solar system purchase. However, the 30% federal ITC and other available incentives more than compensate for this cost in most cases.

Net metering policy: Avoided Cost. SB 100 (2019) changed compensation from retail to avoided cost for new customers The current system size cap is 45 kW.

Kentucky compensates excess solar generation at the utility's avoided cost rate, which is typically lower than the retail rate. To maximize your savings, size your system to match your daytime consumption and consider battery storage to shift excess production to evening hours.