South Dakota Solar Incentives & Rebates Guide 2026

The federal Investment Tax Credit (ITC) allows South Dakota homeowners to deduct 30% of the total cost of a solar energy system from their federal income taxes. For a typical 6kW system costing $16,680 in South Dakota, that's a direct tax credit of $5,004. 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).

South Dakota does not currently offer a state-level solar tax credit. However, South Dakota homeowners still benefit from the substantial 30% federal ITC, worth $5,004 on a typical 6kW system. Even without a state credit, solar is economically attractive in South Dakota with electricity rates averaging 13.38¢/kWh.

Great news for South Dakota homeowners: Solar energy systems are exempt from property tax assessments. Up to $50k or 70% of system value Studies show solar adds 3-4% to home values. For a $300,000 home, that's roughly $12,000 in added value — and with South Dakota's property tax exemption, you save approximately $132 per year in property taxes you'd otherwise owe on that increased value.

South Dakota 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: Not Available. No statewide net metering mandate

While South Dakota doesn't mandate net metering, solar still delivers substantial savings by directly offsetting your grid consumption during daylight hours. Battery storage is especially valuable in South Dakota — it allows you to store excess daytime generation and use it during peak evening hours instead of buying from the grid at 13.38¢/kWh.

South Dakota has a voluntary Renewable Portfolio Standard (RPS) target of 10% by 2015 (voluntary, met). While voluntary, this goal signals the state's commitment to growing its renewable energy capacity. A strong RPS is generally good news for solar homeowners, as it creates market demand for renewable energy and helps maintain favorable solar policies.