Michigan is rapidly advancing toward renewable energy goals, and 2025 is set to be a transformative year for solar energy adoption. With a mix of federal tax credits, state-level exemptions, utility-specific programs, and new funding initiatives, homeowners and businesses have abundant opportunities to make the shift to clean energy.
In this guide, we’ll dive into every major solar incentive expected in 2025—how they work, who qualifies, and how you can save thousands on your solar investment.
Why Solar Incentives Will Matter More in 2025
Adopting solar power in Michigan has traditionally been motivated by the desire to save on energy costs and reduce environmental impact. However, solar incentives play a critical role in offsetting the high upfront costs of installation, which can range from $15,000 to $25,000 for an average residential system.
In 2025, these incentives are expected to be even more relevant due to several factors:
- The 30% Federal Investment Tax Credit (ITC) will remain in effect, creating a time-sensitive opportunity before future reductions.
- Expanded state and local initiatives, such as the MI Solar for All program, will prioritize funding for low-income and disadvantaged communities.
- Advancing technologies and energy policies will make solar more efficient and accessible than ever.
1. Federal Solar Investment Tax Credit (ITC)
The Federal Solar Investment Tax Credit (ITC) is the cornerstone of solar incentives in the U.S. and is slated to remain at 30% of installation costs through 2032. This incentive applies to residential and commercial solar projects alike.
Key Details for 2025
- Eligibility: Applies to new solar systems installed in 2025. Systems must be fully operational by December 31, 2025, to qualify.
- Savings Example:
- Installation Cost: $20,000
- ITC Savings: $6,000
- Final Cost After Credit: $14,000
- Bonus Opportunities: If combined with state-level incentives like Michigan’s property tax exemption (covered below), you can reduce costs even further.
Pro Tip: Use the ITC for complementary energy storage systems. Batteries installed alongside solar panels are eligible for the same 30% credit. (Source: EnergySage)
2. Michigan Solar Property Tax Exemption
One of the hidden costs of home improvement projects is the increase in property taxes due to a rise in assessed value. However, Michigan provides a Property Tax Exemption for Renewable Energy Systems, ensuring solar adopters won’t see their taxes go up because of solar installations.
How It Works
- Solar panels and related equipment (like inverters and batteries) are excluded from property value assessments.
- This exemption applies to residential, commercial, and industrial properties.
Example:
- A homeowner installs a 10kW system that increases their home’s market value by $15,000. Normally, this would result in higher annual property taxes. Under Michigan law, these taxes are waived, saving the homeowner $300 to $500 annually.
3. Net Metering and Distributed Generation
Current Program Status
Michigan’s net metering program allows homeowners to offset energy bills by feeding excess electricity generated by their solar systems back into the grid. In exchange, they receive energy credits that roll over month-to-month.
- Utility Adjustments:
Michigan has transitioned many customers to “distributed generation” programs, which slightly reduce the value of credits compared to older net metering rules.- Net Excess Generation Credits: Distributed generation credits typically compensate at 75% of retail energy rates.
- Example of Savings:
A homeowner with a 6kW system sends 500 kWh back to the grid during the summer. With an average retail energy rate of $0.15/kWh, the homeowner receives $56.25 in bill credits.
What to Watch in 2025
Utility providers like Consumers Energy and DTE Energy may refine these programs further. Staying updated with your provider’s guidelines is essential for maximizing savings.
4. MI Solar for All: Expanding Access to Clean Energy
Program Overview
The MI Solar for All Program, funded by a $156 million federal grant, is designed to increase solar access for low-income and underserved communities. The program is part of the Inflation Reduction Act (IRA) initiative.
Key Benefits in 2025
- Rooftop Solar and Community Solar Projects: Households can apply for direct financial assistance to install solar panels or subscribe to community solar systems.
- Storage Incentives: Energy storage projects, such as home batteries, will also qualify for funding.
- Expected Rollout: Funding allocation and program guidelines will be finalized by mid-2025, with implementation expected in the latter half of the year.
Eligibility
- Households earning below 200% of the federal poverty level will receive priority.
- Multifamily housing complexes may also qualify for bulk discounts on solar installations.
5. Michigan Home Energy Rebates (MiHER)
Funding Allocation
In 2025, Michigan will administer over $210 million in Home Energy Rebates, split between:
- Home Efficiency Rebates: For whole-home energy efficiency upgrades, including solar power.
- Home Electrification Rebates: For solar-compatible technologies, such as electric heat pumps and induction stoves.
Example Savings
- Homeowners can qualify for rebates of up to $4,000 to $8,000, depending on household income and project scope.
- Multifamily properties are eligible for rebates up to $400,000 per property.
6. USDA REAP Grants for Rural Solar Projects
The USDA Rural Energy for America Program (REAP) supports renewable energy projects for agricultural producers and rural businesses.
How It Works
- Grant Coverage: Up to 40% of project costs.
- Loan Guarantees: Low-interest loans available to cover remaining costs.
2025 Deadlines
Grant applications are typically accepted in multiple rounds each year. For the most up-to-date deadlines, visit the USDA website.
7. Federal Clean Energy Expansion Credits
In 2025, the Biden administration is expanding federal credits to incentivize clean energy technologies beyond solar and wind.
Eligible Projects
- Geothermal Energy
- Energy Storage (standalone systems now qualify)
- Advanced Nuclear Energy
By diversifying incentives, the federal government aims to meet its net-zero emissions target by 2035.
8. Local Municipality Incentives
Certain municipalities in Michigan are introducing local grants and tax abatements for renewable energy projects. These incentives often include:
- Permit Fee Reductions
- Expedited Approvals for solar installations
- Matching Grants for community solar initiatives.
Check with your local government to explore these opportunities.
Conclusion
Solar incentives in Michigan will reach new heights in 2025, with programs tailored to reduce costs, improve access, and maximize savings for homeowners and businesses alike. By taking advantage of federal tax credits, state-level exemptions, and new initiatives like MI Solar for All, residents can save thousands while contributing to a sustainable future.
Action Step: Work with a trusted solar installer to stay informed about the latest incentives and eligibility requirements in 2025.
