2023 Colorado Solar Incentives, Tax Credit, Rebates, & Payback Programs

Georgette Kilgore headshot, wearing 8 Billion Trees shirt with forest in the background.Written by Georgette Kilgore

Solar Panels | April 1, 2024

State of Colorado official behind the Colorado flag hands money to a resident who is holding a solar panel demonstrating the Colorado solar tax credit and how to use solar panel colorado solar incentives, Colorado solar rebates and a guide to the colorado power payback program.

This year, the Colorado solar tax credit and incentives are designed to help the residents of the state embrace solar panel energy as the renewable energy of choice.

The stated goal of the move is that (prospectively) by the year 2040, the state will be powered 100% by this infinite, clean resource.

But, how do Colorado solar tax credit, rebates, and payback programs work?

Since Colorado is positioned uniquely, receiving sunlight 300 days a year, on average, it’s entirely possible to remove most homes form the national power grid, generating electricity that is clean.

And although there are emissions associated with the manufacture and disposal of solar panels, they pale in comparison to those generated by fossil fuel power.

This guide outlines the Colorado solar tax credit plans and how residents can take advantage of the discounts to make their homes more independent and ‘greener.’

Solar Panels Colorado: Colorado Solar Incentives and Colorado Solar Tax Credit

For decades now Colorado has been incentivizing its citizens to adopt greener energy initiatives to protect the environment against fossil fuels, assisting them with the purchase and installation of solar panel systems.

With a comparison chart, it’s possible to see the prices for solar panels in 2022 and in 2023.

Colorado Solar Panel Cost 2022 Average Statewide Cost 2022 Colorado Solar Panel Cost 2023 Average Statewide Cost 2023
$13,302 – $18,000 $18,000 – $20,000 $14,435 – $19,665 $16,870 – $23,170

The variation in the prices depends on factors such as the wattage of the panels, house location, and electricity usage. Although the prices for solar panels in Colorado are reasonable, they can still be beyond the reach of many homeowners.

The intention of the Colorado solar tax credit incentive is to make them more affordable to a wider consumer base.

But exactly how much can be saved? What was the saving in 2022 and how much can be saved in 2023?

Colorado Solar Incentives 2022 vs 2023 Colorado Solar Incentives

An average house installs a solar photovoltaic (PV)5 system between 300 – 500 kWh.

Residential house with a garage and solar panels installed on the roof.

(Image: Gary Cole7)

If the installation of a system with 500kWh is evaluated including the solar storage batteries and has the tax incentives applied, it’s possible to see what savings can be achieved with the Colorado solar tax credit and also compare that final price to a few other states across the country.

State kWh System Cost Tax Credit Rebate Final Cost
Colorado 2022 500 kWh $15,650 Capped at $1,000 $400 – $3,000 $11,650
Colorado 2023 500 kWh $14,435 Nothing $400 – $3,000 $11,435

Not all states across the country offer tax credits, but with one type of incentive or another, they are encouraging their citizens to install solar panels through a variety of programs.

State kWh System Cost Tax Credit Rebate Final Cost
New York 500 kWh $14,440 Capped at $5,000 $1,520-$3,040 $6,400
Hawaii 500 kWh $13,350 Capped at $2,250 Nothing $11,100
Arizona 500 kWh $10,360 Capped at $1,000 Nothing $9,360
Utah 500 kWh $13,250 Capped at $1,600 Nothing $11,650
Montana 500 kWh $20,000 Capped at $1,000 $2,000 $17,000
New Mexico 500 kWh $14,365 Capped at 10% ($1,437) Nothing $12,928
South Carolina 500 kWh $12,282 Capped at $3,500 $3,000 $5,782

Graphics of solar cost and incentive per state bar graph with states New York, Hawaii, Arizona, Utah, Montana, New Mexico, and South Carolina in x-axis and cost in y-axis.

The Federal government also offers tax incentives between 25-30% in most states which will reduce the prices even further. Some of the incentives and rebates are time-limited, initially with a termination date of 2024, and the amounts are always changing from year to year.

Always confirm with your local energy provider or your local energy grid for what is available in your area so you don’t miss out. It won’t cost you a cent to ask, but it might cost you thousands of dollars if you don’t.

The Inflation Reduction Act is a ground-breaking legislation that will help millions of Americans transition into renewal energies by providing financial support and incentives in an effort to assist residents statewide and help in reducing greenhouse gas emissions at the same time.6

In Colorado, for example, the Federal government’s incentive from 2022 vs 2023 would look like this:

  • Gov tax incentive 2022 26%
    $15,650 – 26% = $11,581 before deductions
    = $7,581 after deductions
  • Gov tax incentive 2023 30%
    $14,435 – 30% = $10,105 before deductions
    = $7,105 after deductions

Some of the programs available are not widely advertised but can save thousands of dollars more. These programs include tax exemptions simply for installing solar panels on your roof.

Installing a photovoltaic system will relieve pressure on the grid, will save the city money, will help to reduce carbon emissions, and will add value to your property. All these benefits make Colorado a better and greener place to live.

Colorado Solar Rebates: Renewable Energy Colorado

How much do solar panels cost, has deterred many Coloradans from embracing solar energy. Fortunately, the state has introduced several programs to entice those on the fence to take the plunge.

Some of those are:

  • Colorado solar property tax exemption: As a reward for installing solar panels, Colorado has exempted properties from paying the higher rate of tax.
  • Net Metering: A payment for any net excess energy produced that can be sold back to the utility company.
  • Government tax credit: 30%
  • State sales tax exemption: 2.9% off solar panels
  • Watt rebates: Rebates per watt generated by solar panels from some utility companies.

Solar Denver and Boulder, Colorado Incentives

Individual cities are entitled to set their own incentives and rebates and both Denver and Boulder have introduced additional enticements.

Once the solar panels have been installed on a property in Boulder, the homeowner will receive a 15% refund of the sales and use tax they have had to pay.

Cityscape of Denver, Colorado showing buildings, structures, and trees scattered in the city.

(Image: 120198)

Meanwhile, residents in Denver are eligible for an additional $4,000 rebate on top of the government and state incentives. Also, any householder whose wages are 80% less than the state average, can apply for even more funding.

There can be no denying that the Colorado solar tax credits, programs, and rebate initiatives are making solar energy more accessible.2

Colorado Power Payback Program

One of the incentives to going solar is that one day all the energy beamed into your home will be free. When that time arrives, the heating can be turned on for as long as desired, or the air conditioning can be turned up to the max so the interior of your home can be cooler than your refrigerator without fear of receiving eye-watering electricity bills.

It would be enlightening to be able to calculate how soon that day will arrive with and without the Colorado solar tax credits or government incentives.

With this formula, it’s possible to do just that.

  • Cost of system installation
  • Minus all rebates
  • Add up yearly savings on electricity bills
  • Divide final investment by yearly savings
Payback Without Government Incentives Payback With Government Incentives
$14,435 (Cost)
$14,435 ÷ $1,000 (Savings per year)
$14,435 (Cost) – $7,330 (All incentives) =$7,105
$7,105 ÷ $1,000 (Savings per year)
14 years 5 months payback 7 years payback

Depending on the local and government initiatives received and which state, the average payback period can be between 6 to 10 years.

Colorado Springs Solar Incentives (Solar City Colorado)

The Colorado solar tax credit schemes are slowly branding Colorado as the solar city of the United States.

Wide shot of a part of Colorado Springs showing buildings and trees situated in city blocks and a mountain range in the background.

(Image: Kevin Bree9)

Colorado Springs alone has appealing incentives such as:

  • Sales tax incentives
  • Residential rebate programs
  • Property tax incentives
  • A -15% refund on sales incentive programs
  • A -50% Commercial on project costs
  • Performance-based incentive programs for excess production
  • Loan programs

With so many programs, incentives, and rebates from utility providers, it’s worth researching what is available in your specific area to find out what’s available.

Regardless of what type of house you have, or even if you have commercial premises, there is something for everyone regardless of your living or business circumstances.

In fact, you may well be able to go solar for free.

Free Solar Panels Colorado (No Cost Solar Program Colorado)

Being able to have solar panels installed for free is possible in Boulder, Colorado.1 But, not surprisingly, certain criteria need to be met, and not everyone is eligible.

The Solar Grant Program is open for:

  • Nonprofit organizations
  • Homeowners who are classed as low-income

To qualify for the low-income grants, a household would have to not exceed the threshold below based on the combined yearly earnings of the working occupants.

Graphics of Colorado Solar Grant Program: Income Threshold on bar graph with number of occupants on the x-axis and yearly income on y-axis.

Number of Occupants Yearly Earnings
One Single Occupant $71,735
Two Working Occupants $82,025
Three Working Occupants $92,240
Four Working Occupants $102,450

The grant is calculated after all the Colorado solar tax credits and all other rebates have been deducted and are capped at a maximum of $8,000. Inquiring about this program could well provide a completely free solar panel system installed in your home, but the funds are not unlimited.

The process is based on a first-come-first-served system, so get your application form in early.

Carbon Footprint Solar Panels

Installing solar panels as a clean renewable energy source would be counterproductive if they left a huge carbon footprint. The whole idea of solar power is that it is clean energy.

But for the first few years that they are in operation, there is a carbon footprint, and the CO2 per kWh is measured at, surprisingly, 50kWh. This estimation is based on the carbon footprint solar panels create before they are even installed on a rooftop.

This carbon emission is instigated from the very first moment the materials that make up the cells are procured, from the intensive manufacturing process that assembles the panels, and from the transportation methods used throughout.

All of these add up to a carbon footprint that has to be offset while the solar panels are in operation. On average, it will take between 2 to 3 years before that can be achieved and the panels become carbon neutral.

Solar Farm Income per Acre

Knowing how to install solar panels on roof isn’t the only way to capitalize on solar power usage. A particular farmer in Boulder, trapped in running an unprofitable business, realized the potential of installing solar panels above the land of his 24-acre farm.

With the help of the local authority and the Colorado solar tax credits, he was able to incorporate 3,200 solar panels above his farmland and sell 1.2 megawatts of energy back to the local utility company. He installed them in such a way that he was still able to continue to produce his agricultural crops, and in fact discovered after learning how to wire solar panels into one system, that one complemented the other.

Graphics showing traditional and alternative agrivoltaic layouts from crop production, animal husbandry, ecosystem services, mounts, elevated, and greenhouse solar.

(Image: National Renewable Energy Laboratory10)

Combining traditional farming with solar farming is also known as agrivoltaics, or solar and agriculture co-location,4 and is becoming widely accepted across the United States. It is becoming popular because the shade from the panels benefits the growth cycle of the arable crops, and the water evaporation from those same crops helps to cool down the solar cells on hot days.

And the farmer’s solar farm income per acre? With the national average per acre income from solar farms of between $21,250 to $42,500, he was guaranteed to chip away at his initial investment of $2M and start making a healthy profit in no time at all.

Solar Energy: Colorado Solar Tax Credit

Photovoltaics is leading the desire for renewable energy, and Colorado is doing everything possible to make solar panels affordable and accessible to all of its citizens, regardless of their financial situation, and regardless of whether they are in residential or commercial premises. Determined to have a positive impact on the environment and reduce its carbon footprint, Colorado is leading the way in renewable energies.3

Although ranked in 12th position in the country for solar energy, with the recent Colorado solar tax credit, rebates, & payback programs, it will soon be number one.

Frequently Asked Questions About Colorado Solar Tax Credit

Is Solar Worth It in Colorado? Is There a Colorado Solar Tax Credit?

Yes. Colorado has a Colorado solar tax credit initiative, incentives, and excellent programs to make adopting solar energy easier and more affordable.

What Is the Cost of Solar Panels in Colorado? How Much Are Solar Panels in Colorado?

The price varies from $14,435 to $19,665 before any tax incentive or rebates.

Has There Been a Solar Tax Credit Extension?

The Solar Investment Tax Credit which was scheduled to decrease in 2024, has been extended until 2032 when the Inflation Reduction Act was brought into law in late 2022.


1City of Boulder. (2023). How to Go Solar. City of Boulder. Retrieved March 22, 2023, from <https://bouldercolorado.gov/services/how-go-solar>

2Erie Colorado. (2023). Renewable Energy. Town of Erie. Retrieved March 22, 2023, from <https://www.erieco.gov/871/Renewable-Energy>

3Morris, J. (2023, February 2). Renewable Energy. Climate Portal. Retrieved March 22, 2023, from <https://climate.mit.edu/explainers/renewable-energy>

4Solar Energy Technologies Office. (2023). Solar and Agriculture Co-Location. Office of Energy Efficiency and Renewable Energy. Retrieved March 22, 2023, from <https://www.energy.gov/eere/solar/solar-and-agriculture-co-location>

5Solar Energy Technologies Office. (2023, March). Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics. Office of Energy Efficiency and Renewable Energy. Retrieved March 22, 2023, from <https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-credit-solar-photovoltaics>

6United States Environmental Protection Agency. (2023, February 16). The Inflation Reduction Act. EPA|United States Environmental Protection Agency. Retrieved March 22, 2023, from <https://www.epa.gov/green-power-markets/inflation-reduction-act>

7Gary Cole. Unsplash. Retrieved by <https://unsplash.com/photos/2pbElAv6K4I>

812019. Pixabay. Retrieved from <https://pixabay.com/images/id-2230512/>

9Kevin Bree. Unsplash. Retrieved from <https://unsplash.com/photos/67vlhboncRU>

10National Renewable Energy Laboratory. NREL. Retrieved from <https://www.nrel.gov/news/program/2022/growing-plants-power-and-partnerships.html>