All federal benefits apply to entities in Tennessee.

Homeowners and businesses can claim a tax credit equal to 30% of their solar installation costs. This applies to both owned and leased systems, including Power Purchase Agreements (PPAs) lasting at least 10 years. Note that the Inflation Reduction Act (IRA) of 2022 increased the solar installation credit to 30% with no dollar limit.

Tennessee offers a property tax incentive for solar installations through the Green Energy Property Tax Assessment. This program allows homeowners to pay property taxes on only 12.5% of the value added to their property by the solar system. For example, if your home is valued at $250,000 and you install a $16,000 solar system, you would only pay property taxes on $2,000 of the installation cost.

While homeowners cannot claim a sales tax exemption on solar equipment, businesses installing solar systems are exempt from the state's 7% sales tax on qualifying equipment.

Tennessee does not have a statewide net metering policy. However, some utilities may offer net metering or similar programs. It's advisable to contact your local utility provider to inquire about available programs and compensation rates for excess energy produced by your solar system.

Under the Inflation Reduction Act (IRA) of 2022, tax-exempt organizations such as nonprofits are eligible to receive a direct payment equal to 30% of their solar installation cost, effectively mirroring the federal Investment Tax Credit (ITC).

Tennessee offers a combination of federal incentives and state-level programs to make solar energy a viable and beneficial investment for individuals, businesses, and nonprofits. The federal 30% solar tax credit, Green Energy Property Tax Assessment, and sales tax exemptions for businesses provide financial support and compensation for solar energy production. Additionally, nonprofits can benefit from direct payments equivalent to the federal ITC. These incentives make Tennessee an attractive state for solar energy adoption.