Illinois does not fully exempt solar panels from property taxes, but the Illinois solar property tax exemption rule under 35 ILCS 200/10-10 stops a solar installation from raising your assessment. Your home is valued twice: once as if it had a conventional heating and cooling system, and once with the solar system in place. The lower figure becomes your assessed value. Because a solar array almost always costs more than a furnace or central air unit, the conventional value wins, and your tax bill stays where it would have been without the panels.
How the Alternate Valuation Keeps Your Taxes Flat
The mechanism is straightforward. After you install a qualifying solar energy system, you file a claim with your county’s chief assessment officer. The assessor calculates what your improvements would be worth with conventional heating or cooling, calculates what they’re worth with the solar installation, and assigns the lower of the two as your assessed value.1Justia. Illinois Code 35 ILCS 200 Art 10 Div 1 – Solar Energy Systems
You are not getting a tax cut. You are avoiding the increase that would normally follow a home improvement worth tens of thousands of dollars. For a property in a high-tax Illinois county, that avoided increase can be several hundred dollars a year, every year the system stays in place.
The alternate valuation continues for as long as the solar system is operational. If you remove it or stop using it, you have 30 days to notify the chief county assessment officer in writing by certified mail.1Justia. Illinois Code 35 ILCS 200 Art 10 Div 1 – Solar Energy Systems
What Counts as a Solar Energy System
Under 35 ILCS 200/10-5, a solar energy system is an assembly that uses solar energy to generate electricity primarily consumed on the property where the system sits, or that heats or cools the building for that property’s primary benefit.2Illinois General Assembly. Illinois Code 35 ILCS 200 – Property Tax Code The definition is broad enough for most residential rooftop setups.
Third-party owned systems qualify. If your panels were installed through a power purchase agreement or lease, the system still counts, provided it sits on your side of the electric meter and is estimated to produce no more than 110% of your electricity consumption from the prior 12 months.2Illinois General Assembly. Illinois Code 35 ILCS 200 – Property Tax Code That 110% ceiling matters: a system deliberately oversized to sell power back to the grid does not fit the residential definition.
Certain components fall outside the definition. Parts that serve mainly structural, aesthetic, or insulating purposes rather than generating or storing solar energy do not count. Distribution hardware equally usable in a conventional energy system does not count, except for components specifically required for the solar installation. And all qualifying systems must conform to standards set by the Illinois Department of Commerce and Economic Opportunity.2Illinois General Assembly. Illinois Code 35 ILCS 200 – Property Tax Code
How to File the Claim
You file with the chief county assessment officer, which in most counties means your county assessor’s office. The statute requires a filing but does not prescribe a statewide form. Each county handles the paperwork slightly differently. Some have a dedicated solar alternate valuation form; others fold it into their general assessment appeal process.
Call your assessor’s office before filing to confirm what they need. Expect to provide proof of installation, system specifications, and confirmation that the system meets DCEO standards. The assessor needs enough information to calculate both the conventional and the solar-equipped values.
The most important thing to understand: the alternate valuation is not automatic. If you install panels and never file, the assessor can assess your property at its full solar-equipped value. Most of the “why is my tax bill up” stories from Illinois solar owners trace back to this single missed step.
What Happens to the Assessment When You Sell
The alternate valuation transfers with the property. A buyer inherits the lower assessment for as long as the solar system remains operational. That combination — an existing system, lower electric bills, and no property tax penalty — is a real selling point compared to an otherwise identical home without panels.
When it comes time to appraise, the Residential Green and Energy Efficient Addendum lets an appraiser document the system’s contribution to value. The form captures installation cost, estimated annual energy savings, and certifications such as a HERS Rating or DOE Home Energy Score, giving the appraiser measurable numbers to support a higher appraised value.
The gap this creates is worth noticing. Your assessed value stays as if you had conventional equipment. Your market value reflects the panels. The difference is equity that never touched your tax bill.
If the System Comes Off
Removing the panels, or letting the system fall out of operation, ends the alternate valuation. You are required to notify the chief county assessment officer in writing by certified mail within 30 days.1Justia. Illinois Code 35 ILCS 200 Art 10 Div 1 – Solar Energy Systems After that notice, the property returns to standard valuation.
If a repair or replacement takes the system offline temporarily, the operational standard is what matters. A system down for scheduled maintenance is different from one that has been abandoned. When in doubt, ask your assessor’s office how they treat downtime before you assume the valuation continues.
Commercial Ground-Mounted Solar Is Different
The residential rule described above does not govern large-scale, ground-mounted solar projects built primarily for wholesale or retail electricity sales. Those follow a separate framework under Public Act 100-0781, which applies in counties with fewer than 3 million inhabitants (everywhere in Illinois except Cook County) for assessment years 2018 through 2033.3Illinois General Assembly. Public Act 100-0781
The commercial method sets a cost basis of $218,000 per megawatt of nameplate capacity, covering the owner’s interest in the land and real property improvements. That basis is trended each year by the Consumer Price Index. Depreciation is the system’s actual age divided by 25 years, with a floor: the value cannot drop below 30% of the trended cost basis. Commercial solar assessments are not subject to equalization factors from the Department of Revenue, boards of review, or local assessors.3Illinois General Assembly. Public Act 100-0781
A developer can seek further reductions for functional or external obsolescence beyond physical depreciation, but must prove it by clear and convincing evidence.3Illinois General Assembly. Public Act 100-0781 If you are a homeowner with rooftop panels, none of this applies to you; the residential alternate valuation is what governs your bill.
The Practical Takeaway
Adding solar in Illinois should not raise your property taxes, but the protection depends on you filing a claim for alternate valuation with your county assessor. Confirm the system meets the statute’s definition, keep documentation of installation and DCEO compliance, file the claim promptly after installation, and remember the 30-day certified-mail notice if you ever take the system out of service. Those steps are what turn a statutory right into a real reduction on your tax bill.