Michigan energy incentives in 2026 come from four sources stacked on top of each other: federal tax credits, the state-run Michigan Home Energy Rebates program, rebates from your utility, and grants aimed at local governments and public entities. What you can actually claim depends on who you are, what you’re installing, when the work is finished, and — for the rebate program — what your household earns.
The mix shifted twice recently. Michigan passed a package of clean energy laws in late 2023, and Congress changed several federal energy tax credits in July 2025 through the One Big Beautiful Bill. Some credits that were routine in 2024 are gone for property placed in service after December 31, 2025.1Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under the One Big Beautiful Bill Knowing which programs still apply is the difference between a project that pays for itself and one that doesn’t.
Federal Tax Credits After the 2025 Law Change
What Residential Homeowners Can Still Claim
The Section 25D Residential Clean Energy Credit, which covered 30% of the cost of solar panels, battery storage, geothermal systems, and similar installations, expired for any property placed in service after December 31, 2025. If your system wasn’t finished and operational by that date, you cannot claim it.1Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under the One Big Beautiful Bill
The Section 25C Energy Efficient Home Improvement Credit — the one that covered heat pumps, insulation, efficient HVAC, and similar upgrades, up to $1,200 annually with a separate $2,000 cap for heat pumps — was also modified by the same legislation. Check current IRS guidance before relying on pre-2025 figures for this credit.2Internal Revenue Service. Home Energy Tax Credits
What Businesses and Tax-Exempt Organizations Get
Business-side credits held up better. The Section 48E Clean Electricity Investment Tax Credit is available to businesses and tax-exempt organizations installing solar, wind, geothermal, hydropower, or energy storage. The base rate is 6% of the qualified investment, but it jumps to 30% for projects meeting prevailing wage and registered apprenticeship rules. Ten-percentage-point bonuses stack on top for meeting domestic content requirements or locating in an energy community.3Internal Revenue Service. Clean Electricity Investment Credit
Timing is tight for wind and solar. Under current law, those projects must start construction by July 4, 2026 to qualify. Projects starting after that must be placed in service by December 31, 2027. Geothermal, energy storage, and other zero-emission technologies have a longer runway, with construction starts eligible through 2033.4Department of Environment, Great Lakes, and Energy. Unlock Savings: Tax Credits Available to Businesses, Nonprofits for Clean Energy Upgrades The Section 45Y Clean Electricity Production Tax Credit is an alternative structured around electricity generated and sold to the grid, with the same construction windows.
Nonprofits, municipalities, and other tax-exempt entities aren’t shut out. They can access these credits through elective pay, which converts the credit into a direct payment rather than an offset against tax liability they don’t have.
Michigan Home Energy Rebates (MiHER)
MiHER is Michigan’s channel for federal Inflation Reduction Act rebate funding. It opened in select areas in early 2025 and went statewide in April 2025, and it will fund efficiency and electrification upgrades in roughly 15,000 Michigan homes — insulation, windows and doors, heating and cooling equipment, and major appliances.5State of Michigan. MiHER for Residents: How to Get Your Rebate Funding ends when the money runs out or on September 30, 2031, whichever comes first.6U.S. Department of Energy. Home Energy Rebates Program Requirements and Application Instructions
Income Tiers Set Your Rebate Amount
MiHER uses Area Median Income to sort households. The Department of Energy defines low-income as under 80% of AMI for your area.
On the electrification and appliance track, households below 80% AMI get 100% of qualified project costs covered; households between 80% and 150% AMI get 50%; households above 150% AMI don’t qualify for that track at all.6U.S. Department of Energy. Home Energy Rebates Program Requirements and Application Instructions On the efficiency rebate track, higher amounts go to households below 80% AMI, with lower amounts available at 80% AMI and above.
HUD updates AMI figures each year, usually in March or April, so your exact threshold depends on your county and household size. You’ll need income documentation during the application.
How the Process Actually Works
MiHER isn’t a receipts-in-the-mail rebate. You start by picking a MiHER-approved contractor, who walks through your home, evaluates its current energy performance, recommends upgrades, and files the rebate application with you. The contractor relationship is built into the program from day one.
Two tracks sit inside MiHER. Home Efficiency Rebates (IRA Section 50121) reward overall energy savings measured by modeling or by post-installation metering. Home Electrification and Appliance Rebates (Section 50122) fund the switch to efficient electric equipment.
Utility Rebates from Consumers Energy and DTE
Michigan’s two largest utilities run their own rebate programs separately from the federal ones, and you can generally use both on the same project. Per-item amounts are smaller, but the menu is wide and the paperwork is simpler.
Consumers Energy’s 2026 residential heating and cooling rebates include:
- High-efficiency furnace (97%+ AFUE): $300
- Mid-efficiency furnace (95%–96.99% AFUE): $100
- Central air conditioner (SEER2 16+): $300
- Ductless mini-split heat pump: $350
- Ground-source heat pump (EER 19+): $300
- Heating or AC tune-up: $65 each
These are 2026 program year figures.7Consumers Energy. Heating and Cooling Rebates DTE Energy runs comparable programs for both electric and natural gas customers covering insulation, windows, and equipment upgrades. Both utilities work on a first-come, first-served basis with limited annual budgets, so applying early in the program year matters.
Claims usually require the purchase receipt, proof of professional installation, and documentation that the equipment meets the required efficiency rating. Payment typically arrives within four to six weeks.
Grants for Local Governments and Public Entities
If you’re applying on behalf of a city, township, tribal government, school district, or similar public-service organization, the Department of Environment, Great Lakes, and Energy (EGLE) runs grant programs individual homeowners can’t access. EGLE has both state and federal funding available for efficiency upgrades, renewable installations, clean technology development, and EV charger installations.8State of Michigan. Funding Opportunities
The Community Energy Management Program (CEM) is the broadest of these. CEM funds energy management planning, efficiency retrofits, fleet electrification, EV charging infrastructure, and clean energy workforce development for local governments, tribal governments, and other public-service entities.9State of Michigan. Community Energy Management Program Applications call for detailed proposals with cost estimates, projected energy savings, and environmental impact. Competitive scoring rewards quantified outcomes over general sustainability language.
How These Incentives Stack on One Project
You can generally combine federal tax credits with state rebates and utility rebates on the same project, but the tax treatment of each dollar matters and it’s easy to get wrong.
When you calculate a federal energy tax credit, certain subsidies and rebates get subtracted from your qualified expenses first. Public utility subsidies for buying or installing clean energy property come off the cost basis before the credit is calculated. State energy efficiency incentives are generally not subtracted from qualified costs unless they meet the federal definition of a purchase-price adjustment.10Internal Revenue Service. Energy Efficient Home Improvement Credit
A rebate reduces your qualified expenses only if it’s based on the cost of the property, comes from someone connected to the sale (like the manufacturer or installer), and isn’t payment for services you provide. Some state programs label their incentives as “rebates” without meeting that federal definition, and incentives that don’t qualify as purchase-price adjustments could be included in your gross income for federal tax purposes.10Internal Revenue Service. Energy Efficient Home Improvement Credit A tax professional familiar with energy credits is worth the fee here; the alternative is overclaiming a credit or paying tax on money you thought was free.
Property Tax Treatment of Residential Solar
Michigan does not currently offer a general property tax exemption for residential renewable energy systems. An earlier exemption for alternative energy systems expired in 2012, and while bills to reinstate it have been introduced, none have passed as of 2026. Utility-scale solar is taxed under a separate framework (the Solar Energy Facilities Taxation Act, PA 108 of 2023), but that regime applies to commercial developers and landowners hosting large installations, not to rooftop panels on a home.11Michigan Legislature. Solar Energy Facilities Taxation Act (Excerpt) Act 108 of 2023
Documentation You Need to Keep
For MiHER projects, the Department of Energy sets specific standards. Energy savings on the modeled pathway must be estimated using calibrated home energy models consistent with the BPI-2400 standard and DOE-approved modeling software. For the measured pathway, savings must be verified with DOE-approved open-source measurement and verification software, with actual savings calculated no less than nine months after final installation.6U.S. Department of Energy. Home Energy Rebates Program Requirements and Application Instructions
Your contractor handles most of the technical documentation, but you’re responsible for keeping the invoice for all work performed. It has to show the specific work done, the property address, contractor information, work dates, total project cost before the rebate, and the rebate amount.6U.S. Department of Energy. Home Energy Rebates Program Requirements and Application Instructions
Submitting false information to obtain energy incentives carries real consequences. The federal False Claims Act lets the government recover up to three times the damages caused, plus per-claim penalties.12U.S. Department of Justice. United States Files False Claims Act Complaint Against Department of Energy Prime Contractor At the state level, the Michigan Public Service Commission can revoke incentives and impose financial penalties on participants that fail to meet program requirements.
Where to Start
If you’re a homeowner, check MiHER eligibility first (income tier and approved contractors), then layer your utility’s rebates on qualifying equipment, then look at any surviving federal credit that fits your project. If you’re a business or nonprofit, the timing question comes first: for wind or solar, decide whether you can start construction by July 4, 2026, because that gate controls the credit. If you’re applying on behalf of a public entity, watch EGLE’s funding opportunities page for open CEM and related solicitations, and build the proposal around measurable outcomes.