MCL 460.1173, PA 235 of 2023
Distributed Generation Program
Michigan does not have traditional net metering. Since 2019, major utilities operate a Distributed Generation (DG) program governed by MCL 460.1173. The program uses "inflow/outflow" billing: customers pay full retail rates for grid electricity drawn in (inflow) and receive a credit for surplus solar sent to the grid (outflow). Public Act 235 of 2023 updated the program's rules and all major utility tariffs were re-approved by the Michigan Public Service Commission on March 13, 2025.
The outflow credit rate is set by the MPSC at the power-supply component of the retail rate, which is lower than the full retail rate because it excludes transmission and distribution charges. Think of it as the "wholesale" value of the energy you send back.
DG Program Rules & Credit Structure
Active ▼| Rule | Detail |
|---|---|
| Governing statute | MCL 460.1173 (as amended by PA 235 of 2023) |
| Billing method | Inflow/Outflow, not traditional net metering |
| Credit rate | Power-supply component of retail rate (set by MPSC; lower than full retail) |
| Maximum system size | 110% of your prior 12-month consumption, not to exceed 550 kW |
| Residential tier | ≤20 kW, at least 50% of DG program capacity allocated to this tier |
| Eligible technologies | Solar PV, wind, hydroelectric, and other qualifying renewables |
| Unused credits | Accumulate in an Excess Generation Bank; do not expire |
| Program cap | 10% of utility's 5-year average in-state peak load |
| Application fee | ~$50 (verify with your utility) |
| MPSC re-approval | March 13, 2025 (Cases U-21796, U-21798 and others) |
Major Michigan Utilities
Consumers Energy and DTE Electric serve the majority of Michigan's residential customers and both operate MPSC-approved DG programs. Credit rates below are drawn from Tier 1 tariff filings; verify current rates with your utility before signing a contract.
Consumers Energy
Outflow credit: ~$0.085/kWh (winter, RSP rate, per MPSC Case U-21585 erratum, April 2025)
Summer/peak credits may differ. Verify at consumersenergy.com
DTE Electric
Outflow credit: ~$0.07/kWh (Tier 2 estimate; verify current rate at dteenergy.com)
Verify current tariff at dteenergy.com
Lansing Board of Water & Light
Municipal utility; operates its own DG program. Rates and rules differ from IOUs. Contact BWL directly for current credit rate.
Michigan Electric Cooperative Association (MECA) Members
Co-op DG programs vary. Each cooperative files its own MPSC-approved tariff. Contact your co-op for program availability and credit rates.
MCL 211.27(2)(p)
Property Tax
Michigan's General Property Tax Act protects homeowners who install solar from property tax increases during ownership. Under MCL 211.27(2)(p), the installation, replacement, or repair of an "alternative energy system" whose annual energy output does not exceed the property's annual energy consumption is classified as "normal maintenance", not an assessable improvement.
This means your assessed value (and therefore your property tax bill) does not increase because you added solar panels. The protection applies while you own the home; when you sell, the new assessed value reflects the full property including the solar system.
Property Tax Assessment Protection
Active ▼| Provision | Detail |
|---|---|
| Governing statute | MCL 211.27(2)(p), General Property Tax Act |
| What it does | Classifies solar installation as "normal maintenance", no increase in taxable value during the owner's tenure |
| Condition | Annual system output must not exceed the property's annual energy consumption (sized for offset, not export) |
| When it resets | Upon sale of the property, new owner's assessment reflects full property value including solar |
| Applies to | Residential homeowners (MCL 211.27 governs residential property assessment) |
| Personal property tax | MCL 211.9i provides a separate personal property tax exemption, but is limited to systems offsetting commercial or industrial energy usage. Residential homeowners rely on the MCL 211.27(2)(p) protection. |
MCL 205, General Sales Tax Act
Sales Tax
Michigan levies a 6% general sales tax. Our Tier 1 research reviewed the Michigan General Sales Tax Act (MCL 205.51 et seq.) and Michigan Treasury guidance (including Revenue Administrative Bulletin 2026-6), which allows residential DG participants a 5% apportioned exemption on solar equipment.
Sales Tax on Solar Equipment
Partial (5%) Exemption ▼Under Treasury RAB 2026-6, homeowners in a utility DG program may treat 5% of solar equipment as exempt (industrial processing exemption, MCL 205.54t); the remaining 95% is subject to Michigan's 6% sales or use tax.
- Only a 5% apportioned exemption applies to residential DG solar equipment (RAB 2026-6)
- Several bills have been introduced over the years but none were identified as enacted
- The Solar Energy Facilities Taxation Act (2023 PA 108) is utility-scale only, does not apply to residential
MCL 206.262 (Repealed)
State Income Tax
Michigan once offered a state income tax credit for solar, wind, or water energy conversion devices under MCL 206.262. That credit was repealed effective January 1, 1997 and is no longer available.
No state income tax credit for residential solar was found in our Tier 1 research of the Michigan Income Tax Act (MCL 206). Verify with the Michigan Department of Treasury at michigan.gov/taxes before filing.
Michigan State Income Tax Credit
Not Available ▼The Michigan income tax credit for solar energy devices (MCL 206.262) was repealed in 1997. No replacement credit has been enacted through our Tier 1 research date. Michigan income tax filers have no state-level solar credit to claim.
- MCL 206.262 (solar/wind/water credit), repealed effective January 1, 1997
- No replacement enacted through our research date
- Verify current status at michigan.gov/taxes before filing
P.L. 119-21, IRS.gov
Federal Solar Tax Credit
The federal residential solar Investment Tax Credit (§25D) has been eliminated for systems placed in service after December 31, 2025. The One Big Beautiful Bill Act (P.L. 119-21), signed July 4, 2025, removed the credit. IRS.gov confirms the credit is "not available for any expenditures made after December 31, 2025."
Federal Residential Solar ITC (§25D)
Eliminated After 12/31/2025 ▼| Period | Credit Rate |
|---|---|
| Placed in service by Dec 31, 2025 | 30% of system cost |
| Placed in service Jan 1, 2026 or later | 0%, credit eliminated |
Estimate Your Savings
Michigan Solar Savings Calculator
Estimate how Michigan's Distributed Generation program and property tax protection could benefit you. All figures are illustrative estimates based on Tier 1 research.