Montana Solar Overview
Montana offers a clean solar incentive story: no state sales tax (automatic savings on all equipment), full retail net metering for investor-owned utility customers, a 10-year property tax exemption, and a state low-interest loan program. There's no state income tax credit, but the other benefits add up to a reasonable payback.
15.19¢
NWE Retail Rate
Net metering credits same rate
10 yrs
Property Tax Exemption
Up to $20K assessed value
3.5%
AERLP Loan Rate
Up to $40,000, 10-year term
None
State Sales Tax
MT is 1 of 5 states with no sales tax
Net Metering, Full Retail Rate
Montana law (MCA § 69-8-602) requires investor-owned utilities to offer net metering to residential customers. NorthWestern Energy (NWE), which serves most of Montana, credits exported solar energy at its full residential retail rate.
NorthWestern Energy Net Metering, Key Terms
Credit type
1:1 full retail (kWh for kWh)
NWE residential retail rate (Jan 2026)
~15.19¢/kWh
Maximum system size
50 kW (residential well under this)
Monthly credit rollover
Yes, credits carry forward
Annual true-up
Once per year, excess credits forfeited (no cash)
Governing statute
MCA § 69-8-602
Montana's solar production peaks in summer when you need it least, and your bill is lowest in winter when days are short. The monthly rollover means summer surplus credits carry forward to reduce fall and early winter bills, maximizing how much exported energy offsets grid purchases at full retail value.
Rural Electric Cooperative Customers
Montana's rural electric cooperatives are not subject to the state net metering mandate under MCA § 69-8-602. Each cooperative sets its own solar compensation policy. If you're served by a cooperative (common in eastern and central Montana), contact your co-op directly to ask about their net metering or avoided-cost credit rate before purchasing solar.
Montana Solar Incentives
Property Tax Exemption
10 years, up to $20,000 of assessed value exempted
Montana Code Annotated § 15-6-224 exempts the added assessed value of a qualifying solar system from property taxes for 10 years. File Form AB-14 with the Montana Department of Revenue to claim. Annual savings vary by your local mill levy, statewide average is approximately $70 to $100/year.
No State Sales Tax on Solar
Montana has no general sales tax, 0% on all purchases
Montana is one of only five states with no state sales tax. Solar panels, inverters, racking, wiring, every component of your installation is purchased sales-tax-free. For a typical $21,000 system, this eliminates roughly $1,260 to $1,470 in taxes you'd pay in most other states.
AERLP, Alternative Energy Revolving Loan Program
Up to $40,000 at 3.5% fixed, 10-year term, $0 down
Montana's Department of Environmental Quality (DEQ) offers low-interest financing for solar PV installations. Key terms: $40,000 maximum, 3.5% fixed rate (APR ~4.023%), terms up to 10 years, no down payment required. Closing costs include an origination fee of $250 or 2% of the loan amount (whichever is greater) plus about $200 in other fees. Applications reviewed quarterly, visit deq.mt.gov/energy/programs/AERLP for current cycle deadlines.
No
Federal ITC (Section 25D)
EXPIRED, No credit for 2026 installations
The 30% federal Residential Clean Energy Credit expired December 31, 2025. There is no federal tax credit for systems installed in 2026. Systems completed before December 31, 2025 remain eligible on the 2025 tax return.
Not Available in Montana
State solar income tax credit
Utility rebates for solar installation
Community solar / virtual net metering
Aggregate net metering (multi-meter)
AERLP Loan, Montana's Hidden Gem
The Alternative Energy Revolving Loan Program is administered by the Montana DEQ and offers some of the best solar financing terms of any state program in the country. Rates are fixed for the life of the loan, not tied to prime rate.
2026 AERLP Quick Facts (Tier 1 Source: Montana DEQ)
Fixed interest rate
3.5% (APR ~4.02%)
Application cycles
Quarterly
Contact / Apply
deq.mt.gov/AERLP
Eligible technologies: solar PV, solar thermal, geothermal, EPA-certified pellet stoves, wind, micro-hydro. Energy conservation upgrades can be included when paired with an alternative energy system.
Estimated Payback
Based on a typical 7 kW residential system in Billings or Missoula, using NorthWestern Energy's 2026 retail rate of 15.19¢/kWh and 1:1 net metering.
NWE Territory, Estimated Payback
~11 to 13 years
7 kW at $3/W = $21,000 system (no MT sales tax). Annual production: ~11,000 to 12,000 kWh. At 15.19¢/kWh retail NEM value: ~$1,650 to $1,800/year in bill savings. Property tax exemption adds ~$80/year for 10 years. Payback improves if utility rates rise (NWE rates up ~28% over prior 3 years).
Montana receives moderate solar irradiance, Billings averages ~5.0 peak sun hours/day; Missoula averages ~4.5. Eastern Montana has the state's best solar resource. Rural co-op customers should confirm their export compensation rate before estimating payback. Payback does not assume AERLP financing; financing costs reduce net benefit but make solar accessible with minimal upfront cash.
Sources & Verification
- Montana Code Annotated § 69-8-602, Net metering requirements for investor-owned utilities: leg.mt.gov
- Montana PSC 2026 Gas and Electric Rate Summary (January 2026), NWE residential rate $0.151864/kWh: psc.mt.gov
- Montana Code Annotated § 15-6-224, Property tax exemption for alternative energy systems, 10-year, $20,000 cap
- Montana DEQ AERLP Brochure 2026 to $40,000 max, 3.5% fixed, 10-year term, quarterly cycles: deq.mt.gov
- Montana Revenue Department, No state income tax credit for residential solar confirmed
- Section 25D, 26 U.S.C., Federal residential solar credit; expired Dec. 31, 2025 per IRA §13302
- Montana Department of Revenue, No general state sales tax (Montana is one of five states without a sales tax)