What Rebates, Tax Credits, and Incentives Are Available for Solar Energy Systems?
Last updated in April 2016
Below are the tax credits and other incentives we could identify at the time of publication. Check www.dsireusa.org for an up-to-date list.
Federal tax credit: Uncle Sam will let you deduct 30 percent of what you paid for panels, equipment, installation, and permits from your tax bill. The current credit is in place through 2019; in 2020, the credit declines to 26 percent; then 22 percent in 2021; from 2022 on, it stabilizes at 10 percent. For more details on how to compute the credit, see the IRS's Q&A on Tax Credits for Sections 25C and 25D.
Net metering: When your solar energy system produces electricity you don’t use, it’s pushed onto the grid, and your utility pays you for it in the form of a credit against the electricity you’ll buy when you need more power than your panels can produce. Keep in mind, however, that few solar energy systems in this area over the course of a year produce more total electricity than needed by their houses.
Rebates: Homeowners served by the Snohomish County Public Utility District can receive a rebate against the installed price of a solar energy system totaling $300 per kilowatt, up to a maximum of $2,000.
Performance payments: They’re part of a statewide effort called the Renewable Energy Cost Recovery Incentive Payment Program. It pays a base rate of $.15 for every kilowatt-hour your system produces, up to a maximum of $5,000. However, bigger payments are available if your system relies on equipment made in the state. For panels made in Washington, the state will pay $.36 per kilowatt-hour; for an inverter, $.18—a total of $.54 per kilowatt-hour if both products are made in-state. Keep in mind, however, that equipment made in Washington is likely to be more expensive than panels and inverters made elsewhere. In addition, the state will reach a mandated cap in mid-2016, at which point incentive payments for locally made products will decline between 20 percent and 30 percent, depending on the utility.
Sales tax exemption: 100 percent exemption for solar energy systems producing up to 10 kilowatts (by far the majority of residential installations).