Rebates, Tax Credits, and Other Incentives for Installing Solar Energy Systems
Last updated December 2021
Here are the tax credits and other incentives we could identify in December 2021 for the Washington area. Keep in mind that at that time Congress was considering legislation that would improve the federal tax credit for residential solar projects. Check with your utility company and dsireusa.org for up-to-date info.
Note that if you lease, rather than buy, incentives usually go to the leasing company that installs and owns the panels on your roof, not you.
Federal tax credit: Uncle Sam will reimburse you 26 percent of what you paid for panels, equipment, storage devices, installation, and permits. The current credit is in place through 2022; in 2023, the credit is scheduled to decline to 22 percent, and then in 2024 it disappears for residential solar projects, if the program isn’t renewed.
Net metering: If your system produces electricity that you don’t use, it’s pushed onto the grid, your meter spins in reverse, and your utility pays you for it. Even if you produce a lot more electricity than you use, you won’t get rich as a solar-electricity generator. The District limits generating capacity to no more than 140 percent of the electricity you used in the previous 12 months; Maryland’s limit is 200 percent and Virginia’s is 150 percent. And you won’t necessarily get paid at the same rates at which you’d buy electricity: If you are signed up on a time-of-use (TOU) rate plan, you’ll get charged higher rates during peak times, but solar-energy producers often get paid at non-peak rates. Finally, if you’ve built up a credit by the end of your annual billing period, utilities pay you for that at the “generation rate,” “commodity energy supply rate,” or “avoided cost rates,” which are far lower than the full retail rate you pay when you buy electricity.
District of Columbia Incentives
Solar Renewable Energy Certificates (SRECs): PEPCO currently pays about $385 per megawatt hour of electricity your system produces in a year, which is a very generous green benefit.
Rebates: Up to $10,000 for eligible low-income residents who have 3kW to 4kW systems installed on their homes by an approved contractor. Available until funding is exhausted on a paid first-come-first-served basis.
Property tax exemption: Any increase in your home’s value as a result of installing solar panels is exempt from property taxes.
Rebates: The Residential Clean Energy Rebate Program pays $1,000 for qualified home solar energy systems.
Tax Credit: The Maryland Energy Storage Income Tax Credit Program provides a tax credit equal to 30 percent of the cost of a new home energy storage system up to $5,000.
Solar Renewable Energy Certificates (SRECs): PEPCO currently pays about $77 per megawatt hour of electricity your system produces in a year. Unless laws are changed, that rate will be reduced periodically beginning in 2022; by 2030 and beyond it might be $22.50 or lower.
Property tax exemption: Any increase in your home’s value as a result of installing solar panels is exempt from property taxes. Prince George’s County also offers a juicy property tax credit equal to 50 percent of the cost of a new system, up to $5,000, but there’s a catch: Because of annual funding caps, homeowners who apply for this popular credit in 2021 won’t be able to actually collect their benefit until 2029; and if you sell the property or otherwise transfer the title out of your name before then, the credit becomes void.
State sales tax exemption: You won’t pay sales tax on your system.
Property tax exemption: State law allows municipalities to exempt residential systems from taxation but doesn’t require them to do so. Check with your local assessor or city/county administrator.