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. Note that if you lease rather than buy a system, incentives usually go to the leasing company, not you.

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 over the course of a year few solar energy systems in this area produce more total electricity than needed by their houses.

District of Columbia incentives:

  • Rebates: D.C. offers a rebate with the amount tied to the size of the system. It will reimburse installers of residential solar energy systems up to $10,000 at a rate of $2.50 per watt. To qualify, however, you have to meet the income requirement: A family of four must earn less than $60,245 per year. Rebates are paid first come, first served until the $2 million in the fund is gone.
  • Solar Renewable Energy Certificates (SRECs): PEPCO currently pays about $480 per megawatt hour of electricity your system actually produces in a year. Payments will step down to $350 in 2017 and then decline every year until 2023, when they’ll be $50, and disappear after 2023.
  • Property tax exemption: Any increase in your home’s value as a result of installing solar panels is exempt from property taxes.

Maryland incentives:

  • Rebates: The state pays a flat $1,000 rebate for residential solar energy systems sized at less than 20 kilowatts (nearly all of them).
  • Solar Renewable Energy Certificates (SRECs): PEPCO currently pays about $170 per megawatt hour of electricity your system produces in a year. Payments will step down each year after 2016 and level off at $50 in 2023.
  • Property tax exemption: Any increase in your home’s value as a result of installing solar panels is exempt from property taxes.
  • State sales tax exemption: You won’t pay sales tax on your system.

Virginia incentives:

  • Performance payments: Dominion Power’s Solar Purchase Program, which replaces net metering if you sign up, will pay $.15 for every kilowatt-hour your system generates, while you pay Dominion the regular retail rate for all the power your house uses. In other words, you sell your solar power to Dominion while continuing to buy electricity from the utility. It’s a decent deal as long as the regular retail rate is below $.15 (as of early 2016, it was about $.12). The program runs through 2018 and is subject to annual renewals after that. Note: The retail cost of electricity is likely to exceed $.15 by 2020 or 2021, so you’ll have to watch for increases to your payment in future years.
  • Property tax exemption: State law allows municipalities to exempt residential systems from taxation but doesn’t require them to do so. Check with your assessor.