2025 Solar Incentives Guide for Downey, CA - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Downey.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2024 and beyond)
- Ways to optimize your solar investment
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What Solar Tax Credits, Incentives, and Rebates are Available in Downey?
Property Tax Exclusion for Solar Energy Systems and Solar Plus Storage System
Western Riverside Council of Governments - Home Energy Renovation Opportunity (HERO) Financing Program
Minimum financing: $5,000
The financing may not exceed fifteen percent (15%) of the market value of the property, up to the first seven hundred thousand dollars ($700,000) of the property’s market value, and ten percent (10%) of the remaining value of the Property above seven hundred thousand dollars ($700,000) minus any PACE assessment on the propertyThe total amount of any annual property taxes and assessments shall not exceed five percent (5%) of the property's fair market value, determined at the time program financing is approved.
Local Option - Municipal Energy Districts
Self-Generation Incentive Program
Incentives will step down over time. See below for incentive amounts.
Renewable Market Adjusting Tariff (ReMAT)
LADWP - Feed-in Tariff (FiT) Program
Base price will step down over time as certain MW goals are met
California Solar Initiative - Solar Thermal Program
Single Family Residential Incentives:
Systems that displace natural gas: $29.85 per estimated therm displaced
Systems that displace electricity or propane: Funding has been exhausted
Commercial/Multifamily Incentives:
Systems that displace natural gas: $20.19 per estimated therm displaced
Systems that displace electricity or propane: $0.42 per estimated kWh displaced *** Note, funding has been exhausted in this category for SCE and PG&E
Solar Pool heating: $5.00 per estimated therm displaced
Federal Residential Renewable Energy Tax Credit
Source: https://www.dsireusa.org/
Solar incentives are meant to encourage homeowners to switch their home over to renewable energy by offering incentives that lower the financial burden of solar panel installation and use. Different types of incentives, including discounts, cash back or credit towards your monthly utility bill, might be available to you. Some incentives may be offered by the California government, by your utility company or by county or municipality, while others are federal. Categories of solar incentives include:
- Solar Renewable Energy Certificate (SREC): Typically, solar systems that produce more than a predetermined (usually small) amount of electricity can qualify for SRECs or similar performance-based incentives. SRECs and the like are typically given by your state government. You can sell SRECs to your utility company or another buyer, and this is usually considered part of your taxable income.
- Net Metering: Make sure you talk with your Downey utility company about signing a net metering contract. This will allow you to receive credit towards your utility bill every month for the value of excess energy generated by your solar panels. You might receive either a dollar-for-dollar credit or a percentage of the value.
- Tax Credits: Tax credits are dollar-for-dollar reductions in the amount of income tax that you owe the federal government. (This is different from a tax deduction.)
- Rebates: Rebates, or partial refunds after a purchase, are typically given before any solar tax credits are calculated. These rebates might be offered by your local utility company, by your state or by your county.
- Tax Exemptions: Sales tax exemptions go into effect at the time of purchase for your solar panels. Property tax exemptions allow you to ignore the value added by your solar system when you calculate how much property tax you need to pay on your house.
Federal Solar Incentives
Federal incentives are the type of incentives that you are most likely to have heard of. The Federal Solar Investment Tax Credit, or ITC, is likely the most well-known federal solar incentive. The ITC provides a tax credit for a predetermined percentage of your solar system's cost.
The ITC initially applied to 30% of the cost of solar system installation, and has fluctuated slightly over the last few years between 26-30%. The percentage you qualify for will depend on when your solar system was installed. The total cost of installation includes the panels themselves as well as the cost of labor, equipment and accessories. There is no maximum claim amount. The ITC applies to solar systems installed after January 1, 2006, on your primary or secondary residence. The residence must be owned by you and in the United States.
Contacting your local Downey solar panel installer is the best way to understand how the ITC could apply to you.
The Inflation Reduction Act, passed in August 2022, made some changes to the ITC (as well as renaming it to the Clean Energy Credit). The Clean Energy Credit runs until 2035. Your solar installation project undertaken between 2022 and 2032 may qualify for a 30% tax credit. The amount will be decreased slightly each year until the current program ends. Starting in 2023, it will also be easier to get credits for energy storage systems under this new program.
More information about the new Inflation Reduction Act can be found here. The best way to learn more about how the new Clean Energy Credit might apply to you is to reach out to your local Downey solar panel company with your questions.
State & Local Solar Incentives
Tax credits, rebates and more can be claimed at multiple levels. In addition to federal solar incentives, there are often state and local ones, too. These incentives may be distributed by the California government, or by your county or municipality. Some incentives may be ongoing, while others are available for a limited time.
Next Steps for Installing Solar in Downey
You can apply for solar incentives from the federal government and the California government, as well as from your local utility company. Growing availability of solar initiatives over the last 15 years has helped greatly increase nationwide adoption of solar energy. If you're prepared to make the switch to solar energy, getting in touch with your local Downey solar panel installation expert is an excellent place to start.
EcoWatch's Downey, CA Solar Incentives FAQs
How much can I save on my electric bill annually if I install solar panels on my Downey home?
After adding solar panels to your home in Downey, you can anticipate savings of approximately $1,317.57 per year, or around $25,033.85 over the next 20 years.
What are some environmental benefits of adding solar panels to my home?
You can reduce your carbon footprint by 250 pounds of CO2 a year when you install solar panels. This adds up to roughly 5,000 pounds in 20 years. Solar is also a renewable energy source, which means that making the switch lessens the drain on our planet's resources.
How long until the federal solar tax credit ends?
The federal solar tax credit, formerly called the ITC and now called the Clean Energy Credit, is slated to end January 1, 2035. The current 30% credit will end in 2032, replaced by a 26% credit in 2033 and a 22% credit in 2034.
What if I am planning to add a solar system to a rental property, vacation home or commercial property? Do I still qualify for incentives?
While we recommend speaking with your local solar installer and/or tax professional to best understand what solar incentives apply to you, many will apply to a second home, so long as that home is in the United States and owned by you. There may be additional incentives available specifically for commercial properties, depending on the details.
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