2023 Solar Incentives Guide for Los Gatos, CA - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Los Gatos.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2023 and beyond)
- Ways to optimize your solar investment
Solar installers are experts in maximizing your solar tax credits and rebates.
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By EcoWatch Local Advisors
Data Analysis: James Savino
Ranking Methodology: Karsten Neumeister
Updated March 14, 2023
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What Solar Tax Credits, Incentives, and Rebates are Available in Los Gatos?
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 property The 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
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
City of Palo Alto Utilities - Solar Water Heating Program
Single-family residential electricity or propane-displacing systems: $0.54 per kWh displaced
Multifamily and Commercial gas-displacing systems: $14.53 per therm displaced
Multifamily and Commercial electricity or propane-displacing systems: $0.42 per kWh displaced
Low-Income Multifamily gas-displacing systems: $19.23/therm displaced
Low-Income Multifamily Electric or Propane Displacing systems: $0.56/kWh displaced
Federal Residential Renewable Energy Tax Credit
The phrase "solar incentives" refers broadly to financial incentives put in place by solar companies and the government to encourage the use of renewable energy by making the installation and use of solar panels more affordable. Incentives could include things like discounts, cash back or credit on your utility bill each month. Some incentives are offered by the federal government, while others are handled by the California government or by your utility company, county or municipality. You might qualify for any of the following types of solar incentives:
- Tax Exemptions: These might come in the form of property tax exemptions, which would allow you to exclude the value added by your solar panels when calculating the taxes you pay on your home. They may also include exemptions on sales tax at the time of purchase.
- Tax Credits: Tax credits are dollar-for-dollar reductions that lower the amount of income tax you owe the government. (A tax credit is different from a tax deduction.)
- Net Metering: Don't forget to speak to your Los Gatos utility company about signing a net metering contract. This allows you to get a credit towards your utility bill every month for the value of excess energy your solar panels generate. You might receive either a dollar-for-dollar credit or a percentage of the value.
- Rebates: Rebates, or partial refunds after a purchase, are usually given prior to any solar tax credits being calculated. Rebates might be provided by your local utility company, by your state or by your county.
- Solar Renewable Energy Certificate (SREC): SRECs can be sold to your utility company (or other buyers) for money that normally counts as part of your taxable income. In most cases, there is a small threshold of energy production to meet before your solar system is eligible for SRECs or other performance-based incentives. SRECs and similar incentives are normally handled by your state government.
Federal Solar Incentives
When someone says "solar incentives," you likely think of federal incentives first. The Federal Solar Investment Tax Credit, or ITC, is probably the best-known federal solar incentive. The ITC allows you to claim a tax credit for a set percentage of the cost of your solar system.
The ITC applies to the total cost of installing a solar system, including the panels themselves as well as accessories, equipment and labor. This credit can be claimed for panels installed after January 1, 2006 on a primary or secondary residence located in the United States that you own. Originally set at 30% of total costs, the credit has fluctuated over time, and you may qualify for different amounts depending on when your project was completed. There is no maximum amount you can claim.
Reaching out to your local Los Gatos solar panel installation expert is the best way to understand how the ITC may apply to your situation.
The Inflation Reduction Act, passed in August 2022, expanded and extended the ITC (as well as retitling it the Clean Energy Credit). Homeowners are now eligible for a credit of 30% of the total costs of solar system installation for projects started after January 1, 2022 and completed before the end of 2032. This percentage will then decrease annually until the Clean Energy Credit ends in 2035. Beginning 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. To better understand how the new Clean Energy Credit applies to you, speak with your local Los Gatos solar installation expert.
State & Local Solar Incentives
Some solar incentives are often also provided by state and local governments. Like with federal incentives, these might include rebates, tax credits and more. Incentives might be offered by the state of California, or by your county or municipality. Some incentives may be available for only a limited time, while others are ongoing.
Next Steps for Installing Solar in Los Gatos
The variety of available solar incentives has helped tremendously increase the nationwide adoption of solar energy over the last 15 years. You might qualify for solar incentives from the California government, the federal government or your local utility company. Your local Los Gatos solar panel installation company can provide you with more details about which incentives you can apply for, and get you feeling good about making the change to renewable energy today.
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EcoWatch's Los Gatos, CA Solar Incentives FAQs
Can I claim incentives for adding solar panels to a vacation home, rental property or commercial property?
Many solar incentives are intended to apply to a property located within the United States that you own; most secondary residences will fall into this category. There may be other solar incentives available for commercial properties, depending on the details. We recommend getting in touch with your local solar installer and/or tax professional to better understand what incentives will apply to your specific situation.
If I already have a solar system installed on my house, can I still claim incentives?
If your solar system was installed after January 1, 2022, you may qualify for the newly increased 30% tax credit under the Inflation Reduction Act. If your system was installed between 2006 and 2021, you may qualify for a tax credit between 26% and 30%, depending on the date of installation. Speaking with a representative from the company that installed your system, or any local Los Gatos solar installer, can help you learn what incentives you might want to apply for.
What are some environmental benefits of installing solar panels on my house?
You can decrease 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 switching your home over reduces the drain on our planet's resources.
If I change out my appliances for ones that use solar energy, are there incentives I can claim?
Under the new Inflation Reduction Act, there are several new financial incentives to encourage you to make eco-friendly improvements to your home. More details regarding these incentives, including information about incentives for purchasing new appliances, can be found here.
Can I receive incentives both towards the up-front cost of solar panels, and later as reimbursement?
The order in which incentives are applied may vary depending on which incentives you are eligible for but typically yes, you can claim multiple types of incentives for your solar project. Speak to your solar installer or a local tax professional to verify you are claiming all the incentives you are eligible for and applying them in the correct order.
Our goal is to reach as many people as we can with sensible solutions like solar energy. Our team of full-time local researchers collects solar price and installation data for every city in America then compiles it to create these digestible city guides. If you want to read our solar expert's opinion on the top solar companies featured here, follow this link.
Solar incentive research was conducted by Melissa Smith and Karsten Neumeister. Local data analysis was conducted by James Savino. See something we missed or could do better? Email the editor.