2023 Solar Incentives Guide for Sacramento, CA - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Sacramento.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2023 and beyond)
- Ways to optimize your solar investment
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What Solar Tax Credits, Incentives, and Rebates are Available in Sacramento?
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
SMUD - PV Residential Retrofit Buy-Down
Federal Residential Renewable Energy Tax Credit
Solar incentives are meant to help mitigate the cost of installing solar panels on your home. These financial incentives are intended to encourage more people to make the switch to renewable energy. You might be eligible for various kinds of incentives, such as discounts, cash back or monthly utility bill credits, depending on your situation. Some incentives come from your specific utility company, county or municipality, some from the state of California and others from the federal government. Some broad categories of solar incentives include:
- Rebates: Solar rebates might be provided by your local utility company, or by your county or state. These rebates work as partial refunds that are applied after you purchase solar panels and before tax credits are calculated.
- Tax Credits: Tax credits lower, dollar-for-dollar, how much income tax you owe the federal government. Tax credits differ from tax deductions.
- Solar Renewable Energy Certificate (SREC): SRECs and other performance-based incentives are generally handled by your state government. Once your solar system meets the qualification threshold (normally a small amount of energy production), you are eligible to receive SRECs that can then be sold to your utility company or other buyers. The money you receive from the sale is generally considered part of your taxable income.
- Tax Exemptions: These can come in the form of property tax exemptions, which let you exclude the value added by your solar panels when paying property tax on your house. They may also include exemptions on sales tax at the time of purchase.
- Net Metering: Net metering factors in once your solar system is up and running. If you have a net metering agreement with your Sacramento utility company, the company will subtract the value of the excess energy your solar system produces from your utility bill each month. In some places, this credit is dollar-for-dollar, while in other areas you might receive a refund equivalent to a percentage of the value.
Federal Solar Incentives
When thinking about solar incentives, you probably think of federal incentives first. One of the incentives that most people are probably familiar with is the Federal Solar Investment Tax Credit (ITC). The ITC is a tax credit for a specific percentage of your solar system's cost.
The ITC covers solar systems installed after January 1, 2006 and under this program you can deduct from your taxes a percentage of the total cost of solar panels, accessories, labor and equipment. You can receive this credit for solar panels installed on a primary or secondary residence that you own in the United States. The original claim amount was 30% of the total cost, although the amount you can claim may range between 26-30%. There is no maximum amount you can claim.
To know exactly how much money the ITC could save you, get in touch with your local Sacramento solar panel installer.
In August 2022, the Inflation Reduction Act laid out new provisions for the ITC, now dubbed the Clean Energy Credit. The Clean Energy Credit is valid until 2035. Any solar installation project that is completed between January 1, 2022 and December 31, 2032 may qualify for a 30% tax credit. The amount will be decreased slightly each year until the current program ends. Beginning in 2023, it will also be easier to claim credits for energy storage systems under this new program.
Click here to learn more about the new Inflation Reduction Act. Your local Sacramento solar panel company can answer your questions and explain how the new Clean Energy Credit may apply to you.
State & Local Solar Incentives
Tax credits, rebates and more can be provided at multiple levels. Along with federal solar incentives, there are often state and local ones, too. Some incentives are ongoing, while others are available for a limited time. Solar incentives may be provided by your county or municipality, or by the California government.
Next Steps for Installing Solar in Sacramento
The nationwide use of solar energy has increased enormously in the last 15 years, in part due to the increase in availability of solar incentives. You can obtain these incentives from your local utility company, the California government or the federal government. Reaching out to your local Sacramento solar panel installation expert is a great first step towards making sure you get all the incentives you qualify for when you switch to solar energy.
EcoWatch's Sacramento, CA Solar Incentives FAQs
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