2025 Solar Incentives Guide for Washington, DC - Tax Credits & Rebates

What Solar Tax Credits, Incentives, and Rebates are Available in Washington?

Source: https://www.dsireusa.org/

The term "solar incentives" refers to a range of financial incentives implemented to make installing and using solar panels more affordable. This is done to encourage people to switch to renewable energy. Various kinds of incentives, including cash back, discounts or credit towards your monthly utility bill, may be available to you. Certain incentives may be offered by the District of Columbia government, by your utility company or by county or municipality, while other incentives are federal. Some broad categories of solar incentives include:

• Tax Credits: Tax credits reduce, dollar-for-dollar, the amount of income tax you owe the government. These differ from tax deductions.
• Net Metering: Net metering becomes relevant after your solar system is up and running. If you have a net metering agreement in place with your Washington utility company, the company will subtract the value of the excess energy your solar system produces from your monthly utility bill. In some locations, this credit is dollar-for-dollar, while in others you might make back a percentage of the value.
• 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 house. You may also qualify for an exemption on sales tax at the time of purchase.
• Rebates: Some solar companies will help you claim a rebate, or partial refund of your purchase, for your solar panels. States or counties will also sometimes offer limited-time rebates. If you receive a rebate, that amount will usually come off the total price before tax credits are calculated.
• Solar Renewable Energy Certificate (SREC): SRECs can be sold to your utility company (or other buyers) for cash that is generally considered part of your taxable income. In most cases, a certain (small) threshold of energy production must be met before your solar system qualifies for SRECs or similar performance-based incentives. SRECs and similar incentives are normally handled by your state government.

Federal Solar Incentives

Federal incentives are the kind of incentives that you are most likely to have some familiarity with. A federal incentive that most people are likely to be familiar with is the Federal Solar Investment Tax Credit (ITC). This incentive is a tax credit for a given percentage of your solar system's cost.

The ITC can be applied to solar systems installed after January 1, 2006, on a primary or secondary residence in the United States that you own. The credit initially covered 30% of the total cost – for panels, labor, accessories and equipment – although it may range from 26-30%, depending on when your solar project was undertaken. There is no cap on the amount you can claim.

Have questions about how the ITC applies to your specific situation? Contact your local Washington solar panel installer to get more information.

In August 2022, the ITC (now called the Clean Energy Credit) was expanded and extended by the passage of the Inflation Reduction Act. The Clean Energy Credit bolsters the current credit, increasing it up to 30% for solar installations undertaken between January 1, 2022, and December 31, 2032. After 2032, the credit percentage will see a slight decrease annually until the program expires in 2035. Beginning in 2023, it will also be easier to qualify for credits for energy storage systems with the new act.

More information about the new Inflation Reduction Act can be found here. Your local Washington solar panel installation expert is the best person to answer your questions regarding the new Clean Energy Credit and how it may apply to you.

State & Local Solar Incentives

There are more than just federal solar incentives; tax credits, rebates and more may be offered at the local or state level. Some incentives are ongoing, while others are offered for only a limited time. Your local incentives may come from your county or municipality, or from the District of Columbia government.

Next Steps for Installing Solar in Washington

There are a variety of solar incentives: those offered by local utility companies, those offered by the federal government and those offered by the District of Columbia government, to name a few. Solar energy utilization has grown enormously in the last 15 years, partially due to these incentives. Your local Washington solar panel installation expert can give you more information about which incentives you should apply for, and get you feeling good about making the change to renewable energy today.