2023 Solar Incentives Guide for Washington, DC - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Washington.
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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Updated March 14, 2023
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What Solar Tax Credits, Incentives, and Rebates are Available in Washington?
Solar Renewable Energy Credits
Solar Energy System and Cogeneration System Personal Property Tax Credit
Federal Residential Renewable Energy Tax Credit
Source: https://www.dsireusa.org/
Solar incentives are designed to make renewable energy usage more affordable through financial incentives for those who install solar panels on their homes. You may be eligible for different types of incentives, including discounts, cash back or monthly utility bill credits, depending on your situation. Certain incentives come from your specific utility company, county or municipality, some from the District of Columbia government and others from the federal government. Types of solar incentives might include:
- Tax Exemptions: Sales tax exemptions are applied at the point of sale for your solar panels. Property tax exemptions let you ignore the value added by your solar system when you calculate the amount of property tax you need to pay on your house.
- Tax Credits: These credits are dollar-for-dollar reductions (not deductions) in how much income tax you owe the federal government.
- Net Metering: Net metering becomes relevant once your solar panels are up and running. If you've signed a net metering agreement 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 receive a refund equivalent to a percentage of the value.
- Solar Renewable Energy Certificate (SREC): Typically, solar systems that produce over a specific (normally small) amount of electricity can qualify for SRECs or other similar performance-based incentives. SRECs and performance-based incentives in general are typically given by your state government. You can sell SRECs to your utility company or another buyer, and generally the money you make is normally considered part of your taxable income.
- Rebates: A rebate is a partial refund given after you've purchased your solar panels. These might be offered by your local utility company, your state or your county. The rebates are usually applied before tax credits are calculated.
Federal Solar Incentives
Federal solar incentives are likely the first thing that you think of when thinking about solar incentives. An incentive that most people are likely familiar with is the Federal Solar Investment Tax Credit (ITC). This incentive is a tax credit for a given percentage of the cost of your solar system.
The ITC is applied to the total cost of solar system installation, 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 that you own and that is located in the United States. 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.
Your local Washington solar panel installation expert can give you more information about the ITC and how it might apply to your situation.
In August 2022, the Inflation Reduction Act expanded and extended the ITC, now dubbed the Clean Energy Credit. For solar systems installed between January 1, 2022 and December 31, 2032, homeowners can apply for a credit for 30% of the total cost. This percentage will decrease annually after 2032 until the Clean Energy Credit expires in 2035. The program expansion also makes claiming credit for energy storage systems easier than ever before, beginning in 2023.
Click here to learn more about the new Inflation Reduction Act. The best way to fully understand how the new Clean Energy Credit applies to you is to reach out to your local Washington solar panel installers with your questions.
State & Local Solar Incentives
Rebates, tax credits and more might be claimed at multiple levels. In addition to federal solar incentives, there are often state and local ones, too. Incentives may be provided by your county or municipality, or by the state of District of Columbia. Some incentives are available for only a limited time, while others are ongoing.
Next Steps for Installing Solar in Washington
There are a number of different solar incentives: those offered by local utility companies, those offered by the District of Columbia government and those offered by the federal government, to name a few. The use of solar energy has increased enormously in the last 15 years, partially thanks to these incentives. We suggest talking to your local Washington solar installation expert for more information about these incentives and to be sure that you're getting the largest number possible for your solar system.
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EcoWatch's Washington, DC Solar Incentives FAQs
How do I know if I qualify for specific solar incentives?
It's a smart idea to get in touch with your local Washington solar installer to get an understanding of which incentives your project may qualify for. Generally, solar incentives apply to new solar panel systems installed on a property you own (in the U.S.) between the dates specified by the incentive. Some incentives, like those provided at the level of the District of Columbia government, might have other requirements.
What are the top solar panel installation companies near me?
To find a top-rated solar panel installer, check out our guide to the best solar companies in Washington.
When does the federal solar tax credit end?
The Clean Energy Credit (formerly named the federal solar tax credit, or the ITC), is scheduled to end on January 1, 2035. Currently set at 30%, the credit will drop to 26% in 2033 and to 22% in 2034.
Can I qualify for incentives both towards the up-front cost of solar panels, and later as reimbursement?
Yes, you can receive both tax credits and rebates towards the cost of solar panels. Depending on which incentives you are receiving, they may apply in a different order. Make sure that you speak with your solar installer or a local tax professional to verify that you are claiming the correct incentives and that you're getting the most money you can.
Can I use both solar and another type of renewable energy to power my home?
You can use multiple types of renewable energy, or a combination of renewable and non-renewable energy, to power your home. Be sure to talk through your ideas with your local Washington solar installation expert. They can help you as you plan for your project and educate you on the various incentives that you might or might not qualify for.
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.