2023 Solar Incentives Guide for Washington, IL - Tax Credits & Rebates

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

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

Solar incentives are meant to encourage homeowners to switch their home over to renewable energy by providing incentives meant to lower the financial burden of solar panel installation and use. You might qualify for various types of incentives, such as cash back, discounts or credit towards your monthly utility bill, depending on your situation. Some incentives come from your specific utility company, county or municipality, some from the state of Illinois and others from the federal government. Types of solar incentives might include:

• Rebates: Solar rebates can be provided by your local utility company, or by your state or county. These rebates work as partial refunds that are applied after your purchase of solar panels and before tax credits are calculated.
• Solar Renewable Energy Certificate (SREC): SRECs can be sold to your utility company (or other buyers) for cash that typically becomes part of your taxable income. Typically, there is a small threshold of energy production to meet before your solar system is eligible for SRECs or other performance-based incentives. These kinds of incentives are normally handled by your state government.
• Net Metering: Net metering factors in after 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 places, this is a dollar-for-dollar credit, while in other places you may be refunded a percentage of the value.
• Tax Credits: Tax credits are dollar-for-dollar reductions (not deductions) in how much income tax you owe the government.
• Tax Exemptions: Tax exemptions can come in one of two forms. First, there is sales tax exemption, which is applied at the time you purchase your solar panels. The second is property tax exemption, which allows you to ignore the added value of your solar system when paying property tax on your home.

Federal Solar Incentives

When thinking about solar incentives, you likely think of federal incentives first. A federal incentive many people are probably familiar with is the Federal Solar Investment Tax Credit (ITC). This incentive is a tax credit for a predetermined percentage of your solar system's cost.

The ITC initially applied to 30% of the total cost of installing solar panels, although that number has fluctuated slightly over time between 26-30%. The installation date of your solar system will determine what percentage you qualify for. The total installation cost includes the panels themselves as well as the cost of labor, equipment and accessories. There is no maximum amount you can claim. 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.

To more fully understand how the ITC might apply to you, contact your local Washington solar panel installation expert and request more information.

The Inflation Reduction Act, passed in August 2022, expanded and extended the ITC (as well as renaming it to the Clean Energy Credit). The new Clean Energy Credit extends until 2035. Homeowners are now eligible for a 30% credit for solar systems that began installation on or after January 1, 2022 and will be done by December 31, 2032. The total credit will then be decreased by a few percentage points every year until it expires. The expansion to the program also makes it easier to get credit for energy storage systems, beginning in 2023.

More information about the new Inflation Reduction Act can be found here. The easiest way to understand how the new Clean Energy Credit applies to you is to talk with your local Washington solar panel installers.

State & Local Solar Incentives

There are often state solar incentives available in addition to federal ones. Tax credits, rebates and more might be available at a more local level. Incentives may be handled by your county or municipality, or by the state of Illinois. Some incentives may be available for only a limited time, while others are ongoing.

Next Steps for Installing Solar in Washington

Solar incentives can be provided by your local utility company, the federal government or the Illinois government. The variety of available solar incentives has contributed to a large increase in solar energy use in the last 15 years. When you're prepared to switch over to solar energy, talking to your local Washington solar panel installation expert is a great first step.