2023 Solar Incentives Guide for California, MD - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in California.
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 May 04, 2023
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What Solar Tax Credits, Incentives, and Rebates are Available in California?
Residential Clean Energy Rebate Program
SWH: $500/project (flat per installation/household incentive)
New GHC: $3,000/project
GHC Replacement: $500/project
Solar Renewable Energy Certificates (SRECs)
Sales and Use Tax Exemption for Residential Solar and Wind Electricity Sales
Property Tax Exemption for Solar and Wind Energy Systems
Clean-Burning Wood Stove Grant Program
Pellet Burning Stove: $700
Wood Heating Fuel Exemption
Local Option - Property Tax Credit for High Performance Buildings
Local Option - Property Tax Credit for Renewables and Energy Conservation Devices
Residential/Community Wind Grant Program
Community: $1000/kW - $4000/kW, depending on the system capacity
SMECO - Residential Energy Efficiency Rebate Program
Clothes Dryers: $50
Clothes Washer: $75 (Tier 2) - $100 (Tier 3)
Geothermal Heat Pump
Hybrid Heat Pump Water Heater: $500
LED Lighting: Up to $7/bulb
Ductless Mini Split Air-Source Heat Pump
Pool Pump: $400
Recycled Refrigerator/Freezer: $50
Recycled Dehumidifier: $25
Recycled Room A/C: $25
Smart Thermostat: $100
Federal Residential Renewable Energy Tax Credit
The term "solar incentives" broadly refers to financial incentives implemented by the government and by solar companies to encourage the adoption and use renewable energy by making the installation and use of solar panels more affordable. The incentives may include cash back, upfront discounts or monthly credits towards your utility bill. Some incentives are provided by the federal government, some by the Maryland government and some by your utility company, county or municipality. Types of solar incentives might include:
- Rebates: Rebates, or partial refunds after a purchase, are typically given before any solar tax credits are calculated. Solar rebates might be offered by your local utility company, by your state or by your county.
- Solar Renewable Energy Certificate (SREC): SRECs and other performance-based incentives may be available to you if you have a solar system that produces more than a specified (typically small) amount of electricity. Performance-based incentives are typically handled by the state government. You can sell any SRECs you have to your utility company or other buyers, and the money you receive in return is usually considered part of your taxable income.
- Tax Exemptions: Sales tax exemptions are effective at the point of sale for your solar system. Property tax exemptions allow you to ignore the value added by your solar system when you calculate how much property tax you need to pay on your house.
- Tax Credits: Different from tax deductions, tax credits reduce, dollar-for-dollar, the amount of income tax that you owe the government.
- Net Metering: Net metering factors in once your solar system is up and running. If you've signed a net metering agreement with your California 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 might receive a refund equivalent to a percentage of the value.
Federal Solar Incentives
Federal incentives are the type of incentives that you are most likely to have some knowledge of. A federal incentive many people are probably familiar with is the Federal Solar Investment Tax Credit (ITC). This is a tax credit for a specific percentage of your solar system's cost.
The ITC applies to the total cost of solar system installation, including the panels themselves as well as accessories, labor and equipment. This credit can be claimed for panels installed after January 1, 2006 on a primary or secondary residence that you own, as long as it 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 claim amount.
Your local California solar panel installation expert can provide you with more information about the ITC and how it may apply to your situation.
In August 2022, the Inflation Reduction Act made revisions to the ITC, now called the Clean Energy Credit. The new Clean Energy Credit extends until 2035. Homeowners can now receive a 30% credit for solar systems that began installation on or after January 1, 2022 and will be done by December 31, 2032. The credit will then see a slight annual decrease until the date of expiration. The expansion to the program also makes credits for energy storage systems even easier to claim, beginning in 2023.
Click here to learn more about the new Inflation Reduction Act. To understand how the new Clean Energy Credit might apply to you, talk to your local California solar installers.
State & Local Solar Incentives
Some solar incentives are often also provided at the state and local level. Similar to federal incentives, these could include tax credits, rebates and more. Incentives may be provided by the state of Maryland, or by your county or municipality. Certain incentives are available for only a limited time, while others are ongoing.
Next Steps for Installing Solar in California
The variety of solar incentives available has enormously increased the use of solar power nationwide over the past 15 years. You might qualify for solar incentives from your local utility company, the Maryland government or the federal government. Contact your local solar panel installation company today to learn more and to save as much money as possible on solar panels for your California home.
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EcoWatch's California, MD Solar Incentives FAQs
How do I know if I qualify for different solar incentives?
It's a smart idea to get in touch with your local California solar installer to get an understanding of which incentives your project will qualify for. In most cases, solar incentives apply to new solar panel systems installed on property you own (in the U.S.) within a specified date range. Some incentives, such as those provided by the Maryland government, may have additional requirements.
If I installed solar panels on my house a few years ago, can I still claim incentives?
You should plan to talk to someone from the company that installed your system — or call a local California solar installer — to learn about which incentives you may qualify for. If your solar panels were installed after January 1, 2022, you likely qualify for the recently increased 30% tax credit under the Inflation Reduction Act. Solar panels installed between 2006 and 2021 may qualify for a tax credit of 26-30%.
What are the highest-rated solar panel installation companies near me?
To find the right solar panel installer for you, check out our guide to the best solar companies in California.
Can I receive incentives both towards the initial cost of solar panels, and later as reimbursement?
Yes, you can claim both tax credits and rebates towards the cost of solar panels. Depending on precisely which incentives you are receiving, they may apply in a different order. Be sure to speak with your solar installer or a local tax professional to confirm that you are claiming incentives correctly and that you're getting the most money possible.
Can I use a combination of multiple types of renewable energy to power my home?
You can power your home with multiple types of renewable energy, or a combination of renewable and non-renewable energy. Be sure to talk through your plan with your local California solar installation expert. They can help you with the plan for your project and give you an understanding of various incentives that you may or may 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.