2025 Solar Incentives Guide for California, MD - Tax Credits & Rebates

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

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

Solar incentives help mitigate the cost of installing a solar panel system on your home. These financial incentives are intended to encourage more people to make the switch to renewable energy. You may be eligible for different types of incentives, including discounts, cash back or credit towards your monthly utility bill, depending on your situation. Certain incentives come from your specific utility company, county or municipality, some from the state of Maryland and others from the federal government. You might qualify for any of the following types of solar incentives:

• Rebates: Rebates, or partial refunds after a purchase, are usually given prior to any solar tax credits being calculated. These rebates may be given by your local utility company, by your state or by your county.
• Net Metering: Net metering factors in once your solar panels are 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 utility bill each month. In some places, this credit is dollar-for-dollar, while in other places you might make back a percentage of the value.
• Tax Credits: Tax credits lower, dollar-for-dollar, the total amount of tax you owe the government. Tax credits differ from tax deductions.
• Tax Exemptions: Tax exemptions can come in two forms. The first is sales tax exemption, applied at the time you purchase your solar panels. The second is property tax exemption. This allows you to ignore the value added by your solar system when paying property tax on your home.
• Solar Renewable Energy Certificate (SREC): SRECs and other performance-based incentives might be available to you if the solar system on your home produces more than a specified (typically small) amount of electricity. This category of incentives is typically handled at the state level. You can sell the SRECs you receive to your utility company or other buyers, and the money you receive in return is generally considered part of your taxable income.

Federal Solar Incentives

Federal solar incentives are likely the first thing that comes to mind when you think about solar incentives. You've likely heard of the Federal Solar Investment Tax Credit, or ITC. This is a tax credit equal to a certain percentage of the money you spend on solar panels for your home.

The ITC can be applied to solar systems installed after January 1, 2006, and lets you deduct from your taxes a percentage of the total cost of solar panels, equipment, labor and accessories. This credit can be claimed on a solar panel system installed on a primary or secondary residence in the United States that you own. 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.

Contacting your local California solar panel installation expert is the best way to understand how the ITC could apply to you.

The Inflation Reduction Act, passed in August 2022, made some changes to the ITC (as well as retitling it the Clean Energy Credit). For solar system installations that begin after January 1, 2022, and are completed by the end of 2032, homeowners may be eligible 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 expansion also makes it easier to get credit for energy storage systems, starting in 2023.

More information about the new Inflation Reduction Act can be found here. The easiest way to learn more about how the new Clean Energy Credit will apply to you is to get in touch with your local California solar panel installers.

State & Local Solar Incentives

Some solar incentives are often also provided by state and local governments. Like with federal incentives, these could include tax credits, rebates and more. These incentives may be distributed by the Maryland government, or by your county or municipality. Some are available for a limited time, while others are ongoing.

Next Steps for Installing Solar in California

The nationwide use of solar energy has gone up tremendously in the last 15 years, in part thanks to the growth in the number of solar incentives. You can obtain these incentives from the federal government, the Maryland government or your local utility company. We recommend talking to your local California solar installation expert for more information about these incentives and to make sure that you're getting all the money you can for your solar panels.