2023 Solar Incentives Guide for Dranesville, VA - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Dranesville.
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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What Solar Tax Credits, Incentives, and Rebates are Available in Dranesville?
Income Tax Deduction for Energy-Efficient Products
Local Option- Renewable Energy Machinery and Tools Property Tax Exemption
Local Option - Residential Property Tax Exemption for Solar
Federal Residential Renewable Energy Tax Credit
Solar incentives are designed to mitigate the cost of installing a solar panel system on your home. Financial incentives like these are in place to encourage more homeowners to convert their home partially or fully to renewable energy. Incentives may include things like discounts, cash back or monthly utility bill credits. Some incentives are offered federally, while others are handled by the state of Virginia or your utility company, county or municipality. Categories of solar incentives include:
- Rebates: Solar rebates can be provided by your local utility company, or by your county or state. These rebates are essentially partial refunds that are applied after you pay for a solar system and before tax credits are calculated.
- Tax Exemptions: Your solar panel system might qualify for both sales tax and property tax exemptions. Sales tax exemptions come into effect at the time of purchase. Property tax exemptions allow you to ignore the added value of the solar panels when you are calculating property taxes on your house.
- Tax Credits: These credits are dollar-for-dollar reductions (not deductions) in how much in taxes you owe the federal government.
- Solar Renewable Energy Certificate (SREC): SRECs and similar performance-based incentives may be available to you if you have a solar system that produces more than a specified (usually small) amount of electricity. This category of incentives is generally handled by the state government. You can sell your SRECs to your utility company or other buyers, and the money you make is normally considered part of your taxable income.
- Net Metering: Be sure to talk with your Dranesville utility company about signing a net metering agreement. This will allow you to receive credit towards your utility bill every month for the value of excess energy generated by your solar panels. You could receive either a dollar-for-dollar credit or a percentage of the value.
Federal Solar Incentives
Federal incentives are the type of incentives that you are most likely to have heard of. The solar incentive that you're most familiar with is probably the Federal Solar Investment Tax Credit (ITC), which provides a credit on your taxes equal to a specified percentage of the cost of your solar system.
The ITC can be credited towards the value of solar panels installed on your primary or secondary residence in the United States. The solar panels have to have been installed on a property you own after January 1, 2006 for you to claim the credit. Initially, the ITC applied to 30% of all system costs (panels, equipment, accessories and labor), although the amount has fluctuated slightly over the last few years between 26-30%. The amount you qualify for will depend on when your solar system was installed. There is no cap on the amount you can claim.
To better understand how the ITC might apply to your situation, contact your local Dranesville solar panel installer and request more information.
In August 2022, the Inflation Reduction Act laid out new provisions for the ITC, now called the Clean Energy Credit. The Clean Energy Credit re-raises the credit up to 30% for solar installations undertaken between January 1, 2022 and December 31, 2032. After 2032, the percentage will decrease slightly each year until the program expires in 2035. The expansion also makes claiming credit for energy storage systems easier than ever before, beginning in 2023.
More information about the new Inflation Reduction Act can be found here. The best way to understand how the new Clean Energy Credit applies to you is to reach out to your local Dranesville solar panel installation expert with your questions.
State & Local Solar Incentives
Some solar incentives are often also offered at the local or state level. As with federal incentives, these could include rebates, tax credits and more. Some incentives are offered for only a limited time, while others are ongoing. Your local solar incentives could come from the Virginia government, or from your specific county or municipality.
Next Steps for Installing Solar in Dranesville
There are many kinds of solar incentives: those offered by local utility companies, those offered by the Virginia 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. When you're prepared to make the change to solar energy, talking to your local Dranesville solar panel installation expert is an excellent place to start.
EcoWatch's Dranesville, VA Solar Incentives FAQs
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.