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What Solar Tax Credits, Incentives, and Rebates are Available in Reston?
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 encourage people to make the switch to renewable energy by offering financial incentives that lower the burden of solar panel installation and use. Solar incentives can include upfront discounts, cash back or monthly credits towards your utility bill. Some incentives are provided by the federal government, some by the state of Virginia and some by your specific utility company, county or municipality. Some solar incentives you might qualify for are:
- Solar Renewable Energy Certificate (SREC): SRECs are credits that can be sold to your utility company (or other buyers) for cash that typically becomes part of your taxable income. Typically, you must meet a certain (small) threshold of energy production before your solar system can earn SRECs or other performance-based incentives. SRECs and similar incentives are typically handled at the state level.
- Net Metering: Net metering becomes relevant once your solar system is up and running. If you've signed a net metering agreement with your Reston utility company, they will subtract the value of the excess energy your solar system produces from your utility bill each month. 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.
- Tax Credits: Tax credits are dollar-for-dollar reductions in the amount of income tax that you owe the federal government. (This is different from a tax deduction.)
- Tax Exemptions: Sales tax exemptions go into effect at the point of sale for your solar system. Property tax exemptions let you ignore the value that your solar panels add when you calculate how much property tax you need to pay on your house.
- Rebates: A solar rebate is a partial refund given after you've purchased your solar panels. These may be offered by your local utility company, your state or your county. The rebates are usually applied before calculating tax credits.
Federal Solar Incentives
Federal solar incentives are probably the first thing that comes to mind when thinking about solar incentives. The Federal Solar Investment Tax Credit, or ITC, is likely the best-known federal solar incentive. The ITC provides you with a tax credit for a set percentage of the cost of your solar system.
The ITC can be applied to solar systems installed after January 1, 2006 and allows you to deduct from your taxes a percentage of the total cost of solar panels, equipment, accessories and labor. You can claim this credit for solar panels installed on a primary or secondary residence in the United States that you own. Originally, you could claim 30% of the total cost, although certain projects may qualify for only 26%, depending on the details. There is no maximum claim amount.
To more fully understand how the ITC might apply to you, call your local Reston solar panel installer and request more information.
The ITC was both renewed and expanded by the passage of the Inflation Reduction Act in August 2022. It's also now called the Clean Energy Credit. Homeowners can now receive a credit of 30% of the total solar system installation costs for projects started after January 1, 2022 and completed before the end of 2032. The credit percentage will then begin to decrease annually until the Clean Energy Credit ends in 2035. Starting in 2023, the expansion to the program will also make it easier to get credit for energy storage systems.
Click here to learn more about the new Inflation Reduction Act. Your local Reston solar panel company is the best resource for answering your questions regarding the new Clean Energy Credit and how it may apply to you.
State & Local Solar Incentives
Rebates, tax credits and more might be provided at multiple levels. Along with federal solar incentives, there are often state and local ones, too. These solar incentives — which might be handled by your county or municipality, or by the state of Virginia — may be offered for only a limited time, or on an ongoing basis.
Next Steps for Installing Solar in Reston
Nationwide solar energy use has increased enormously in the last 15 years, in part due to the proliferation of solar incentives. You may get these incentives from the federal government, the Virginia government or your local utility company. Reach out to your local solar panel installation expert today to find out more information and to save as much money as possible on solar panels for your Reston home.
EcoWatch's Reston, 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.