2024 Solar Incentives Guide for Federal Way, WA - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Federal Way.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2024 and beyond)
- Ways to optimize your solar investment
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What Solar Tax Credits, Incentives, and Rebates are Available in Federal Way?
Renewable Energy Cost Recovery Incentive Payment
Renewable Energy Sales and Use Tax Exemption
100% exemption for solar photovoltaic systems 10 kilowatts or less, and solar thermal systems;
75% exemption for other qualified systems
Evergreen Sustainable Development Standard for Affordable Housing
Federal Residential Renewable Energy Tax Credit
Source: https://www.dsireusa.org/
Solar incentives are meant to help mitigate the cost of installing solar panels on your home. These financial incentives are in place to encourage more people to switch to renewable energy. Solar incentives can include cash back, upfront discounts or credit towards your monthly utility bill. Some incentives are offered by the federal government, some by the Washington government and some by your specific utility company, county or municipality. Some broad categories of solar incentives include:
- Tax Exemptions: Sales tax exemptions are applied at the point of sale for your solar panels. Property tax exemptions allow you to ignore the added value of your solar system when calculating how much property tax you need to pay on your home.
- Tax Credits: Unlike tax deductions, tax credits reduce, dollar-for-dollar, the amount of income tax that you owe the federal government.
- Net Metering: You may be able to sign a net metering agreement with your Federal Way utility company, that may apply to all or a percentage of the excess electricity your solar panels generate. They will then subtract this value from your utility bill each month.
- Rebates: Your solar installer might help you claim a rebate, or partial refund after purchase, for your solar system. Counties or states will also offer limited-time rebates at various times. The value of a rebate will usually be deducted from the total price before tax credits are calculated.
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Federal Solar Incentives
When someone says "solar incentives," you likely think of federal incentives first. The Federal Solar Investment Tax Credit, or ITC, is probably the most commonly known federal solar incentive. The ITC provides a tax credit for a predetermined percentage of the cost of your solar system.
The ITC can be applied to solar panels installed after January 1, 2006, on a primary or secondary residence in the United States that you own. Originally, the tax credit was for 30% of the total cost – for panels, accessories, equipment and labor – although it may range from 26-30%, depending on when your solar system was installed. There is no cap on the claim amount.
Speaking with your local Federal Way solar panel installer is the best way to understand how the ITC applies to your situation.
The Inflation Reduction Act, passed in August 2022, added more provisions to the ITC (as well as renaming it to the Clean Energy Credit). Homeowners can now qualify for a credit equal to 30% of the total solar system installation costs for projects that began after January 1, 2022, and will be finished by the end of 2032. This percentage will then decrease yearly until the Clean Energy Credit expires in 2035. The expansion to the program also makes it easier to get credit for energy storage systems, beginning in 2023.
Click here to learn more about the new Inflation Reduction Act. Your local Federal Way solar panel company can answer any questions you have and explain how the new Clean Energy Credit may apply to you.
State & Local Solar Incentives
Tax credits, rebates and more might be provided at multiple levels. Along with federal solar incentives, there are often state and local ones, too. Certain incentives are ongoing, while others are offered for only a limited time. These local incentives might come from the Washington government, or from your specific county or municipality.
Next Steps for Installing Solar in Federal Way
You can apply for and receive solar incentives from the Washington government and the federal government, as well as from your local utility company. Growing availability of solar initiatives in the past 15 years has helped increase nationwide solar energy use enormously. Getting in touch with your local Federal Way solar panel installation company is the best first step towards getting the most money possible when you switch to solar energy.
EcoWatch's Federal Way, WA Solar Incentives FAQs
When does the federal solar tax credit end?
The federal solar tax credit, formerly known as the ITC and now titled the Clean Energy Credit, is set to end January 1, 2035. The current 30% credit will end in 2032, replaced by a 26% credit in 2033 and a 22% credit in 2034.
Can I claim incentives both towards the initial cost of solar panels, and later as reimbursement?
The order that incentives will be applied in could vary depending on which incentives you are eligible for but typically yes, you can receive multiple types of incentives for your solar project. Check with your solar installer or a local tax professional to verify you are claiming all possible incentives and applying them in the correct order.
Can I use a combination of multiple types of renewable energy to power my home?
You can use multiple types of renewable energy, or a combination of renewable and non-renewable energy, to power your home. Make sure you discuss your plan with your local Federal Way solar installation expert. They can help you as you plan for your project and educate you on the various incentives that you might or might not qualify for.
Can I get any financial incentives when I add solar panels to a vacation home, rental property or commercial property?
While we recommend talking to your local solar installer and/or tax professional to better understand what solar incentives apply to you, many apply to a second home, provided that it is in the United States and owned by you. There may be other incentives available for commercial properties specifically, depending on the specifics.
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.