WASHINGTON COMMERCIAL
Incentives
2021 WAShINGTON State Commercial Incentives
Federal incentives, state tax breaks, and efficient solar panels give
Washington business owners the opportunity to take advantage of
incredible financial benefits when switching to solar.
When you switch to solar, we’ll take care of the majority of your
incentive paperwork. All of our solar systems come with free project
management support, and we’ll supply all the information necessary
for your tax documents and communicate with your tax professional as
needed.
Washington State Solar Tax Exemption
As of July 1st, 2019, all solar systems smaller than 100 kilowatts are
exempt from state and local use tax. This tax exemption helps
Washington business owners save thousands of dollars when installing
solar panels on their property. For a standard-sized solar system, this
equates to saving $6,000+ on the overall cost of going solar.
This statewide solar tax exemption extends through 2029 and pairs
well with the Federal Solar Investment Tax Credit.
Here’s how the State Solar Tax Exemption Works
All tax obligations are waived when you purchase solar in the state of
Washington. The tax rate of the city that you do business in will
determine how much you’ll save in overall costs. As an example, if you
live in Longview, Washington you will save 8.1% on the overall cost
going solar. If you live in Tacoma, Washington, you will save 10.2% on
the overall cost of going solar.
Find out how much you’ll save with this sales tax calculator.
Federal Solar Investment Tax Credit (ITC)
Our Federal government incentivizes businesses to purchase solar by
reducing the barriers to entry. This incentive lowers your federal tax
obligations on a dollar-to-dollar basis, through a cash rebate. There is
no ceiling on this tax credit. The Federal Solar Investment Tax
Incentive is worth 26% of the total purchase price of your solar
system, no matter the system size or cost.
Your solar system must be installed before January 1st, 2023 in order to qualify for the entire 26% rebate.In 2023, this rebate will be reduced to 22%, and this incentive will be reduced to a permanent 10% in 2024. Below is a timeline of anticipated federal rebate changes.
2021-2022: Owners of new commercial solar systems can deduct 26% of
the cost of the system from their federal tax obligations.
2023: Owners of new commercial solar systems can deduct 22% of
the cost of the system from their federal tax obligations.
2024-Onward: Owners of new commercial solar systems can deduct 10% of
the cost of the system from their federal tax obligations.The ITC
vanishes for homeowners in 2022.
Here’s how the Solar Investment Tax Credit works
For every dollar your solar system costs, the federal government will
award you 26 cents back in tax credits. This is how you reduce your
overall federal tax liability. This is a dollar-for-dollar tax rebate, not a
tax write-off. There is no ceiling on the amount of tax credits you can
be awarded – the 26% credit applies, no matter the size of your solar
system.
Understanding Cost
You will receive 26% of the total cost of your solar system on your
next year’s tax return. For instance, if the final purchase price of your
new solar system is $20,000, you will get an additional $5,200 back
from the federal government.
Calculation example 1:
$50,000 cost x 0.26 rebate = $13,000
In this example, you will receive an extra $13,000 back from the
federal government.
Calculation example 2:
$100,000 cost x 0.26 rebate = $26,000
In this example, you will receive an extra $26,000 back from the
federal government.
Rural Energy For America Grant Program
The REAP Program offers grants and guaranteed loans to rural
businesses and agricultural companies throughout America. The grants
are renewable energy focused and include the purchase of commercial
solar systems.
The REAP Program has 2 primary goals:
1. To enhance energy independence by creating a greater supply of
clean, renewable energy in the commercial sector
2. To reduce energy demands
Over time, the REAP Program hopes to decrease the overall energy
costs for businesses in the agriculture sector and in towns of less than
50,000.
REAP Grant Terms:
The Rural Energy for America Program offers grants ranging from
$1,500 to $250,000. Solar installations that exceed $200,000 must
have a technical report and an on-site evaluation completed prior to
starting the installation. Grant applicants must provide at least 75% of
the total cost of the solar installation in order to qualify.
REAP Loan Terms:
• $5,000 minimum and $25 million maximum loan amounts
• Up to 85% loan guarantee
• Maximum term of 30 years for real estate
• Maximum term of 15 years for equipment
• Maximum term of 30 years for combines equipment and real estate
• Maximum term of 7 tears for capital loans
Loan applicants must provide at least 25% of the total cost of the solar
installation in order to qualify.
Who Is Eligible?
1. Agricultural producers who generate a minimum of 50% of their
gross annual revenue from farming
2. Rural small businesses residing in qualified areas
How To Qualify:
1. You must be the owner of the business
2. You must have no outstanding federal taxes, judgement or
debarment
3. Your business must be financially solvent
Qualified Locations
Agricultural producers can reside in either a rural or non-rural area.
Small non-agriculture businesses must be located in rural areas to
qualify. ‘Rural’ is defined as a location that is not considered ‘a city or
town with more than 50,000 inhabitants.’ Here’s an eligibility map to
determine whether your business resides in a qualified area.
How To Apply For REAP Grants and Loans
You can find the REAP Application here. Applications for grants, loans,
and grant/loan combinations are due by March 31st, 2021. Submit
your application to your state office.
To apply, you have to be enrolled in the System for Award
Management and have a Dun & Bradstreet number. These are both
free of charge, but can sometimes be time-consuming. Be sure to
prepare in advance if you plan on submitting a REAP application.
As soon as you’ve signed up with the System for Award Management
and Dun & Bradstreet, you can apply to the REAP program. Application
instructions for the REAP Program can be found on the REAP website.
The REAP Program’s 3 Tiers
Tier 1: Solar installations that will cost less than $80,000
Tier 2: Solar installations that will cost more than $80,000 and less
than $200,000
Tier 3: Solar installations that will cost more than $200,000
When applying, be sure to fill out the appropriate application based on
the tier you’ll be in.
Planning Is Critical
Thoroughly preparing before you apply will greatly improve your
chances of being approved for the REAP grant. Be sure to get in touch
with your state’s energy coordinator as soon as possible. They will
need to conduct an environmental review of the installation site before
you begin your application. Months before the REAP Application
deadline of March 31st, 2021, you’ll want to make sure you’ve applied
to the System for Award Management and Dun & Bradstreet.
Below is a list of other things you may need to supply during the
application process:
• Bank statements
• Funding commitment from any other funding sources
• Interconnection agreement if you’re interconnecting with a utility
company
• Documentation of any known associations with USDA employees
You Can Combine Solar Incentives
The REAP Grant can be combined with any of the other solar incentives
available to you. The REAP application requires you provide a funding commitment statement that includes any other solar incentives you’ll be taking advantage of. For this reason, you’ll want to be sure to
arrange other solar incentives first before applying to the REAP
Program.
What is Net Energy Metering?
Typically, utility companies only need to keep track of the amount of
energy you consume on a monthly basis. When you go solar, your
utility company needs to keep track of the amount of energy you
produce on a monthly basis. With Net Energy Metering, your utility
company can keep track of both. At the end of the month, your power
company will subtract the amount of energy you produce from the
amount of energy you consume, reducing your monthly power bill. Any
additional energy credits you store up will be carried over to your next
month’s bill throughout the year.
Each kilowatt-hour of energy you produce is equivalent to the retail
market value of a kilowatt hour of energy you purchase from your
utility company. You can literally save up energy credits in the form of
solar power created during the longer days of summer and then use
them during the shorter days of winter.
Understanding Net Energy Metering
Imagine your new solar energy system generates 1,000 kilowatt hours
of solar power in the month of June, but you only end up consuming
700 kilowatt hours of energy that month. You’d have an extra 300
solar credits that would carry over into the month of July. If you
consume more energy than you produce, then the solar energy credits
you have stored up would automatically be applied. Think of it as a
sort of “energy storage bank.” Net Energy Metering keeps track of it
all.
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