WASHINGTON RESIDENTIAL
Incentives
2020 WASHINGTON State Residential Solar Incentives
Federal incentives, state tax breaks, and high producing solar panels
give Washington homeowners 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
Washingtonians save thousands when installing solar panels on their
property. For a standard sized solar system, this will save Washington
property owners $2,000+ 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 city that you live in will determine how much you
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)
The Federal government incentivizes homeowners 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, 2021 in order
to qualify for the entire 26% rebate. This solar incentive is going away
in 2022. Below is a timeline of anticipated federal rebate changes.
2020: Owners of new residential and commercial solar systems can deduct 26% of the cost of the system from their federal tax obligations.
2021: Owners of new residential and commercial solar systems can deduct 22% of the cost of the system from their federal tax obligations.
2022: Owners of new commercial solar only (not residential) 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:
$20,000 cost x 0.26 rebate = $5,200
In this example, you will receive an extra $5,200 back from the federal government.
Calculation example 2:
$15,000 cost x 0.26 rebate = $3,900
In this example, you will receive an extra $3,900 back from the federal government.
Solar Boosts Home Resale Value
Solar panels don’t just reduce your energy costs and help the
environment; they also increase your property value. According to
Zillow, homes with solar sold for nearly 3% more than comparable homes without. That means an average home with solar across the United States sold for an additional $9,274.
Zillow’s findings reflect similar studies published by the Lawrence Berkeley National Renewable Energy Laboratory, which drew on a sample of 23,000 homes across the country.
Understanding Property Resale Value
Your property value will increase by an average of 3% the moment you
go solar. For instance, if your property value was $400,000 before
installing solar, it would be worth $412,000 after installing it.
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.