WASHINGTON RESIDENTIAL SOLAR

Incentives

2024 WASHINGTON State Solar Incentives

Federal solar incentives, Washington state solar incentives, 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 docs 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 30% of the total purchase price of your solar system, no matter the system size or cost.

Currently, the 30% Federal Solar Income Tax Credit applies to all solar projects that begin construction in 2024. The 30% tax credit will last through 2033, at which point it will drop to 26%. 

Here’s how the Solar Investment Tax Credit works

For every dollar your solar system costs, the federal government will award you 30 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 30% credit applies, no matter the size of your solar system.

Understanding Cost

You will receive 30% 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 $6,000 back from the federal government.

Calculation example 1: 

$20,000 cost x 0.30 rebate = $6,000 

 

In this example, you will receive an extra $6,000 back from the federal government.

Calculation example 2: 

$15,000 cost x 0.30 rebate = $4,500

 

In this example, you will receive an extra $4,500 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.
Solar Installation

Washington State Solar Sales Tax Exemption Certificate

Installing solar panels on your home in Washington not only benefits the environment but also comes with financial perks. Since 2019, solar systems under 100 kilowatts are exempt from both state and local use taxes. This exemption, set to continue through 2029, can save you over $1,000 when you invest in rooftop solar.

Estimating Your Solar Sales Tax Savings

The actual savings depend on your location, as sales tax rates vary between cities. To calculate your Washington solar tax exemption savings, determine your town’s sales tax rate and multiply it by the solar system’s cost. For instance, in Olympia with a sales tax rate of 9.5%, the savings for a $19,000 solar system would be $1,805.

Home Solar

Federal Solar Tax Credit

The federal government offers a generous 30% tax credit for installing residential solar energy systems nationwide. This credit recently increased due to the climate bill, providing more savings for solar homeowners. Calculate the credit by multiplying the total system cost by 30%. For example, a $20,000 solar system results in a $6,000 tax credit, reducing the total cost to $14,000.

Understanding Solar Tax Credit Qualifications

To benefit from the federal solar tax credit, you must have sufficient tax liability with the IRS. It’s crucial to own the system, as leased solar panels don’t qualify. While the credit isn’t refundable, any unused portion can be carried over to future tax years if the credit is still in effect.

Net Energy Metering in Washington

Washington’s net metering programs enable homeowners to significantly lower their energy bills by crediting surplus electricity to the grid. This process involves feeding excess power to the grid during sunny days and receiving credits back at night or on cloudy days.

Taking Advantage of Net Metering in Washington

Solar credits expire annually on March 31, emphasizing the importance of proper system sizing. Smart Solar Energy offers free solar audits, ensuring your system meets your home’s energy needs for optimal savings. Net metering programs are available through various utility companies in Washington, including Clark PUD, Puget Sound Energy, and Seattle City Light.

FAQs about Washington Solar Incentives

  • Does Washington have a solar sales tax exemption? Yes, homeowners in Washington installing solar panels can enjoy sales tax exemptions, with savings varying based on local tax rates.
  • Does Washington have net energy metering? Yes, Washington has net metering laws requiring utility companies to offer programs for solar systems under 100 kilowatts.
  • How do I apply for net metering in Washington? The application process involves completing interconnection agreement paperwork, with Smart Solar Energy handling the submission on your behalf.
  • Will I qualify for the solar tax credit? Qualification depends on factors like sufficient tax liability and the system being installed on a primary or secondary residence. Consultation with a tax specialist is recommended.
  • How did the Inflation Reduction Act impact the federal solar tax credit? The climate bill increased the solar tax credit to 30% through 2032, promoting clean energy and domestic solar manufacturing.

Going Green with Smart Solar Energy

Understanding Washington’s solar incentives is crucial when deciding to go solar. Smart Solar Energy, a trusted company serving Oregon and Washington, is ready to explain these incentives, estimate your savings, and assist with net metering paperwork. Schedule a free solar audit to get started on your journey to cleaner and more cost-effective energy.