State Incentives
In 2019, Washington State announced that the Department of Revenue would reinstate the Sales and Use Tax Exemption for purchases and installation of solar energy systems, effective July 1, 2019 until December 31, 2029. The exemption applies for systems that produce at least 1kW and up to 100kW AC electricity. 100% of costs are eligible for the 8.3% (or more) sales and use tax exemption. More information is available here.
In 2019, Washington State announced that the Department of Revenue would reinstate the Sales and Use Tax Exemption for purchases and installation of solar energy systems, effective July 1, 2019 until December 31, 2029. The exemption applies for systems that produce at least 1kW and up to 100kW AC electricity. 100% of costs are eligible for the 8.3% (or more) sales and use tax exemption. More information is available here.
Federal Incentives
As a result of the Inflation Reduction Act that was just signed into law, the Renewable Energy Tax Credit commonly referred to as the Federal Tax Credit or ITC, provides a 30% federal tax credit for residential and commercial solar installations. The 30% credit is calculated from the total system cost. This would include sales tax, permits, and fees, in addition to the materials and labor cost. The IRS also issued a private letter ruling allowing battery storage systems that are charged by solar to be eligible for the credit.
To claim the tax credit for residential installations, you would need to fill out IRS Form 5695 and submit that with your federal tax filing. The credit is normally claimed for installations that were paid for during the tax year you are filing. For commercial installations you would use IRS Form 3468.
Importantly, the ITC is a tax credit against your tax liability. It is not a reduction of income, or a tax deduction. The home served by the system does not have to be the taxpayer’s principal residence.
The official webpage from energy.gov for residential installations is here:
https://www.energy.gov/savings/residential-renewable-energy-tax-credit
The webpage for commercial installations is here:
https://www.energy.gov/savings/business-energy-investment-tax-credit-itc
Example: If the total cost of your new solar installation was $10,000 in 2022, then when you file your taxes in early 2023, for the 2022 tax year, you may be able to claim a tax credit of $3,000 ($10,000 x 30%). If you had a tax liability in 2022 of $10,000, then the tax credit would reduce your tax liability to $7,000.
If your new solar installation generated a tax credit of $3,000, but you had less than $3,000 in tax liability, then you may be able to roll over a portion of the tax credit to the next tax year.
* Remember, we are solar installers, not accountants. Please contact your tax professional to confirm how you can make use of the ITC.
As a result of the Inflation Reduction Act that was just signed into law, the Renewable Energy Tax Credit commonly referred to as the Federal Tax Credit or ITC, provides a 30% federal tax credit for residential and commercial solar installations. The 30% credit is calculated from the total system cost. This would include sales tax, permits, and fees, in addition to the materials and labor cost. The IRS also issued a private letter ruling allowing battery storage systems that are charged by solar to be eligible for the credit.
To claim the tax credit for residential installations, you would need to fill out IRS Form 5695 and submit that with your federal tax filing. The credit is normally claimed for installations that were paid for during the tax year you are filing. For commercial installations you would use IRS Form 3468.
Importantly, the ITC is a tax credit against your tax liability. It is not a reduction of income, or a tax deduction. The home served by the system does not have to be the taxpayer’s principal residence.
The official webpage from energy.gov for residential installations is here:
https://www.energy.gov/savings/residential-renewable-energy-tax-credit
The webpage for commercial installations is here:
https://www.energy.gov/savings/business-energy-investment-tax-credit-itc
Example: If the total cost of your new solar installation was $10,000 in 2022, then when you file your taxes in early 2023, for the 2022 tax year, you may be able to claim a tax credit of $3,000 ($10,000 x 30%). If you had a tax liability in 2022 of $10,000, then the tax credit would reduce your tax liability to $7,000.
If your new solar installation generated a tax credit of $3,000, but you had less than $3,000 in tax liability, then you may be able to roll over a portion of the tax credit to the next tax year.
* Remember, we are solar installers, not accountants. Please contact your tax professional to confirm how you can make use of the ITC.
Net Metering
OPALCO members with grid-tied solar PV systems are eligible for net-metering. Net-metering means that if your array produces more electricity than you consume (common in summer months) then you earn credits ($0.0882/kWh) for the electricity you sent back to the grid. During a later month, if you consume more electricity than your array produces (common in winter months) then you retrieve those credits. Moreover, if it happens that you have produced more electricity than you consumed for the entire year, then OPALCO will send you a check for the excess production at the same solar rate ($0.0882/kWh).
*OPALCO charges a flat fee of $50 each month, even if you use no electricity. This is known as the facilities charge and allows OPALCO to cover infrastructure costs even as electricity consumption varies.
OPALCO members with grid-tied solar PV systems are eligible for net-metering. Net-metering means that if your array produces more electricity than you consume (common in summer months) then you earn credits ($0.0882/kWh) for the electricity you sent back to the grid. During a later month, if you consume more electricity than your array produces (common in winter months) then you retrieve those credits. Moreover, if it happens that you have produced more electricity than you consumed for the entire year, then OPALCO will send you a check for the excess production at the same solar rate ($0.0882/kWh).
*OPALCO charges a flat fee of $50 each month, even if you use no electricity. This is known as the facilities charge and allows OPALCO to cover infrastructure costs even as electricity consumption varies.