Washington State Solar Incentives for 2024

Beautiful Diablo Lake is a reservoir in the North Cascade mountains of northern Washington state, United States.

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What are the Washington State Solar Incentives for 2024?

Washingtonians are increasingly choosing to invest in solar energy systems for their homes and businesses as solar technology improves by leaps and bounds, prices drop, and more Washington state solar incentives are rolled out. 

Local, state, and federal incentives can be combined to significantly reduce the upfront cost of a solar investment. 

So, let’s look at what solar incentives are available in Washington for 2024.

Beautiful Diablo Lake is a reservoir in the North Cascade mountains of northern Washington state, United States.

Federal Investment Tax Credit

The federal investment tax credit (ITC) for solar is one of the most popular and successful solar incentives ever, responsible for growing the solar industry by more than 10,000%. The ITC was enacted in 2006 and has been extended several times, with another extension possible. 

Currently, homeowners and business owners who install a new solar energy system at their properties can deduct 30 percent of the total cost of installing their system from their federal income tax liability amount until 2032 then it decreases each year. See below:

Residential Solar Tax Credit

  • Until 2032 – 30%
  • Year 2033 – 26%
  • Year 2034 – 22%
  • 2035 & Beyond – 0% (Unless Congress renews it)

Commercial Solar Tax Credit

  • Until 2032 – 30%
  • Year 2033 – 26%
  • Year 2034 – 22%
  • 2035 & Beyond – 0% (Unless Congress renews it)

What if my tax credit exceeds my federal tax liability?

If the credit amount exceeds your federal tax liability amount for the year, you can rollover unused credit to subsequent years, so long as the tax credit is still in effect.

With the average gross price of a residential solar energy system in Washington at $13,750, a 30% tax credit equals $4,125 in savings!

Washington Solar Sales Tax Exemption

As of July 1, 2019, all solar equipment for systems less than 100 kW is exempt from state and local sales and use taxes. This tax exemption is good through December of 2029 and can often save solar buyers thousands of dollars!

The Washington State sales tax is currently 6.5%, plus whatever local sales and uses tax amounts apply in your area – some areas have sales tax rates of over 10%. Considering once again that the gross average price of a residential solar energy system in Washington is $13,750, a 10% sales tax exemption would result in $1,375 of savings.

As of January 1, 2020, there is also a 50% tax exemption for larger systems that generate between 101-500 kW.

Washington Solar Net Metering is a solar incentive that essentially allows you to accumulate credits for the energy that your panels produce in the power grid so that you can use it anytime as opposed to only when the panels are generating energy. This means that although solar panels produce the most energy during the day when most people are at work or school and not home to use that energy, it does not go to waste.

Rather, you can sell the energy to the electrical utilities’ power grid and be compensated with credits on your account. Then when you use power in the evenings or on days when your panels aren’t producing, your credit will be applied against the grid power that you use.

This is also helpful since you can bank credits during the summer months when solar panel production is high and the energy consumption is generally lower, and then use the credits to keep your power bill low even in the winter months when solar production is decreased and the energy consumption is increased.

a diagram of net energy metering in oregon and washington state
Commercial Incentives

What Solar Incentives are Available for Washinton State Businesses?

While the previous three Washington state solar incentives apply to both residential and commercial solar energy system installations, the following two incentives are solely for commercial solar applications.

USDA REAP Grant for Solar and Other Energy Projects

The United States Department of Agriculture offers the Rural Energy for America Program, or REAP Grant, which provides grants and loans to qualifying agricultural producers and rural small businesses. These grants and loans are specifically for the purpose of implementing renewable energy systems or improving existing systems to be more energy-efficient.

Examples of eligible renewable energy systems include solar of course, but also biomass, geothermal, hydropower, hydrogen, wind power, and ocean power. Qualifying energy efficiency projects include installing more efficient HVAC systems, improving lighting or insulation, upgrading doors, and windows or refrigeration units, transitioning from diesel to electric irrigation motors, and so forth.

Applications are divided into three tiers based on the overall cost of the proposed project: Tier One includes projects costing less than $80,000, Tier Two includes projects costing between $80,000 and $200,000, and Tier Three is for projects costing more than $200,000. There is a permanent funding baseline of $50 million per year and often additional discretionary funding available as well, so if you qualify, chances are good that you will receive the funding you ask for. You can check your business’s eligibility here.

washington state solar farming

Modified Accelerated Cost Recovery System (MACRS)

This MACRS depreciation system is an income tax deduction that allows business owners to recover some of the cost of assets that they have purchased over time. Specifically for solar equipment, there is a cost recovery period of five years.

The Modified Accelerated Cost Recovery System, or MACRS program, allows business owners to deduct a total of 85% of the cost of qualified solar equipment from their tax liability amount over that five-year period, which can result in significant savings.

Is the Washington State Solar Production Incentive Still Available?

Currently, there is no production incentive program in Washington state that offers direct cash payments worth up to 50 percent of the total cost of the solar energy system. These payments were based on the gross amount of solar energy an individual solar panel installation created. This program ended in 2018 due to funding restrictions

Is Solar Worth It in Washington State?

As we’ve covered, there are many different solar incentives in Washington state available to both homeowners and business owners in the state of Washington. These incentives combined with ever-improving solar technology that can produce energy even on overcast PNW days mean that investing in solar energy for your home or business can certainly be worth it in Washington. 

Plus, Washington is committed to reaching 100% clean energy by 2045, so making the switch now will put you ahead of the game. At Precision Solar, we specialize in solar energy for the Pacific Northwest and can help you determine if your property is suitable for solar. 

Contact us at Precision Solar today to get started with a free consultation! We will be more than happy to answer any questions you may have and assist you in determining which incentives apply to your situation.

Stan tussing and his solar installers at Precision Solar of Warrenton, OR
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