Washington State Solar Incentives
30% Federal Tax Credit
The federal government has put forth an incredible incentive for those considering solar power. 30% of the eligible costs related to your solar project can be taken as a federal tax credit. As long as you or your business pays federal income taxes you can take advantage of this incentive.
Keep in mind this is not merely a tax deduction. Tax deductions only reduce the income on which you pay taxes. Tax credits reduce your tax which means that every dollar of the tax credit is a dollar in your pocket.
Here’s a tax deduction example:
Supposed your annual gross income is $50,000 and you have $6,000 in tax deductions (mortgage interest, health insurance premiums, etc) leaving you with $44,000 in taxable income. Furthermore, suppose that your tax rate is 25%. In this example you would pay $11,000 in taxes on $44,000 of income. Without the $6,000 in deductions, you would pay $12,500 in taxes on all $50,000 of income. The $6,000 in tax deductions saved you from paying $1,500 in actual tax dollars.
Here’s a tax credit example:
Supposed you still make $50,000 annually and you still have $6,000 tax deductions, making your taxable income $44,000. Your tax rate is still 25% which means your total tax liability is $11,000. Now let’s say you had solar installed this year and the total system cost was $35,000. The federal tax credit on a $35,000 system would be $10,500 ($35,000 x 30%). Once the $10,500 solar tax credit is applied to your $11,000 tax liability, you’ll now only have $500 in tax liability.
Be sure and talk to your tax preparer to make sure a federal tax credit can benefit you.
Cost Recovery Incentive Program
The Washington Renewable Energy Cost Recovery Incentive Payment Program is an exceptional solar incentive – arguably the best in the country! The program is designed to encourage the use of solar components made here in Washington. Here’s how it works.
Your power company will pay you for the electricity your solar panels generate. The rate you’ll be paid ranges from $0.15 – $0.54 per kilowatt-hour (kWh) up to an annual maximum of $5,000. The range is based on where the solar components are manufactured. If they are not made in Washington, your power company will pay you $0.15 per kWh. If they are made in Washington, you’ll be paid up to $0.54 per kWh.
So, is $0.54 per kWh a good rate? Consider this – your power company probably charges you around $0.07 – $0.09 per kWh for the electricity you consume. If you do solar with Washington-made components, your power company will pay you nearly SEVEN TIMES that amount. You’re buying electricity at around 8 cents and you could be selling it at 54 cents. Each August, you’ll receive a check from your power company for the electricity your system generated during the preceding July 31st through June 30th time period. Nothing like receiving checks in the mail from PUD! Pretty good deal, huh?
Here’s the catch. The program expires June 30, 2020. After this date you will not be able to sell your solar electricity, which means every day that goes by without you having solar is literally costing you money. Whether you choose us for your project or a different solar company, the sooner you move forward the more time you’ll have to sell power at that amazing premium.
We know this might sound too good to be true, so check out the Washington Renewable Energy Cost Recovery Incentive Payment Program for yourself!
Not only will you be selling the electricity your solar panels generate but you’ll also avoid having to buy that electricity from your power company. Net metering is a billing mechanism that credits solar energy system owners for the electricity they add to the grid. For example, your home or business may generate more electricity than is used during daylight hours. With net metering, the electricity meter will run backwards to provide a credit against what electricity is consumed at night or other periods where the electricity use exceeds the solar system’s output. Customers are only billed for their “net” energy consumption.
Just as the electricity coming from your power company goes to your electrical panel (breaker box) for you to use, the electricity from your solar system will also go to your electrical panel. You’ll use the solar electricity first, then you’ll use your power company for any additional electricity needs you may have.
Let’s say for example that your home typically uses 20,000 kWh of electricity each year, without solar. Now suppose you have a solar system installed that generates 9,000 kWh of electricity each year. Instead of having to buy all 20,000 kWh of electricity from your power company each year, you’ll only have to buy 11,000 because your solar panels will provide the rest.
Sales Tax Exemption
Washington residents and business owners do not have to pay sales tax for solar installations. This is an excellent incentive and saves people thousands of dollars.
Premier Solar NW was professional and efficient form start to finish. We are very happy with the product they provided and services they performed for us.