The following is a summary of the main tax credits and incentives that are currently in place to make solar more affordable to those interested in installing a solar system in Washington. Click for a list of Washington utilities to find out more about your utility's solar programs including net metering, if your utility participates in the state production incentive program, interconnection, and more.
Washington State Production Incentive Program
NEW INCENTIVE PROGRAM ONLINE APPLICATION PORTAL NOW AVAILABLE:
The Washington State University (WSU) Energy Program, which is the administrator for the new incentive program, is now accepting the following types of applications:
- New Incentive Application for Residential-scale or Commercial-scale renewable energy systems
- New Precertification Application for Shared Commercial Solar or Community Solar Projects
Applicants will use this application to:
- Create and submit a new incentive application
- Check the status of their application as the review process gets underway.
The WSU Energy Program has put together a Frequently Asked Questions (FAQ) document concerning the new production incentive program.
Earlier releases from the Washington State Department of Revenue:
- From September 2017: Language from a release which applies to system owners, sellers, and installers. Click to view the release.
- From October 2017: Additional notices concerning manufacturers of solar energy systems and their components, B&O tax rates and more. Click to view the release
Federal Income Tax Credit
The Solar Investment Tax Credit (“ITC”) is a federal tax credit for solar systems placed on residential (under Section 25D) and commercial (under Section 48) properties. In December 2015, Congress acted to extend the 30% tax credit through 2019 with a step down in subsequent years: to 26% in 2020, to 22% in 2021, and thereafter it is 0 (zero) for homeowners and 10% for businesses.
The Wind Production Tax Credit declines on a different schedule than the tax credit for solar. Learn more about wind from the American Wind Energy Association and the Distributed Wind Energy Association.
Sales Tax Exemption in Washington State
The state sales tax exemption on residential and commercial solar PV systems of 10kW or less expired September 30, 2017.
Net metering allows system owners to receive credit for excess electricity produced by their system. Net-metered systems that produce more electricity than needed are credited for the excess production at retail electric rates on the next month’s utility bill. Credits carry forward month to month for a year period ending annually on April 30. Remaining credits are zeroed out on May 1 with no payment to the customer. Get more information.
Most utilities offer incentives and rebates for energy efficiency upgrades that help their customers reduce their use of electricity. Review a comprehensive list of PUDs and utilities in Washington state.
For Businesses - MACRS Depreciation of Solar Energy Property
The Modified Accelerated Cost Recovery System (MACRS) is a method of depreciation for some tangible property for tax purposes. Qualifying solar energy equipment is eligible for a cost recovery period of five years. The market certainty provided by MACRS has been found to be a significant driver of private investment for the solar industry and other energy industries. For equipment on which an Investment Tax Credit (ITC) or a 1603 Treasury Program grant is claimed, the owner must reduce the project’s depreciable basis by one-half the value of the 30% ITC. This means the owner is able to deduct 85 percent of his or her tax basis. The amount of the project cost that is eligible for a Bonus Depreciation is based upon the year of installation.
Washington State Department of Commerce Energy Efficiency and Solar Grants
For higher education, local governments, state agencies and K-12 public school districts
Commerce received a $25,000,000 appropriation in the 2015-2017 state Capital budget to continue the Energy Efficiency and Solar Grants program. Eligible entities include state public higher education institutions, local government facilities, state agencies and K-12 public school districts. This program focuses on funding the best projects possible to increase energy and cost savings in the publicly-built environment. The grants are awarded through a competitive process and must be used solely for energy and operational cost saving and solar installations. Click for more information about the program.
There is a proviso in the upcoming biennial budget to continue funding the energy efficiency and solar grant program for the 2018-19 biennium. Click for more info.