Washington State may be known for its cloudy, rainy climate, but that doesn’t mean solar isn’t a good investment. Several Washington solar incentives are available to make solar more attractive and help residents save on a solar system, including the federal solar tax credit, net metering, and tax exemptions.
State Incentives
Washington Renewable Energy Sales and Use Tax Exemption
One of the key Washington State solar incentives is the Renewable Energy Sales and Use Tax Exemption. This incentive exempts 100% of the sales tax on solar photovoltaic (PV) systems up to 100 kilowatts. The exemption is applied at the time of purchase and significantly reduces the cost of installing solar systems.
To qualify, you must apply for a sales tax refund through the Washington State Department of Revenue (WA-DOR). More details are available on the WA-DOR website.
Washington Renewable Solar Incentive Program
Although the Washington Renewable Energy System Incentive Program (RESIP) no longer accepts new applications, it historically provided significant savings. This program offered $0.16 per kilowatt-hour (kWh) generated by your solar energy system, up to $5,000 per year. In late 2022, the state reinstated the program to offer grants for community solar installations, benefiting larger projects rather than individual homeowners.
Net Metering
Net metering is a crucial part of the solar incentives in Washington. The program mandates that utility companies offer billing credits for excess electricity generated by your solar panels at the full retail rate. These credits can offset your electricity bills, providing substantial savings. However, any remaining credits from the previous year must be forfeited to the utility company annually on March 31.
To enroll in net metering, your solar installation company will assist you in applying for interconnection through your utility company. Once approved, you can start generating energy and earning credits on your electric bill.
Estimated Savings
With the combined benefits of state sales tax exemptions, net metering, and the 30% federal solar tax credit, homeowners in Washington can save thousands over the lifetime of their solar panel system. The average cost of a 6 kW solar system is $16,890 in Washington before applying any incentives. Homeowners can save an average of $1,346 on energy bills annually, and the typical payback period is around 12 years. Once the system pays for itself, you can enjoy approximately 15 years of free energy.
Federal Solar Tax Credit
The federal Solar Investment Tax Credit (ITC) is another major incentive available to all U.S. residents, including those in Washington. This credit is worth 30% of the total price of your solar equipment and reduces your federal tax liability. If the credit value exceeds your federal tax liability, you can roll over the remaining balance for up to five years.
The ITC is available through 2032, decreasing to 26% in 2033 and 22% in 2034 before expiring in 2035. Your solar installer can assist you with filling out IRS Form 5695 when filing your federal tax returns.
The Bottom Line
Despite Washington’s overcast weather, solar remains an excellent financial investment for many homeowners. By taking advantage of Washington solar incentives such as net metering, the federal solar tax credit, and state tax exemptions, you can significantly reduce the cost of your solar project. These incentives help make switching to solar energy a viable and attractive option for Washington residents.
To learn more about solar incentives in Washington and to determine if solar is right for you, Contact us today!
