30% Federal Income Tax Credit

Systems commissioned before December 31, 2019 qualify for a 30% Federal Income Tax Credit.

Solar owners must have a sufficient tax liability to take advantage of credits, this credit can be applied for up to 15 years or until the credit is used.

We recommend that you consult with your tax advisor to verify how the ITC incentive specifically applies to your solar project.

The 30% Federal Income Tax Credit is available through the end of 2019. Following that, the incentive is reduced to 26% through 2020, 22% through 2021, and then permanently to 0% for residential solar projects.

Sales-Tax Free Solar

As part of Governor Jay Inslee’s 100% Clean Energy Campaign, Washington State Bill 5116 (Section 18) passed in April 2019 entitles residential and commercial solar projects under 100kW in size to both state and local tax-exemptions.

The tax exemption applies to the machinery and equipment used directly in the generation of electricity by a solar energy system, as well as the labor and services required to install those components.

This incentive is effective beginning July 1st, 2019 and ends December 31st, 2029.

Net Metering

When a grid-tied solar system produces more electricity than is consumed, it earn “credits” from your utility.

When you consume more electricity than you produce, you use those earned “credits,” lowering your electricity bill.

There is no expiration date for this incentive. For the most comprehensive and up-to-date incentive information, please visit www.solarwa.org/solar-incentives.

BELOW ARE ADDITIONAL INCENTIVES AVAILABLE EXCLUSIVELY FOR COMMERCIAL PROJECTS

USDA – Rural Energy for America Program Grant (REAP)

The United States Department of Agriculture (USDA) developed the REAP grant for the purpose of renewable energy development in rural areas. Grants can cover up to 25% of solar project costs.

Who may apply:

  • Agricultural businesses with at least 50% gross income from agricultural operations
  • Small businesses in eligible rural areas

Both must have no outstanding delinquent federal taxes, debt, judgment, or department.

Grant terms: $2,500 minimum and $500,000 maximum

Grant deadlines:

  • End of March for grants up to $50,000
  • End of October for grants up to $20,000

REAP Contacts

For answers to questions about the REAP grant, contact our local USDA representative Brandon Hoffman.

  • Phone: (360) 488-4841
  • Email: Brandon.Hoffman@wa.usda.gov

For assistance with the REAP application process, contact Mia Devine at Spark Northwest.

  • Phone: (206) 755-1233
  • Email: Mia@sparknorthwest.com

Modified Accelerated Cost Recovery Program (MACRS)

The MACRS is the current tax depreciation program in the United States.

MACRS may allow small businesses to recover the cost of their assets, in this case it would be a solar PV system. Based on the depreciation schedule of the particular solar system, small business owners are able to apply a certain value as a deductible to their income taxes.

Typically, MACRS permit the cost recovery over a set schedule based on the type of asset, usually a period of years. However, Section 179 of IRS Tax Code allows businesses to deduct the full purchase price of a qualifying equipment purchased or financed in that same year.

We suggest that you consult your tax or financial adviser about how MACRS would apply to your business and acquisition of a solar PV system.