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Solar Incentives

Is the cost of a solar panel installation standing between you and your dream of a solar-powered home? Cascadia Solar can help you save on installation costs with Washington solar incentives! 

There are excellent solar incentives available in Washington State that can reduce the net cost of the system and help you save more money with solar over time. 

Cascadia Solar is a local solar company in Port Townsend, WA that’s been installing solar panels on the Olympic and Kitsap Peninsulas since 2008. We can help you take advantage of the best Washington State solar incentives to maximize your savings.

Residential Solar Incentives in Washington State

All-black solar panels installed on rooftop with tree in background

Federal Solar Tax Credit

The federal solar tax credit (also known as the Investment Tax Credit) is one of the best incentives for residential solar panel installation in Washington State. The solar tax credit reduces your federal income tax liability by 30% of your solar panel installation costs (materials, labor, permitting, etc.) for the year you install your solar panels. If your tax liability is less than the 30% tax credit, you can roll over the remainder to your following year’s tax return.

Solar Battery Tax Credit

Solar battery storage systems are also eligible for the 30% federal solar tax credit! You can claim the solar tax credit for batteries that are part of a solar system installation and standalone solar battery systems.

Labeled diagram of how solar net metering works

Net Metering

Net metering is a utility billing agreement that allows you to trade power with the main electric grid. When your solar panels produce more electricity than you need, the excess is sent to the grid. Net metering incentives vary by state, but in Washington, you’re credited at the full retail rate of electricity. You can use your credit to buy electricity from the grid when your solar panels are not producing power—like at night. Your credits roll over from month to month, so you can bank credit in the summer and use it in the winter when there’s less sunlight and your solar production drops. 

Net metering is one of the best Washington state solar energy incentives, but given the recent changes to net metering laws in other parts of the country, we may see changes to our net metering policies in the future. We can help you lock in the best net metering rate before policy changes reduce incentives for homeowners.

Renewable Energy Sales and Use Tax Exemption

There’s no sales tax on solar panels in Washington State. Considering sales tax is 6.5% in Washington, the solar sales tax exemption could save you thousands of dollars on your home solar panel installation!

All-black solar panel array on top of green roof residential home

Commercial Solar Incentives in Washington State

Solar Tax Credit for Businesses

The commercial solar tax credit is a tax credit that reduces your business’s federal income tax liability by 30% of your commercial solar installation costs. If your commercial solar project meets certain labor requirements, it may qualify for bonus credits.

Direct Pay Solar Tax Credit

The direct pay tax credit makes it possible for non-profit organizations, governments, and tribes to benefit from the solar tax credit. These organizations are eligible for a direct payment worth 30% of their total solar installation costs in place of the federal solar tax credit.

Net Metering for Businesses

Net metering is a utility billing agreement that allows you to trade power with the main electric grid. When your solar panels produce more electricity than your building needs, the excess is sent to the grid and you’re credited at the full retail rate of electricity.

Renewable Energy Sales Tax Exemption

Commercial solar power systems smaller than 100 kW AC are exempt from sales tax in Washington state. Sales tax is typically 6.5% in Washington, and Jefferson County imposes an additional 2.6% sales tax, which means the solar sales tax exemption could save you thousands of dollars on your commercial solar installation. We’ll handle all the necessary documentation with the Washington State Department of Revenue to ensure you benefit from this tax break.

MACRS Depreciation

The Modified Accelerated Cost Recovery System is a method of depreciation that allows businesses to recover the cost of certain tangible assets through annual tax deductions over a specified period of time. Commercial solar energy systems are eligible for a 5-year cost recovery period. You can claim the solar tax credit and still qualify for MACRS depreciation, but you will have to reduce the project’s depreciable basis by one-half the value of the 30% tax credit.

Bonus Depreciation

Commercial solar energy systems are also eligible for bonus depreciation. In 2024, businesses can elect to claim a 60% bonus depreciation for commercial solar panel installation. Note that the percentage of qualifying equipment that can be expensed drops 20% a year until it reaches 0% in 2027.

NWSWB solar arrays seen from drone

USDA REAP Grants & Loans

The United States Department of Agriculture (USDA) Rural Energy for America Program (REAP) provides grant funding and loan guarantees to rural small businesses and agricultural producers that install solar energy systems. Qualifying businesses can receive a REAP grant worth up to 50% of their solar installation costs or guarantees on loans up to 75% of total eligible project costs. We’ve helped several small businesses in Jefferson County take advantage of REAP grants and can connect you with the grant experts at Spark Northwest to assist with your application.

Maximize Your Savings with Washington State Solar Incentives

Incentives make solar panels more affordable, but they can be confusing. Cascadia Solar is here to help. If you have questions about Washington solar incentives and whether you qualify, give us a call. We are always happy to answer questions and help you on your solar journey!

Disclaimer: The information on this page is provided for informational purposes only. We are not a tax advisor and always recommend speaking with a professional tax advisor about your specific situation. 

Save on solar with tax credits and incentives! Call 360-531-6163 or contact us to learn more.