A Complete Guide to Solar Tax Credits & California Solar Incentives

Exploring the many tax credits and financial incentives available to help you fund your solar energy system can be overwhelming. With so many affordable and financially beneficial programs available to California consumers, we hope you enjoy this guide.

Offset the Costs of Installing Your Solar Energy System

The cost of installing solar panels onto your property has decreased and is only expected to continue to do so, year after year – albeit a little bit at a time.

Federal Solar Investment Tax Credit (ITC)

The Federal ITC is one of the most significant incentives available for solar installations. Currently, homeowners can claim 30% of their total solar installation costs as a federal tax credit.

Key Requirements for the Federal ITC

• The system must be installed on property you own
• The solar panels must be used for generating electricity for your use
• You cannot claim the credit if property taxes are not your fiscal responsibility
• The solar panels must power a structure on the property

What Qualifies?

Both solar photovoltaic (PV) systems and energy storage systems (ESS) qualify for these solar panel tax credits. Leased systems typically do not qualify, as they are owned by a third party.

California Net Energy Metering (NEM)

Net Energy Metering allows solar customers to receive credits for excess energy their system produces and sends back to the grid.

How NEM Works

• When your solar system produces more energy than you use, the excess is sent to the grid
• You receive credits on your utility bill for this excess energy
• These credits can offset the cost of electricity you use when your solar panels aren't producing

Self-Generation Incentive Program (SGIP)

California's SGIP provides rebates for installing energy storage systems alongside your solar panels.

Benefits of SGIP

• Reduces the upfront cost of battery storage
• Higher rebates available for customers in high fire-threat areas
• Additional incentives for low-income households

Property Tax Exemption

In California, the added value that solar panels bring to your home is exempt from property tax assessments. You get the benefit of increased home value without paying higher property taxes.

Maximizing Your Solar Incentives

1. Work with a qualified installer: They can help ensure your system qualifies for all available incentives
2. Keep thorough records: Documentation is key to claiming tax credits
3. Consider timing: Some incentives decrease over time, so acting sooner may mean bigger savings
4. Evaluate battery storage: Adding a battery may qualify you for additional incentives

Conclusion

California offers some of the best solar incentives in the country. At ESP, we help homeowners navigate these incentives to maximize their savings. Contact us today!