California Solar Energy Tax Credits, Incentives & Rebates 2021

Although California enjoys one of the best climates for solar energy in the United States, it is not just sufficient sunlight that is driving the growth of renewables in the Golden State. There are a number of California solar tax credit, exemption, and rebate options that make solar panel installation more affordable for residents.

By realizing the economic and environmental benefits of solar energy early on, California has positioned itself as a leader in solar energy in the United States. Several of the country’s largest solar companies are based in California, and data from the Energy Information Administration shows the state for nearly 45% of the nation’s small-scale residential solar power generation in 2019.

As the availability of quality products and installers add to the ease of purchasing solar panels, what financial incentives are currently available to California residents interested in solar power? Let’s explore.

California solar tax credits and solar rebates

Solar panels have long proven to be a sound and reliable financial investment for Californians, and many buyers are able to achieve rapid return on investment (ROI). However, there is currently no California solar tax credit to help residents pay for the upfront cost of solar panels.

That said, all Californians are eligible for the federal solar tax credit, and the state offers several incentive programs and solar rebates aimed at further increasing access to reliable and affordable solar panels.

Self-production incentive program (SGIP)

In response to an increasing frequency of power outages, California’s SGIP is offering discounts to residents using solar battery systems to store excess energy. Battery storage is an important part of emergency preparedness. However, these discounts are only available for certain outage-prone areas of the state. You can check your eligibility on the SGIP website.

Exclusion of the tax on active solar energy

Typically, when an item of value is installed on a property, the addition is assessed and added to the value of the property (increasing property taxes accordingly). California’s active solar energy tax exclusion incentive allows residents to install solar systems without altering the valuation of their property (even though solar panels significantly increase property values).

Affordable Solar Housing Program for Single-Family (SASH)

SASH offers a $ 3 per watt incentive to qualifying low-income homeowners. In addition to making solar energy more accessible in disadvantaged communities, this program reduces collective consumption of conventional electricity and promotes environmentally and economically sustainable energy solutions. Note that you must be a Pacific Gas & Electric (PG&E), Southern California Edison (SCE) or San Diego Gas & Electric (SDG & E) customer to be eligible for this program.

Other Californian solar incentives

Net energy metering (NEM), or net metering, allows customers to feed excess energy generated by their solar panels back into the local electricity grid. In return, customers receive credits from their utility companies which can be applied to future bills. Since most solar systems generate more energy than a home uses, reselling this excess energy to a utility company saves homeowners additional savings on their utility bills and reduces the demand for grid-supplied electricity in the region.

California currently offers a statewide net metering incentive for residents generating electricity with solar panels. The exact credit values ​​vary depending on your utility company.

Some utility companies and local municipalities also have their own solar rebates and incentives, such as the Sacramento $ 300 rebate. Most large solar companies will help you identify which local solar programs you are eligible for, but it is always worth checking your local government and utility company websites to see if there are any additional incentives. that you can take advantage of.

Federal solar tax credit

No matter what state you live in, all homeowners in the United States are eligible for the Federal Solar Investment Tax Credit (ITC) for installing solar panels and energy storage devices. The ITC is a tax credit that you can claim on your federal return and is currently assessed at 26% of the total cost of your system.

Although the solar tax credit currently stands at 26%, it is expected to be phased out over the next few years. Credit was first developed by the Energy Policy Act of 2005 under the Bush administration. Initially, it was only supposed to last two years, but due to its bipartisan success, it was extended for solar installations until at least 2023. (Note that the specific terms of the solar tax credit have changed over the years and may continue to change.)

To be currently eligible for the federal tax credit, homeowners must meet the following criteria:

  • You installed a residential solar panel system any time from 2006 to the end of 2022.
  • You have placed the solar panel system in a residential location. It does not have to be your primary residence.
  • You own the solar system (as opposed to renting solar panels), which means you paid it off in cash or took out a solar loan.

We understand that for most homeowners, the decision to invest in solar panels is easier when presented with a firm cost. To find out how much it would cost to install solar panels on your home, taking into account the solar tax credit, you can get a free, no-obligation quote from a large solar company near you by filling out the form below. .

FAQ: Solar Incentives in California

Is There a California State Solar Energy Tax Credit?

Although California does not offer a statewide solar tax credit, all residents are eligible for the current federal solar tax credit. The solar tax credit is worth 26% of the value of the installed system and can be claimed on federal tax returns.

What is the California Solar Tax Credit for 2021?

All U.S. households are eligible for the Federal Solar Tax Credit, which is assessed at 26% of the cost of your solar system. California doesn’t have any other state-specific solar tax credit, but it does offer property tax exemptions for new solar installations.

Does California have a free solar program?

The reality is that no state has a free solar program. Fortunately, California offers several incentives and discounts for installing solar panels, making it a very profitable place to do so.

How much is the solar tax credit for 2021?

All U.S. households are eligible for the federal solar tax credit. In 2021, this tax credit is assessed at 26% of the purchase of eligible solar panels and energy storage devices.

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