Buy Solar, Pay No Sales Tax, and Get a 30% Tax Credit

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Jul 13, 2019

Why pay taxes when you can put solar on your roof instead?  The solar tax credits make that possible.

Starting today, July 1st 2019, the Washington sales tax is waived for solar energy systems that are smaller than 100 kilowatts.  This includes both the State and local taxes, so you save 10%

Also, the ongoing solar federal Investment Tax Credit (ITC) and the Residential Energy Efficient Property Tax Credit have been the most important federal policy mechanisms to support the deployment of solar energy in the United States.  The federal tax credits are going to be reduced at the end of 2019 (see below).

Quick Facts

For the rest of 2019 the ITC is a 30% tax credit for solar systems on residential (under Section 25D) and commercial (under Section 48) properties.  Next year the credit is reduced to 26%, with a further reduction in 2021 after which the residential credit program ends and the commercial credit remains a 10%.

The existence of the ITC through 2021 provides market certainty for companies to develop long-term investments that drive competition and technological innovation, which in turn, lowers costs for consumers.

In Detail

The Investment Tax Credit (ITC) is currently a 30 percent federal tax credit claimed against the tax liability of residential (Section 25D) and commercial and utility (Section 48) investors in solar energy property. The Section 25D residential ITC allows the homeowner to apply the credit to his/her personal income taxes. This credit is used when homeowners purchase solar systems outright and have them installed on their homes. In the case of the Section 48 credit, the business that installs, develops and/or finances the project claims the credit.A tax credit is a dollar-for-dollar reduction in the income taxes that a person or company claiming the credit would otherwise pay the federal government. The ITC is based on the total cost of a solar project.  Both the residential and commercial ITC are equal to 30 percent of that cost for eligible projects that have commenced construction through 2019.

About The Author - Jeremy Smithson

Started Puget Sound Solar in 2001 with 30 years of construction contracting experience, and a desire to turn Seattle on to solar energy. Achieving NABCEP certification in 2004, Jeremy believes that our customers often follow a path similar to the one he took, starting out with solar daydreaming, then progressing to education on the subject, and eventually leading to action. In addition to leading the company he also does some teaching and speaking engagements about various aspects of solar energy, and experiments relentlessly with various solar, energy efficiency, and electric vehicle projects.

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