Understanding Solar Rebates and Tax Credits in California – 2023 Edition
Known for its sunny skies and pleasant climate, California is an ideal location for generating steady, clean power through solar photovoltaic (PV) systems. Coupled with the state’s lucrative solar tax credits and incentives, switching to solar in California promises not only a renewable energy source but also substantial savings on your energy expenses.
This article, brought to you by the experts at Guides Home Team, provides a detailed overview of the various solar tax credits, incentives, and rebates accessible to Californians. We’ll also keep you informed about the state’s current net metering policies. For California homeowners contemplating the installation of solar panels, we’ve provided a handy tool below to help you locate the top solar providers in your specific ZIP code.
Federal Solar Tax Credit An integral part of maximizing your solar savings is leveraging the federal solar investment tax credit (ITC). This federal initiative enables you to claim a tax credit equivalent to 30% of your overall solar installation costs on your federal taxes. Note that this is not a tax refund, but a credit that directly reduces the tax amount you owe.
One remarkable aspect of this credit is that there is no upper limit to the amount you can claim. The federal solar tax credit covers the majority of the costs associated with installing a solar PV system. The current 30% rate will persist until the end of 2032, after which it will decrease to 26% in 2033 and then 22% in 2034. If the federal government does not renew it, this credit will expire by 2035.
You will apply the tax credit to your federal tax return for the same year you install the solar system. To initiate the process, download IRS Form 5695, which pertains to residential energy credits, and fill it out accordingly. If your federal tax liability is less than the value of your tax credit, you can carry forward the remaining balance to offset your tax dues for up to five succeeding years.
California Statewide Solar Incentives California residents enjoy the added advantage of state-specific incentives such as a property tax incentive and rebates for specific homeowners who decide to install solar panels. While some of these incentives are based on household income or are available only in particular areas, your solar installer can guide you through the ones you are eligible for. To give you a preliminary understanding, we have outlined a few of the key statewide incentives available in California.