2022, 2023 Federal Solar Tax Credit – Solar Rebate

Last Update: January 2023

Get a Free Solar Power Estimate from a local vendor by clicking the link to the right.

2023 continues the very popular residential Solar Federal Tax Credit or Investment Tax Credit first enacted in 2009.  With the new credit, you can claim up to 30% of solar power costs for a new solar electric system off your Federal taxes. Existing homes & new construction qualify. Both principal residences and second homes qualify. Rental properties do not qualify. 

In August 2022, Congress passed an extension of the ITC, raising it to 30% for the installation of which was between 2022-2032. (Systems installed on or before December 31, 2019 were also eligible for a 30% tax credit.)

• 2020-2021: Owners of new residential and commercial solar can deduct 26 percent of the cost of the system from their taxes.
• 2022-2032: Owners of new residential and commercial solar can deduct 30 percent of the cost of the system from their taxes.

Tax Rebate Expires: December 31, 2032

The Solar Federal Tax Credit works especially well when coupled with a state rebate program. (CA, CT, NJ, NY)

Did you know you could get rebated on:

• Fixing a roof to install solar
• Working on electric wiring to install solar
• Tree trimming that affects solar

Always consult your accountant to understand if you qualify.

Also look for city solar incentive programs, that can also save you money on your solar panels.

• San Francisco GoSolarSF Incentive
• San Mateo County Peninsula SunShares

On the tax credit, existing homes & new construction qualify. Both principal residences and second homes qualify. Rentals do not qualify. This Solar Federal Tax Credit reduces the amount of tax you owe. The credit is a reduction of total income tax at the bottom of your tax return. This tax credit is a non-refundable tax credit. Consult your tax adviser for details about solar power. Use it or lose it!

California Solar Power Rebates

In the Spring of 2013, most of California ran out of money for their solar rebates. Southern California Edison ran out after that, but they may have a waiting list for business customers. Rebates make solar power worthwhile in California as well as several other states. Without hefty rebates, few systems would be sold. California Solar Initiative Rebates vary according to system size, customer class, and performance and installation factors. The subsidies automatically decline in “steps” based on the volume of solar megawatts confirmed within each utility service territory. Be sure to check this website tracker page to see where rebate amounts are currently at. The rebates are clearly approaching a lower level in the near future. If you are interested in the solar system and reside within the service area, it is time to start moving your project forward.

Example Solar Electric System cost with Rebates An average 6kW residential solar electric system costing $17K would get $5k Federal Solar Tax Credit. First year system net cost $12k. System pricing is always changing, primarily downwards. The estimated annual electricity cost before you installed a solar system would be approximately $1700, the price with your solar electric system installed would drop to $400. System payback time would be roughly 9 years.

Rebates vary depending on location of course. Rebates make solar power Very attractive! The estimated life span of most solar electric systems is from 20 – 30 years, so after your system payback time, your system has already paid for itself. The payback time in New York, with its state and local tax credits is even shorter. The payback time in Minnesota and Oregon is slightly longer than California.

If you add a batter backup to your solar system in California, you could qualify for the CPUC’s Self-Generation Incentive Program (SGIP) incentive.

Solar Leasing

Because solar panel prices have fallen so fast, the best way to purchase a new solar panel system is by paying cash or getting a loan. More than 50% of customers do this in 2017.

San Francisco Solar Rebates

The city of San Francisco recently started GreenFinanceSF, a financing program that helps to pay for water savings, energy efficiency, and renewable energy projects that you might not have been able to afford.  The repayment obligation is attached to the property, rather than the individual, and is paid back through property taxes over the life of the financing. The maximum payback is 20 years. this program applies to residential and commercial property owners. Eligible projects include home energy audits, upgrading heating systems, upgrading water heaters, installing solar hot water, installing solar electric panels, and conserving hot water.

The city wants people to get home energy audits before doing any work, so you see all the options. The program has an online application and application processing fee of $300. FAQ 800-803-6930 is their phone number. If you sell the property before everything is paid back, whoever buys the property will make the rest of payments over time through their property tax bill. This program was funded in part Through the American Recovery and Reinvestment Act of 2009 (ARRA). The City and County of San Francisco received direct funding through the federal Energy Efficiency and Conservation Block Grant Program that was used to establish the framework of GreenFinanceSF. This Solar Federal Tax Credit is not affected by the AMT or Alternative Minimum Tax.

San Francisco Solar Panel Discount

This program may have its funding slashed by 40% shortly, so get in now if you have been thinking about it. Go solarSF helps San Francisco residents acquire discounts on Solar panel installation in San Francisco. There is a GoSolarSF rebate of $2000-6000 and a firm that helps people collectively buy panels at lower prices. A 2Kw system for $6000 after rebates instead of $18,000. Pretty sweet. Make sure you factor in any city permit or contractor installation fees. Also consider fixing any roof problems before you add solar panel.

San Jose Solar Discount

Let’s face it, solar panels are great but very expensive. The nonprofit Bay Area Climate Collaborative has set up a new program called SunShares that allows employees of participating companies and credit unions to buy solar panels at the significantly discounted price. San Jose city workers have a group by program of their own, that allows them to buy top rated SunPower solar panels at more than 40% off. Financing is available from the San Jose Credit Union. They are looking for other municipalities and businesses to participate, so be sure to contact them.

Solar Panel Group Buy

1bog.org (One block off the grid) is working to aggregate solar purchases to save money. They are active in San Francisco Bay Area, LA, San Diego, and New Orleans. They are a community based, national organization helping to negotiate group discounts between consumers and solar installers.

Solar Power During Power Outages

Many people believe that their solar electric system will provide them with power when the power is off. Recently Super Storm Sandy reminded solar panel owners that this is not the case. A standard known as UL 1741 allows solar electric systems to be connected to an electric utilities system. The utility becomes an electrical backup, for times when the sun isn’t shining.

The electric company becomes part of a centralized grid for distributing and buying power. If they are offline, the whole system shuts off. You can go completely “off the power grid” by having your own battery backup. This option is extremely expensive and requires more maintenance and complexity. Most people that opt for this type of system live far away from electric wires. With the recent solar rebates, it is a great time to get off the grid.

Be sure to read our article: Are solar panels for me? Interested in Solar Energy? Read our articles on solar power:

• Are Solar Panels for Me?
• Solar Panel Installation – Planning
• No money down Solar Panels
• Solar panel cleaning

Posted on January 1st, 2023
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