Tax Credits & incentives

Learn more about the tax incentives that make solar so appealing to residential and commercial property owners!

Federal Solar Tax Credits

The federal solar tax credit is the best way to significantly reduce the net cost of solar for residential and commercial installations. Specifically the federal solar tax credit reduces your 2022 federal income taxes by 26% of the cost of your solar system.

Here are the specifics:

  • 2016 – 2019: Owners of residential and commercial solar systems installed between these years could deduct 30 percent of the cost of the system from their federal taxes.
  • 2020-2022: New owners of residential and commercial solar can deduct 26 percent of the cost of the system.
  • 2023: New owners of new residential and commercial solar can deduct 22 percent of the cost of the system.
  • 2024: New owners of commercial solar energy systems can deduct 10 percent of the cost of the system. There is no federal credit for residential solar energy systems.

An example: You purchased a solar system in 2022 that costs $20,000; you are eligible for a $5,200 tax credit ($20,000 x 26% = $5,200). If not fully utilized in one tax year the remaining credit will roll into the next tax year. 

The good news is there is still time to take advantage of the federal solar tax credit. If you or your friends have been considering a new solar system, an expansion to your existing system, a solar battery backup, or the addition of a battery to an existing system, this year is the time to install a solar system in order to maximize your savings.

Virginia Solar Renewable Energy Credits (SRECs)

Thanks to current legislation from the Virginia Clean Economy Act, Virginia has a wonderful program which allows you to sell kilowatt-hours produced by your solar system through an SRECs brokerage. Dominion Power and Appalachian Power Co. then purchase from this brokerage to bolster their renewable energy portfolio. SRECs are paid out quarterly at current market price per 1000kWh sold. 

SRECs are an easy way to increase the financial benefits of your solar system.

 

Charlottesville Tax Incentives for Residential Solar

City of Charlottesville residents are eligible for a 5 year real estate tax credit which reduces real estate taxes owed by a percentage of the total cost of the solar system. Additionally, adding a solar system to a home will not increase the property tax despite the value of the property increasing. 

The real estate tax rate is 1%; you can save 1% of the cost of your solar system each year which amounts to a 5% system cost reduction over five years.

A Helpful Example: A property has an assessed value of $350,000. A $20,000 solar system is installed increasing the value of the property. For tax purposes the property’s assessed value remains at $350,000. 

The property owner applies for the Charlottesville solar tax credit and is approved. The credit amount would be equal to ($20,000 x Tax Rate) and applied for 5 years starting on the first new tax year post system installation. With a tax rate of 1% and a system cost of $20,000 the tax credit would equal $200 annually or $1000 total over 5 years. 

This might sound like a small amount of money, but it adds up, increasing your return on investment and shortening your payback period.

Thanks Charlottesville, we are proud to call you home.

To learn more or begin your application follow this link

 

Commercial Tax Incentives

Charlottesville – no interest for 10 years – systems can be paid off in as little as 4 years.

Commercial: will pay (2%) down solar loans for commercial installations

Non-Profit: 0% down, no-interest loan for installing solar.