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While Washington State isn't quite as RE-friendly as California or New Jersey, Washingtonians can take advantage of tax credits, tax exemptions, and production incentives.
- Federal Income Tax Credit:
The federal government is giving us a tax break through 2016 with a 30% credit on solar hot water (except pool heating) and solar photovoltaic (PV) systems. For residential installations, the solar hot water credit is capped at $2000. There isn't a cap on residential solar PV or on commercial solar PV or solar hot water systems.
For more information about this tax credit visit the following links:
- DSIRE database link for information about commercial tax credit
- IRS Form 3468 and instructions
- DSIRE database link for information about residential tax credit
- IRS form 5695 and instructions
- For Businesses -- The Commercial Federal Tax Credit and Depreciation:
Businesses get more good news from the IRS. First, both PV and solar hot water systems installed in 2008 were 5-year properties for the purpose of depreciation. Federal legislation to extend this accelerated depreciation is pending. Second, under a special rule in the Internal Revenue Code, the depreciation basis for PV and solar hot water systems is only reduced by half of the federal tax credit. That's right! A business that installs a solar thermal or PV system (or both) gets a tax credit of 30% and can also depreciate 85% of the cost of its system(s) over only 5 years.
A caveat ... we are neither accountants nor tax attorneys. Consult with your tax professional.
- Internal Revenue Code -- Scroll way down to section C, Basis adjustment to investment credit property for the special rule concerning basis adjustment and the energy credit.
- IRS publication 946, How to Depreciate Property -- See page 30, topic Depreciable Basis for reference to section 50(c) of the tax code; page 33, section 2h for listing of energy systems as 5-year property for depreciation.
WA State Sales Tax Exemption:
Materials and installation of solar electric, solar hot water, wind, and micro-hydro power -- grid-tied or not -- are exempt from Washington State sales tax. This exemption will last through June 30, 2009.
Details at:
- DSIRE database
- WA State Legislature
- Production Incentives:
Washington State has legislated production incentives. In our area, PSE customers who generate power with grid-tied solar PV arrays, wind turbines or anaerobic digesters are eligible for production incentives as high as 18 cents/kilowatt-hour up to a maximum of $2000 per year. This program is currently legislated to run through June 2014.
Basic rate is 15¢
- Current Multipliers:
WA inverter x 1.2 = 18¢
Non-WA equipment x 1 = 15¢
Non-WA wind x .8 = 12¢
- For more information see:
-
PSE website
- DSIRE database
- WA Department of Revenue information
- WA Department of Revenue application
A printable hand-out on renewable energy financial incentives can be accessed here. It is a PDF file and will open in another window.
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