The state of California has a robust tax credit program for homeowners who invest in solar energy for their residences. When you pair state incentives with the federal solar tax credit, solar solutions are more affordable and can begin paying homeowners back in as little as six yearsContinue reading to learn more about the solar tax credit program available for California residents and how they may be changing in 2023.

Federal Solar Tax Credit

The Federal Solar Investment Tax Credit (ITC) is one of the most advantageous tax credits available for California residents. Initially established in 2006, the solar tax credit was to begin phasing out in 2022 and eventually end in 2024. 

President Biden’s Inflation Reduction Act signed in August 2022, however, has re-upped the program and extended it to run through 2034. Any project started in 2022 or 2023 will be eligible for up to a 30% solar tax credit on solar system costs, and unused credits can carry over for up to five years. The credited percentage will begin to tier down starting in 2033.

Self-Generation Incentive Program

Many Californians have experienced prolonged power outages due to an overwhelmed power grid, forest fires, or other natural disasters. The unreliability of the power grid has led many Californians to consider switching to solar power.

California created the Self-Generation Incentive Program to provide rebates to residents who pair their solar panels with solar batteries. The rebate for doing so is up to $200 per kWh of battery. The rebate is structured as a tiered incentive program, but the program may potentially run out. If you want to take advantage of this program, act quickly.

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Net Metering

Net metering is a program that works in partnership with local utility companies to provide homeowners the ability to generate excess solar power and return it to the grid with future electric bill credits.

In 2022, California mandates that all net metering power be credited back to the homeowner at the full retail rate. California is one of the best places to participate in net metering because of this homeowner-friendly mandate. However, a proposal is under consideration in California to allow individual utilities to determine the credit rate moving forward. As in other states, the utilities will likely begin offering a lower return or a blended billing rate.

The fact that net metering is still in the future plans for California and utility companies is a positive note, but the proposed changes could result in more homeowners investing in significant battery storage and avoiding further reliance on the grid.

Stay Tuned for Future Changes

State and federal governments initially launched incentive programs to drive residents’ interest in going solar. Now that solar power has become more popular and many homeowners have realized the benefits of such programs, though, we may see these programs begin to phase out over time. This realization means that now is the perfect time to consider solar power. If you’d like to learn more about what it takes to go solar in California or about the solar tax credit, contact us to learn more.

To compare solar financing options and see how much you can save, use our solar calculator below.

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