California solar incentives and tax credits status in 2024 may vary based on regulatory and policy changes. California is known for being environmentally conscious and committed to achieving aggressive clean energy goals over the next 20 years. Officials plan to become carbon neutral by 2045, one of the most ambitious renewable energy goals in the United States. With one of the largest solar markets in the country and several cost-saving solar incentives, California is an ideal place to grow solar.
Latest News on Californian Solar Incentives
As of February 9, 2024, California’s solar incentives, tax credits, and rebates are listed below:
- Federal Solar Tax Credit: Although California does not have a state solar tax credit, residents are eligible for an ongoing solar tax credit of 30% on their federal income taxes. This is a one-time non-refundable tax credit.
- SGIP (Solar Grid Installation Refund): a one-time refund for the installation of solar cells.
- Property Tax Exemption: no increase in property taxes with the installation of solar cells.
- PACE Program: Financing for solar cells paid for through property taxes.
- Local California Solar Incentive: varies by utility and geographic location and includes net metering payments.
California Solar Incentives
California offers property tax incentives and rebates to certain homeowners who install solar panels. Some incentives are conditional on household income or are only available in certain areas, but you can discuss which incentives you qualify for with your solar installer. We outline some of the statewide incentives below.
| Incentive | Incentive type | Summary | Occurrence |
| Disadvantaged Communities – Single-Family Solar Homes (DAC-SASH) | State | Offers financial assistance of up to $3 per watt for qualifying low-income residents | One-time |
| Self-Generation Incentive Program (SGIP) | State | Offers up to $200 per kWh for solar battery installations | One-time |
| Equity Resiliency Program | State | Includes rebates for $1,000 per kWh for energy storage systems | One-time |
| Active Solar Energy System Property Tax Exemption | State | Eliminates property tax for solar system installations | One-time |
| Local City and Utility Company Rebates | Local | Additional rebates and incentives are offered at the city and utility level | Varies |
| CA Solar Rights and Easement Laws | State | Protects homeowners from HOAs preventing solar system installation | Ongoing |
| Net-Metering | Local | Allows you to earn energy credits in exchange for excess energy | Ongoing |
California Solar Tax Credits and Rebates
California solar programs and incentives for homeowners. These programs help reduce the cost of solar panels and additional battery storage. California also has programs aimed at making solar energy more affordable for low-income households. In addition to financial incentives, the state also protects homeowners’ rights to own solar panels.
California Solar Incentives and Tax Credits (2024)
California offers a range of benefits in 2024 to encourage homeowners to embrace solar energy. The most significant incentive is the California Solar Initiative (CSI) program, which provides cash rebates for residential solar installations. Additionally, the federal Investment Tax Credit (ITC) 5allows homeowners to claim a percentage of their solar system costs as a tax credit.
The Self-Generation Incentive Program (SGIP) provides incentives for energy storage systems, allowing homeowners to store excess solar energy for use during peak hours or power outages. Moreover, California’s Net Energy Metering (NEM) program enables solar system owners to receive credits for the surplus energy they contribute to the grid. These programs make going solar even more affordable and help homeowners reduce their carbon footprint.
Federal Solar Tax Credit
The federal solar investment tax credit (ITC) can help you maximize your savings on your solar energy bills. The federal solar tax credit allows you to deduct 30% of the total cost of a solar installation from your federal taxes. This is not a tax refund. Instead, it reduces the amount you owe as a tax credit.
There is no upper limit on the amount you can apply for. The federal solar tax credit helps cover most of the installation costs of a solar photovoltaic system. The 30% tax rate will remain in place until 2032. It will drop to 26% in 2033 and 22% in 2034. The credit will end in 2035 unless renewed by the federal government.
You will claim the tax credit on your federal tax return for the year you install your solar system. To apply for the Residential Energy Credit, download and complete IRS Form 5695. If you owe less in federal taxes than your tax credit, you can carry forward the remaining balance to cover your tax liability for up to five years.
Self-Generation Incentive Program (SGIP)
The California Public Utilities Commission’s Self-Generation Incentive Program (SGIP) provides tax rebates to residents who install solar cells and solar panels. The amount of the rebate depends on the capacity of the battery storage system and the local utility company.
Property Tax Exemption
In California, solar panels are currently not considered when determining property values. This means that while solar panels will increase the value of a home, they will not increase property taxes. This tax exemption is set to expire on January 1, 2025.
Property Assessed Clean Energy (PACE) Program
Financing is available to eligible homeowners through the Property Assessed Clean Energy (PACE) program. Under this program, you can finance a solar installation and pay off the loan with your property taxes.
There are some caveats to the program: you may be subject to higher annual property taxes and a lien will be placed on your home until you pay off your loan, which may make it difficult to sell your home when the last payment is due. These contracts are for 10 to 30 years.
California Solar Costs
According to EcoWatch.com, the cost to install a solar power system in California is approximately $16,380. That averages $2.73 per watt, which is higher than the national average of $2.66. Despite higher installation costs, California residents benefit from long-term savings by ditching fossil fuels. Federal and state solar incentives will also lower your solar panel costs.
Let’s do the math for a 7 kWh solar system. Based on the per-watt rate, your system costs $19,110 (7,000 x $2.73). We can instantly reduce these costs by 30% using federal solar credits, lowering your investment to $13,377. This is a savings of $5,700 before any other solar incentives are applied. If you add a 13.5 kWh solar battery, you can save an additional $2,700 using SGIP incentives. More cities, municipalities and utility companies are more convinced of cost reductions.
California Solar Panels Cost
The cost of solar panels in California depends on the size of the system, the brand you choose, and the complexity of the installation based on the shape and slope of the roof. The average homeowner in California who needs a 5 kW system costs an average of $12,700 before any incentives or rebates. After federal tax credits, the average cost is $8,890.
California Solar Incentives FAQs
What is the California Solar Incentives Plan?
The California Solar Initiative (CSI) handles all solar incentives for three major investor-owned utilities: Pacific Gas & Electric (PG&E), San Diego Gas & Electric (SDG&E), and Southern California Edison (SCE). These incentive programs include rebates for schools, nonprofits, businesses, and residential solar projects. CSI also offers solar rebates for affordable housing programs, including the Single-Family Affordable Housing Program (SASH).
Does California offer any tax incentives for solar?
Yes, California Solar Incentives . Homeowners receive a property tax exemption on the added value of solar panels and qualify for federal solar tax credits that can reduce installation costs by 30 percent. Unfortunately, California no longer offers a sales tax exemption for residential solar panels.
What are the benefits of using solar energy in California?
California leads the nation in residential solar installations and promotes clean energy among residents. The state has abundant sunshine year-round, making it an ideal environment for solar power generation. According to the Solar Energy Industries Association (SEIA), the price of solar panels in California has dropped 53% in the past 10 years. Additionally, the California government plans to transition to 100% clean energy by 2045 and is supporting this initiative through multiple solar incentives and rebates.
Are solar panels worth installing in California?
The Solar Energy Industries Association (SEIA) ranks California No. 1. 1st state in the nation to adopt solar power. The state has enough solar installed to power more than 11 million homes. Many factors make solar energy worthwhile in California.
The Golden State has plenty of sunshine year-round, which means homeowners can generate a lot of solar power with relatively small solar panel systems. California also has a host of solar-friendly policies and incentives in place to make it easier for homeowners to switch to clean energy. A large number of solar installers also serve California residents, providing a variety of options when comparing providers.
How many years can I claim the federal solar tax credit?
You can claim a federal tax credit once in the year you install your solar system. However, if the credit exceeds the tax you owe, it will be carried forward to the next tax year for up to five years. Under the Inflation Reduction Act passed in August 2022, the federal solar tax credit is equal to 30% of the total system cost.
Is it worth getting solar in California?
Of course, not only will installing solar panels in California save you money on your electric bill, but the long-term solar investment will also contribute to energy savings, which makes it worthwhile for any California resident.
Does California have a solar property tax exemption?
Yes, there is a Property Tax Exemption for Solar in California, homeowners who install solar panels in California will not be taxed on the amount that those panels increase the value of their home until January 1, 2025.
How to Choose the Best California Solar Panel Company
There are several solar energy companies in California. Many offer all kinds of incentives for panel installation.
Do your research to learn more about licensed providers that have a good track record of customer satisfaction, affordability, and long-term maintenance. Of course, ask neighbors, colleagues, family, and friends for recommendations for PV contractors that they’ve used and liked.
