Investing in solar energy is one of the smartest financial and environmental decisions homeowners and businesses can make in Los Angeles. However, the upfront costs can be a concern. Fortunately, numerous tax incentives and rebates can significantly reduce these expenses, making solar energy more accessible and affordable. In this guide, we will explore the top solar tax incentives available in Los Angeles, including federal, state, and local programs.

Federal Solar Tax Incentives

1. Investment Tax Credit (ITC)

The Investment Tax Credit (ITC) is one of the most significant incentives for solar energy. As of 2024, homeowners and businesses installing a solar photovoltaic (PV) system can deduct 30% of the total installation cost from their federal tax liability. This credit applies to both residential and commercial installations and is available until 2032, after which it will gradually decrease.

Eligibility Criteria for ITC:

• The solar system must be new and owned outright (not leased).

• Installation must be completed during the tax year in which the credit is claimed.

• The system must be located in the United States.

2. Federal Solar Grant Programs

Several federal grant programs, such as the Rural Energy for America Program (REAP), provide financial support to rural businesses and agricultural producers installing solar systems. These grants can cover up to 50% of the total project costs, reducing the overall financial burden.

California State Solar Incentives

1. Net Energy Metering (NEM 3.0)

California’s Net Energy Metering (NEM) program allows solar system owners to sell excess electricity back to the grid, earning bill credits. However, under the new NEM 3.0 policy, which took effect in April 2023, the compensation rate for exported energy has been reduced. Despite this, net metering still provides long-term savings.

Key Benefits of NEM 3.0:

• Lower electricity bills by using solar-generated power.

• Earn bill credits for excess electricity sent to the grid.

• Incentives for battery storage to optimize solar energy use.

2. Self-Generation Incentive Program (SGIP)

The Self-Generation Incentive Program (SGIP) provides rebates for solar battery storage systems, making it easier to store excess solar energy. These incentives can cover up to 85% of the battery cost, depending on income level and location.

SGIP Eligibility Requirements:

• Must be a customer of Pacific Gas & Electric (PG&E), Southern California Edison (SCE), San Diego Gas & Electric (SDG&E), or Los Angeles Department of Water and Power (LADWP).

• The solar system must include a battery storage unit.

3. Property Tax Exemption for Solar Installations

Adding solar panels increases property value, but thanks to California’s Active Solar Energy System Exclusion, homeowners do not have to pay additional property taxes on the added value of their solar system. This exemption applies until January 1, 2025.

Los Angeles Local Solar Incentives

1. Los Angeles Department of Water and Power (LADWP) Solar Incentives

LADWP offers one of the most attractive solar rebate programs in California. Through the Solar Incentive Program (SIP), residents can receive a rebate of $0.25 per watt installed, reducing the overall system cost significantly.

Who Qualifies for LADWP Solar Rebates?

• Must be an LADWP customer.

• The solar system must meet LADWP energy efficiency requirements.

2. Low-Income Solar Incentives (SOMAH & DAC-SASH)

Los Angeles has specific programs for low-income homeowners, such as:

• Solar on Multifamily Affordable Housing (SOMAH): Provides incentives to affordable housing developments.

• Disadvantaged Communities – Single-family Solar Homes (DAC-SASH): Offers fully subsidized solar panel installations for eligible low-income families.

How to Apply for Solar Tax Credits and Incentives

Step 1: Determine Eligibility

Before applying, confirm that you meet all eligibility criteria for federal, state, and local incentives.

Step 2: Work with a Certified Installer

Most incentive programs require installations to be performed by a licensed solar contractor.

Step 3: Keep All Necessary Documents

• Receipts and invoices for the solar system and installation.

• Permit approvals and system documentation.

• IRS Form 5695 for federal tax credit claims.

Step 4: File for Incentives

• Federal tax credits are claimed through the IRS tax return.

• California incentives require applications through utilities like LADWP.

• Local rebates are applied via the program provider’s website.

Conclusion

Los Angeles residents have access to a variety of solar tax incentives and rebate programs that make switching to solar energy more affordable. Whether you are a homeowner, business owner, or low-income resident, taking advantage of these financial benefits can significantly reduce your solar investment costs.

If you’re considering installing solar panels, act now while these incentives are still available and maximize your savings!