Alia Atwell had been planning to install solar panels on her roof ever since she replaced it two years ago. But when President Donald Trump was elected last year, she quickly sped up the project, assuming that federal tax credits for green initiatives could disappear.
Atwell, 35, had her panels installed in May. By the beginning of July, her predictions had come to fruition with the passing of the tax-and-spending bill, referred to by Trump as the “one big beautiful bill” — a bundle of different legislation that included a rollback on tax incentives for home solar panel installations and electric vehicles.
“I can’t do anything about the national political repeals of climate legislation,” Atwell said. “But I can do something about my own personal space, and this is somewhere where I could directly spend money that I knew would make a difference against global warming.”
Atwell may have been ahead of the curve as Washingtonians are now rushing to go green before tax breaks expire in upcoming months. With rising interest, solar companies are working to provide their products while anticipating a sales cliff. And while the tax credit helped ease costs, the high price of solar panel installation has kept some buyers on the fence.
Homeowners currently receive a 30% tax credit on the total cost of installation when they file taxes after putting solar panels on their home. That credit will expire Dec. 31.
Federal tax incentives for buying electric vehicles, including a purchasing credit and a home charging installation credit, are set to expire Sept. 30 and June 30, 2026, respectively. The purchasing tax credit includes up to $4,000 for a used EV and $7,500 for a new one. The credit for installing a home EV charger is 30% of the cost, up to $1,000.
Federal solar tax credits first popped up in 2005 as part of the Energy Policy Act. Since then, the credits have been expanded or extended multiple times with the last extension passed in former President Joe Biden’s Inflation Reduction Act, before it was eliminated by the recent bill. The Inflation Reduction Act also expanded electric vehicle credits.
Chris Hanacek and his wife had been kicking around the idea to install solar panels on their home for a while. Neighbors and friends of his seemed to like theirs, Hanacek said, so when the bill passed, it tipped the decision to yes. Hanacek received a quote, around $35,000, and will have the panels installed in September.
It wasn’t just solar panels the couple decided to jump on. The pair, looking at the repeals on EV credits, decided to purchase another Tesla. Hanacek bought his first Tesla in 2018 and said he loves driving the vehicle. So when Tesla had a financing deal, coinciding with the news of rollbacks, the couple made their decision, replacing their Suburban Hanacek called the “big, white whale.”
“If it hadn’t passed, we might still be on the fence about these things,” Hanacek said. “I feel really good about this. We’re spending a little bit more money this year than I would have otherwise budgeted but I think in the long run it’ll definitely pay off.”
Seattle City Light estimates the cost to install solar panels on homes, before the tax credit, is between $25,000 and $30,000, with the average consumer saving around $2,230 on utility bills per year, according to data from the Internal Revenue Service.
Hanacek isn’t alone in his decision. Will Sumner, CEO and co-owner of Puget Sound Solar, said there’s been a huge surge in business since the bill passed and was signed into law. Usually there will be 20 to 30 people asking for installation cost quotes a week, Sumner said. Last week, the company had over 60.
While business is booming right now, Sumner said the company is looking ahead to the upcoming cliff when the credits expire. To manage the sales drop, Sumner said the business is continuing to diversify into other kinds of electrical work. Although the rollbacks are impactful in the short term, he said in the long term, the solar industry doesn’t want to have to rely on subsidies and this could be a chance for it to sustain itself without.
“We needed a runway,” Sumner said. “Right now the rug is being pulled out from underneath us when we needed a runway.”
Puget Sound Solar is not yet booked out until the end of the year, but Sumner said every day he hears about competitors filling up. This could be a concern for some homeowners, Sumner said, because the consensus of those in the solar industry is that the tax credit will only apply to those who have panels installed before the end of December — not people who scheduled installations for later.
This isn’t the first time the company has seen incentives end. In 2021, a state initiative run through Washington State University known as the Renewable Energy System Incentive Program stopped accepting new applications after state funding ran out.
Randy Sprout, co-founder and chief operating officer of Clean Energy Innovators, hopes with federal enticements ending, Washington can create its own programs for solar tax credits to ease the transition and support companies. In Washington, solar and clean energy jobs totaled around 4,149, according to 2023 data from the Interstate Renewable Energy Council.
Washington currently offers net metering, meaning homeowners can buy electricity from their provider when needed and send back solar power-generated electricity to their providers when not needed. If consumers produce more electricity than they use, they receive a credit.
Equipment for solar panel energy systems smaller than 100 kilowatts is also exempt from state and local taxes in Washington.
Washington also offers a sales and use tax exemption for purchasing EVs, although those exemptions will expire at the end of July. The state recently introduced a rebate program in April, offering up to $1,200 for e-bike purchases.
Robert Deprez, a co-owner of Paramount Motors NW, said he has not seen an uptick in sales, and that business has been relatively slow overall. He is expecting people to begin buying EVs in the last week of July, however, before the Washington tax credit expires.
Sprout, however, said his company has seen high demand, starting about 30 to 45 days before the bill passed. He knows a sharp decline in sales is likely, but he also believes that solar has a high value, and it will never be fully eliminated.
Even with the incentives, not everyone is sure that the benefits are worth the cost. Olympia homeowner Zack Hofstad, 46, said he’s still considering installing solar. It would cost around $30,000 to install and he could get 30% of the cost back with the federal tax credit if he installs the panels before the end of the year.
But the benefits of offsetting his power bill would take nearly 14 years to actualize, Hofstad said. As he’s likely to sell the home in about a decade, he’s unsure about making the jump.
“I still really like the idea of solar,” Hofstad said. “It’d be really nice if it financially made sense for us.”
