Last updated: December2024
Written by
Jamie Smith
Solar incentives offered in Virginia can help homeowners save an average of $5,506 on a solar installation.
Switching to solar is a great way to invest in a renewable energy source and cut down on monthly electricity bills, but it can be a hefty upfront investment. With the help of solar incentives, solar power is more accessible to the average homeowner. Let's see what's offered to homeowners in the Old Dominion State and how to calculate how much you can save with solar.
Incentive | Estimated average annual savings | Eligibility | About |
|---|---|---|---|
Federal solar tax credit | $5,506 | All-tax-paying U.S. citizens | Tax credit equals 30% of installation costs, applied to federal income taxes |
Virginia solar property sales tax exemption | Varies with property and system characteristics | Virginia property owners in participating municipalities | A portion of solar panel system’s value is exempt from property tax assessment. Exemption rates vary with system age |
Quick Facts
Value: 30% of solar installation costs
Frequency: One-time tax credit, rollover for five years
How to apply: File IRS form 5695 with an annual tax return
Virginians who go solar can save 30% on their solar installation through the federal solar tax credit. The credit equals 30% of the costs of a solar installation and lowers your federal income tax liability.
The average solar energy system in Virginia will earn a federal solar tax credit of $5,506. However, it's important to know this isn't an upfront payment. The tax credit lowers what you owe in taxes, so you won't get the savings until you file your tax return.
Quick Facts
Value: 80% property tax exemption for first five years, 70% for the next five years, then 60% for remainder of solar panels' lifespan.
Frequency: Annually
How to apply: Applications and regulations are offered by cities and counties, such as Fairfax, visit your local municipality’s website for further information.
Virginia allows municipalities to offer property tax exemptions for homes with solar systems. Solar panels typically raise your home's value, but if your town offers a solar property tax exemption, you won't have to worry about your tax bill increasing too much.
Virignia's property tax exemption can seem confusing. For the first five years that you own your system, 80% of the system value is exempt from your property assessment. 70% of the system's value is exempt for the next five years. For the remainder of the solar panel's life span, 60% is exempt from property assessment.
If your town participates, you can save a little over $100 on your property taxes through the exemption.
Quick Facts
Electric rates in Virginia average $0.15 per kWh
Virginia offers full retail net metering to customers of investor-owned utility companies
The major utilities offering net metering to customers include Appalachian Power Company and Dominion Energy.
Virginia's net metering policy mandates that utilities credit customers for excess solar energy they produce at the full retail electricity rate. So, if your solar panels generate more energy than your home uses, you'll earn a credit on your electric bill. That credit can then cover the cost of energy you use from the grid down the line.
Smaller municipal utility companies and electric cooperatives are not required to offer net metering to customers.
For more information on compensation rates your utility company offers, check out its website.
The average cost of a solar energy system in Virginia is $2.66 per watt installed, or $18,354 for the average 6.9 kilowatt (kW) system. Once you factor in the 30% federal solar tax credit, the amount falls to $12,847 to install solar panels in Virginia.
Federal tax credit: $18,354 x 30% = $5,506
Total savings: $5,506
Effective system cost: $18,354 - $5,506 = $12,847
These savings don’t include the additional energy bill savings through Virginia’s full retail net metering policy, which can offset most of your bill if your solar system is sized properly.
The total cost of a solar panel installation will depend on a few factors, like how many solar panels you install, the solar company used, and the characteristics of your roof.
As a whole, we’d love to see Virginia offer some upfront rebates to lower the initial cost of a solar installation. But, with the combination of the federal tax credit and full retail net metering, solar is a worthwhile investment. The average payback period for a solar project in Virginia is around 9 to 12 years, which falls in line with the national average.
Solar programs to target low-income homeowners or residents of disadvantaged areas might be on the horizon. Virginia received millions in funding from the Environmental Protection Agency’s (EPA) ‘Solar for All’ initiative in 2024. This federal funding will be used to create or expand existing solar programs to make installations more accessible.
It’s important to remember that everyone’s home is different and all financial situations are unique. The best way to determine if solar is right for you is to speak with local solar companies and contractors. You can check out SolarReviews’s extensive directory of solar companies in Virginia to find one that suits your needs.
Jamie is a Content Writer and researcher at SolarReviews. A recent graduate of La Salle University in Philadelphia, Jamie earned her B.S. in communications with a concentration in journalism, mass media, and public relations.
Jamie has previously worked at a marketing company where she had the opportunity to highlight and promote small bu...
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