Solar Energy Incentives in WA: What Were Curtailed or Canceled?

What Solar Incentives Were Curtailed or Canceled?

1. "Solar for All" Grant Program Terminated

President Trump’s administration ended the $7 billion “Solar for All” grant program, designed under the Inflation Reduction Act (IRA) to expand solar access to low‑income households. The EPA announced they no longer had funding authority due to the recently signed “One Big Beautiful Bill,” which eliminated the program’s funding source. The program was nearly fully subscribed, with high demand from eligible households before its termination. This move halted grants that had already been awarded, potentially affecting nearly 1 million households.

2. Executive Order Abolishing Clean‑Energy Tax Credits

On July 8, 2025, Trump issued an executive order terminating the federal solar and wind tax credits. The Treasury was instructed to phase out clean-energy tax incentives, including the federal solar tax credit (also known as the federal tax credit for solar installations), within 45 days. The federal solar tax credit has been a significant financial incentive for homeowners, reducing federal tax liability and lowering the initial cost of installing solar energy systems. To claim the federal solar tax credit, homeowners must complete the appropriate IRS form (such as Form 5695) and submit the complete form with their federal tax return. This announcement sent renewable energy stock prices sharply downward and heightened investor uncertainty.

3. The One Big Beautiful Bill Act: Scaling Back Tax Credits

The sweeping One Big Beautiful Bill Act (OBBBA) repealed or limited several renewable energy incentives originally in the IRA:

• Residential solar Investment Tax Credit (ITC) at 30% remains only through December 31, 2025; only solar system installations completed by this date will qualify. The credit applies to the total cost of installation, including equipment and labor, for residential solar systems and other renewable energy systems owned by individuals.
• Commercial and utility-scale solar/wind credits remain only if the installation:
• Starts construction by June 2026, or
• Is placed in service by December 2027, subject to stricter “safe harbor” rules and new foreign‑entity constraints. These changes affect both commercial solar systems and other renewable energy systems owned by businesses.
• The Act also ends other clean-energy incentives—like home electrification, EV and charging credits—much earlier than originally scheduled, meaning a wide range of potential projects may no longer qualify for incentives.

4. Tighter ‘Safe Harbor’ & Foreign‑Entity Restrictions

Following the OBBBA, Trump issued an executive order tightening how “begin-construction” is interpreted. Developers can no longer rely on minimal spending (e.g., 5%) to qualify. They now must show substantial physical progress to claim tax credits. Additionally, enhanced screening of foreign-influenced entities makes some projects ineligible.

5. Tariffs on Imported Solar Panels

Going back to his first term, Trump imposed 30% tariffs on imported solar panels (phasing to 15%). This move increased costs for solar installations, impacting both roof-mounted and ground-mounted solar systems, and triggered the cancellation or postponement of billions in solar projects, shaking investor confidence and hurting industry growth. Higher costs could slow the adoption of solar power for homeowners and businesses.

6. Funding Freezes and Uncertain Enforcement

Trump’s administration froze many clean energy funds under the IRA and IIJA. The Residential Clean Energy Credit (the 30% tax credit) wasn't directly eliminated by executive order—it still remains legislatively intact—though broader funding uncertainty casts long shadows.

Net Metering and Energy Systems: Rollbacks and Restrictions

Net metering has long been a cornerstone of Washington’s solar incentives, allowing homeowners and small businesses to earn credits for the excess electricity their solar panels generate and feed back into the utility grid. However, recent moves by the Washington State Legislature signal potential changes that could impact the value of these solar credits and the overall savings from solar energy systems.

Proposed modifications to the net metering program may reduce the credit homeowners receive for surplus energy, making it more challenging to offset their electricity bill and maximize the return on investment for solar panels. The Solar Energy Industries Association has voiced concerns about these rollbacks, emphasizing that strong net metering policies are essential for encouraging the adoption of renewable energy systems and supporting the growth of the solar industry in Washington.

Puget Sound Energy, one of the state’s largest utility companies, has also announced plans to reevaluate its net metering program. This could lead to changes in how commercial utility customers and homeowners are credited for the energy they generate, potentially affecting the financial benefits of installing solar.

Despite these uncertainties, there are still significant opportunities for homeowners who act quickly. If you install your solar energy system before any changes take effect, you can lock in the current 1:1 credit exchange, allowing you to save money by offsetting your energy costs with the electricity your system produces. The federal investment tax credit, which offers a dollar-for-dollar reduction in your federal income tax, remains available for a limited time, and Washington’s state sales tax exemption for solar energy systems continues to provide substantial upfront savings.

The Washington State Department of Commerce is actively promoting energy efficiency and renewable energy adoption, but the success of these initiatives depends on the continuation of supportive policies like net metering. As the solar industry evolves and incentives shift, it’s more important than ever for homeowners to stay informed and work with a trusted solar installer who understands the latest programs and can help you maximize your savings.

The upfront cost of installing solar panels can be significant, but the long-term benefits—including lower energy costs, increased property value, and greater energy independence—make solar a smart investment for many Washington residents. Net metering systems not only help you generate your own electricity but also allow you to earn credits that can be used to offset future energy costs, further enhancing your savings.

For those navigating the changing landscape of solar incentives, the WSU Energy Program offers valuable resources to help you understand your options and make informed decisions about your energy system. With potential changes on the horizon, now is the time to evaluate your options, take advantage of existing incentives, and secure your place in Washington’s renewable energy future.

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What This Means for Homeowners and Communities

• Homeowners: You can still claim a 30% solar tax credit (ITC) if your system is installed and operational by December 31, 2025. After that, residential credits disappear unless structured as Third-Party Ownership (TPO) installations through 2027.
• Commercial and utility solar developers face tighter deadlines and stricter criteria to qualify for project credits.
• Low-income households and nonprofits were expecting support from the “Solar for All” program; those grants are now rescinded, leaving projects and energy-support initiatives in limbo.
• Industry-wide, both investors and developers face an eroding policy environment and increased volatility.

Final Thoughts

The Trump administration’s latest moves have significantly rolled back federal support for solar energy—dismantling grant programs, ending tax credits, and introducing new compliance hurdles for projects. For anyone considering solar, time is critical: acting now could mean capturing incentives that may soon vanish.

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