• The state of Washington offers tax incentives to encourage consumers and businesses to use solar power.Frank Chmura/Photodisc/Getty Images
  
  The state of Washington offers several tax incentives to encourage the use of alternative energy sources by consumers and businesse that use and sell solar technology. While some of the incentives promote the sale and manufacture of solar equipment, consumers can benefit from an incentive aimed at promoting the use of solar and other forms of renewable energy.
  
  

Business and Occupational Tax

• Selling certain types of solar systems will reduce the B&O tax rate for businesses.dollars image by peter Hires Images from Fotolia.com
  
  Washington state now offers a lower business and occupational (B&O) tax on businesses that sell certain solar systems. The law lowers the B&O tax from 0.2904 to 0.275 percent until June 30, 2014. The lower tax rate applies to solar-energy systems that use photovoltaic modules, the manufacture of solar-grade silicon, wholesale sales of systems that use photovoltaic modules when the system is manufactured by the seller, and wholesale sales of solar-grade silicon manufactured by the seller when the silicon is used entirely in a solar-energy system that utilizes photovoltaic modules.
  
  To receive the lower tax rate, the business must file a report with the Washington Department of Revenue by March 31 of the following year.
  
  

Tax Exemption on Gas and Chemicals

• Businesses seeking this tax exemption must file a report by April 30 of the following tax year.business report image by Christopher Hall from Fotolia.com
  
  Washington state grants a sales and use tax exemption for the purchase of gases and chemicals that are used to manufacture semiconductor materials, silicon solar wafers, silicon solar cells, and thin-film solar devices. The tax exemption is in place until December 1, 2018.
  
  To receive the exemption, manufacturers must provide a copy of the sales-tax exemption certificate. Businesses who claim this exemption must file a report with the Department of Revenue by April 30 of the following year.
  
  

Consumer Tax Incentives

• Individual consumers can enroll in an incentive program when they use solar power.Solar Panel image by kuhar from Fotolia.com
  
  The state of Washington encourages individuals and businesses use solar power. They can apply for a cost-offset incentive program that pays up to $2,000. This program is in place until June 30, 2014. Participants must first determine if their local electric utility is enrolled in the cost-offset program.
  
  Participants must complete a certification form and present it to the Department of Revenue and the Climate and Rural Energy Development Center. The information provided must indicate that the power generated at the location is derived from a "renewable energy source," state where the energy system is located, indicate the manufacturing location of the equipment, and demonstrate that the electricity produced by the system can be transmitted to a system that distributes electricity.
  
  After acquiring certification, the consumer can apply for the cost-offset incentive program. The program pays the consumer at a rate of $0.15 per kilowatt hour multiplied by a rate for the type of technology that is used. Solar modules produced in Washington state are multiplied by a rate of 2.4, solar systems with an inverter produced in Washington by 1.2, and anaerobic digesters produced in Washington state by 1.0.