Solar Incentives by State 2026: Credits, Rebates & Programs

The Federal ITC: What Happened and What's Left

The Residential Clean Energy Credit — the 30% federal tax credit for homeowner-purchased solar systems under IRS Section 25D — was scheduled under the original Inflation Reduction Act to remain at 30% through 2032. That changed in July 2025 when Congress passed and President Trump signed the One Big Beautiful Bill Act (OBBBA), which eliminated the residential solar tax credit for customer-owned systems effective January 1, 2026.

The OBBBA's impact on solar is significant but not uniform across all ownership structures:

• Cash purchase or solar loan (homeowner-owned): No federal ITC available for systems placed in service on or after January 1, 2026. This eliminates what was previously worth $5,000–$9,000 on a typical residential system.
• Solar lease or PPA (third-party owned): The commercial Section 48E Investment Tax Credit may still apply through 2028 (placed in service) if the project began construction before July 2026. The economics of leases and PPAs depend on developers passing some of this credit value to customers through lower rates.
• Battery-only systems: Stand-alone residential battery storage is also no longer eligible for the Section 25D credit.
• Prior installations: Homeowners who claimed the credit on systems installed before January 1, 2026 keep their credits. There is no retroactive clawback.

State Solar Tax Credits: The 7 States That Offer Them

Only seven states offer personal income tax credits for residential solar installations in 2026. These are dollar-for-dollar reductions in your state income tax liability — not deductions from income — and they function similarly to how the now-expired federal ITC worked. Unlike the federal credit, unused state credits may or may not carry forward; check your state's rules.

*Value on 8 kW system at $2.85/watt installed ($22,800 gross). State credits may be non-refundable; verify carryforward rules with your state tax authority. Source: DSIRE database, April 2026.

South Carolina deserves special attention. Its $35,000 cap means that for a large system — say, 15 kW at $42,750 — the full 25% credit of $10,688 is available. No other state comes close to this level of potential tax credit value for residential solar. South Carolina's credit also allows a 10-year carryforward period, making it accessible even to homeowners with moderate annual state tax liability.

SREC Markets: Turning Solar Production Into Cash Income

Solar Renewable Energy Certificates are one of the most valuable — and most misunderstood — solar incentives available. An SREC is a tradeable certificate representing 1 megawatt-hour (1,000 kWh) of solar electricity generation. Utilities in SREC states are required by law to purchase a certain percentage of their electricity from solar sources; if they cannot generate enough themselves, they buy SRECs from solar homeowners to meet their obligation.

The result is a second revenue stream from your solar panels — on top of electricity bill savings — that can add hundreds to thousands of dollars annually. Here is the current landscape by state:

*Annual income assumes 8 kW system producing 9,600 kWh/year (9.6 MWh). SREC prices fluctuate based on supply/demand for compliance. Income is taxable as ordinary income. Verify current prices at srecmall.com or through a licensed SREC aggregator. Source: SEIA, NJ Clean Energy Program, IL SHINES program data, Q1 2026.

Washington D.C.'s SREC market is extraordinary — $350 to $450/MWh makes D.C. solar the most financially compelling in the nation on a combined-incentive basis. A D.C. homeowner with an 8 kW system producing 9.6 MWh annually can earn $3,360 to $4,320 in SREC income alone — before counting electricity bill savings. D.C. SREC prices are high because D.C.'s aggressive Renewable Portfolio Standard (100% renewable by 2032) creates strong compliance demand with a limited local supply of eligible solar projects.

Utility Rebates and State Cash Programs

Beyond state tax credits and SREC markets, many utilities and state agencies offer direct cash rebates or incentive payments for solar installations. These programs are highly variable by utility territory — even within the same state, one utility may offer generous rebates while a neighboring one offers nothing.

New York — NY-Sun Megawatt Block

The NY-Sun program, administered by NYSERDA, provides per-watt incentives for residential solar installations across New York State. Incentive levels vary by utility territory and available megawatt-block capacity:

• Con Edison territory (NYC, Westchester): $0.20–$0.35/watt for systems under 25 kW in 2026
• National Grid / NYSEG territory: $0.15–$0.25/watt depending on current block availability
• LIPA (Long Island): Separate program; verify current rate at PSEG-LI website

For an 8 kW system, NY-Sun adds $1,600 to $2,800 in upfront incentive value, directly reducing installed cost. Combined with New York's 25% state tax credit ($5,000 cap), the total state incentive package can reach $6,600 to $7,800 — significant mitigation for the loss of the federal ITC.

California — SGIP Battery Rebates

California's Self-Generation Incentive Program (SGIP) provides rebates for residential battery storage — critical under NEM 3.0 where batteries are nearly essential for good solar economics. Standard SGIP rebates run $150 to $200/kWh for residential batteries. Income-qualified households receive enhanced rebates of $850 to $1,000/kWh, potentially covering 80–100% of battery cost. For a 13.5 kWh Powerwall 3 in California:

• Standard SGIP: 13.5 kWh × $175/kWh = $2,363 rebate
• Income-qualified SGIP: 13.5 kWh × $925/kWh = $12,488 rebate — more than the battery hardware cost

SGIP applications open periodically; check the California Public Utilities Commission portal for current enrollment status.

Maryland — $1,000 State Rebate

Maryland offers a straightforward $1,000 residential clean energy grant for solar installations through the Maryland Energy Administration. The program is first-come, first-served and funding is periodically renewed by the state legislature. As of Q1 2026, funding remained available but programs like this can exhaust quickly — apply promptly after installation.

Austin Energy & Selected Texas Utilities

Texas has no statewide solar rebate program, but several municipal utilities offer their own incentives. Austin Energy's Value of Solar Tariff pays a per-kWh rate for all solar production (not just excess), which in 2026 runs approximately $0.097/kWh. CPS Energy in San Antonio offers a $1,500 rebate for residential solar. These utility-specific programs are exceptions; most Texas residents are served by competitive retail providers with no solar rebate programs.

Net Metering Policy by State: Where Your Solar Export Is Worth the Most

Net metering determines the financial value of every kilowatt-hour your solar system exports to the grid. A state with full retail net metering turns excess production into bill credits at the full retail electricity rate. A state with avoided-cost net metering pays something closer to wholesale — dramatically less. This policy choice can have a larger financial impact than most state tax credits.

Export rates vary by utility and time of year. Full retail NEM rates reflect prevailing residential electricity rates in each state. Source: SEIA State Solar Policy database, NCSL, individual utility tariffs, April 2026. Verify with your specific utility before installation.

New Jersey's move to a successor tariff (effectively NEM 3.0) in 2024 reduced export value compared to the old full retail model, but the state's SREC income more than compensates for most homeowners. A New Jersey solar owner now earns less from grid exports but more from SREC sales — the net economic impact is modest. For a complete explanation of how net metering works and what California's NEM 3.0 means in practice, see our Net Metering Explained guide.

Property and Sales Tax Exemptions: The “Hidden” Incentives

Property and sales tax exemptions are often overlooked in solar cost calculations because they don't show up in a quote or on a tax return — but they represent real and sometimes significant financial value.

Property Tax Exemptions

Solar panels increase home value — Lawrence Berkeley National Laboratory research found an average premium of approximately $4/watt, or roughly $28,000 for a 7 kW system. In states without a property tax exemption, this added value would increase your annual property tax bill. In the 35+ states that have enacted solar property tax exemptions, the solar-added value is excluded from taxable assessed value.

At a 1.1% average U.S. property tax rate (Tax Foundation 2025 data), a $28,000 value addition would normally increase property taxes by approximately $308 per year, or $7,700 over 25 years. The property tax exemption preserves this entire amount. States with full property tax exemptions include: California, Florida, New York, Massachusetts, New Jersey, Maryland, Arizona, Colorado, Nevada, Minnesota, Wisconsin, Oregon, Virginia, and many others.

Sales Tax Exemptions

More than 25 states exempt solar equipment from state sales tax. At a typical 6–8% sales tax rate, this exemption saves $1,300 to $1,800 on a $22,800 system — real money. States with solar sales tax exemptions include Arizona, Colorado, Florida, Illinois, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, and others. Several states (Texas, Washington) exempt solar from sales tax on the equipment but not the installation labor.

Property tax value based on $28,000 home value increase at 1.1% average property tax rate over 25 years. Sales tax value based on 8 kW system at $22,800 at state sales tax rate. Local taxes may vary. Source: Tax Foundation, DSIRE, Lincoln Institute of Land Policy.

Low-Income and Environmental Justice Solar Programs

Several states have created dedicated solar programs for households that face financial barriers to solar access — renters, lower-income homeowners, and residents of disadvantaged communities. These programs often provide far more generous incentives than standard programs.

California — DAC-SASH and SGIP Enhanced

California's Disadvantaged Communities Single-family Affordable Solar Homes (DAC-SASH) program provides upfront rebates of $3/watt for income-qualified homeowners in designated disadvantaged communities — potentially covering $15,000 to $20,000 of a typical installation at no cost to the homeowner. The enhanced SGIP battery rebate ($850–$1,000/kWh for income-qualified applicants) can add another $11,000 to $14,000 for battery storage. Together, these programs can make solar nearly free for eligible California households.

Maryland — Solar Access Program

Maryland's Community Solar and Solar Access Program provides 100% of solar installation cost for qualifying low-income households, funded through the EmPOWER Maryland program. Eligibility is based on income (typically below 60% of state median income) and property ownership. The program includes installation, interconnection, and ongoing maintenance coverage.

New York — Affordable Solar

NYSERDA's NY-Sun Affordable Solar program provides enhanced per-watt incentives (approximately 2–3× the standard rate) for income-eligible applicants. Additional financing through the Assisted Home Performance with ENERGY STAR program can reduce remaining costs to near zero for households at or below 80% of Area Median Income.

Illinois — Illinois Shines Low-Income

Illinois Shines provides elevated Renewable Energy Credit (REC) payments for solar installations serving low-income households — approximately 20–30% higher than standard REC rates. Additionally, Illinois' Solar for All program, funded through CEJA (Climate and Equitable Jobs Act), provides direct installations or community solar subscriptions at no cost for income-qualified renters and homeowners.

Full State Solar Incentive Summary

The table below summarizes available incentives across the most active solar states. For states not listed, the primary available incentive is typically only net metering (where applicable) and federal incentives (now expired for homeowner-owned systems). Verify current program status at dsireusa.org before installation — programs change frequently.

Data represents commonly available programs as of April 2026. Programs are subject to funding caps, enrollment periods, and legislative changes. Source: DSIRE, SEIA State Solar Policy Database, individual state energy agencies. Always verify current status before relying on any incentive in your financial projections.

How to Stack Solar Incentives for Maximum Savings

The homeowners who get the best financial outcomes from solar are those who systematically identify and claim every available incentive — not just the most obvious ones. Here is how to approach incentive stacking:

Step 1: Start with DSIRE

Visit dsireusa.org and enter your zip code. DSIRE is maintained by NC State University and funded by the U.S. Department of Energy — it is the most complete and regularly updated source for state and utility incentives. Look at both state-level AND utility-level programs; some of the most valuable incentives exist only at the utility level and are easy to miss.

Step 2: Calculate Your State Tax Credit Benefit

If your state offers an income tax credit, calculate how much state tax you typically owe annually. The credit is non-refundable in most states, so you need sufficient state tax liability to use it fully. Because the federal ITC no longer offsets your federal bill, projecting tax owed before vs. after the state credit using the LevyIO federal income tax calculator alongside your state schedule is the cleanest way to verify the credit will actually be absorbed. If the credit exceeds your annual state tax bill, check whether your state allows carryforward — New York, Hawaii, and South Carolina allow multi-year carryforward, which is particularly valuable.

Step 3: Enroll in SREC Programs Before Installation

In states with SREC markets (NJ, MA, MD, IL, DC), register with an SREC aggregator before or immediately after installation. Some programs have enrollment windows or first-come-first-served capacity limits. Massachusetts SMART applications should be submitted through your utility before installation — the program assigns a specific rate tier based on available capacity at the time of application.

Step 4: Apply for Utility Rebates Before Final Quote

Utility rebates in programs like NY-Sun often require the installer to apply on your behalf as part of the installation process. Ask any installer you are evaluating whether they are enrolled in your utility's incentive program and whether the incentive will be applied directly to your installation cost or issued as a check after installation. The former is more common and means your loan amount or cash outlay is reduced immediately.

A Real Stacking Example: New York Homeowner, 8 kW System

New York is an exceptional case because of the NY-Sun program depth, but similar stacking opportunities exist in Massachusetts, New Jersey (SREC stacking), and South Carolina. Use our Solar Panel Calculator to input your state-specific incentives and calculate your personal payback period. For a deeper look at which states offer the best solar ROI, see our Best States for Solar Panels 2026 guide.

Frequently Asked Questions