Solar incentives in the United States are programs that reduce the cost of buying, installing, or operating a solar system. In 2026, the former 30% federal Residential Clean Energy Credit is no longer available for new residential solar installations completed after December 31, 2025. Paying before the deadline was not enough if the installation finished later.
The incentives still available in 2026 depend on your state, utility, income, property and system ownership.
Solar Incentives at a Glance
| Incentive | How it reduces cost | Availability in 2026 |
|---|---|---|
| Federal residential tax credit | Reduced federal income tax by 30% of qualifying costs | Generally unavailable for new residential installations completed after December 31, 2025 |
| State solar rebate | Upfront payment or reimbursement | Depends on state funding and eligibility |
| Utility rebate | Cash incentive from your electricity provider | Depends on the utility and program budget |
| Net metering or net billing | Credits for excess electricity sent to the grid | Depends on state and utility rules |
| Solar renewable energy certificates, or SRECs | Payments for qualifying solar generation | Available only in certain markets |
| Property-tax exemption | Keeps some or all added solar value out of property-tax assessments | Depends on state and local rules |
| Sales-tax exemption | Reduces the purchase price of equipment | Available in some states and jurisdictions |
| Income-qualified assistance | Grants, rebates or discounted solar access | Eligibility and availability vary |
| Community solar | Bill credits without installing panels on your roof | Available in participating utility territories |
Is There Still a Federal Solar Tax Credit?
No, not for new residential solar installations completed after December 31, 2025.
The former Residential Clean Energy Credit under Internal Revenue Code Section 25D provided a 30% credit for eligible solar electric systems, solar water heaters and qualifying battery storage. The IRS says the credit is not allowed for expenditures made after December 31, 2025.
For an eligible installation completed by December 31, 2025:
- The credit was generally 30% of qualifying costs.
- Qualifying costs could include equipment, labor and installation.
- The credit was nonrefundable. It could reduce federal tax owed, but could not create a tax refund by itself.
- Unused credit amounts could generally be carried forward.
- The system had to be installed by the deadline. Ordering or paying for it was not enough.
If you completed a qualifying installation in 2025, you may still be able to claim the credit on the relevant tax return. A tax professional can confirm how the rules apply to your situation.
What State and Local Solar Incentives Are Available?
State and local programs vary by location. Common options include rebates, income-tax credits, property-tax exemptions and sales-tax exemptions.
State Solar Rebates
A state energy office, local government or public-benefit program may offer a fixed rebate or a payment based on system size. A program may have:
- Income limits
- System-size limits
- Approved-installer requirements
- Application deadlines
- Funding caps
- Pre-approval requirements
An installer's quote does not prove that a rebate is available. Confirm the program with the state agency or utility that administers it.
State Income-Tax Credits
Some states offer an income-tax credit for solar equipment or installation. The credit may have a dollar cap, percentage limit, carryforward rule or expiration date.
State tax credits are separate from federal tax credits. A state credit may still be available even though the federal residential credit has ended.
Property-Tax Exemptions
Some states and local governments exclude the added value of a solar energy system from property-tax assessments. This can let a homeowner add solar without paying property tax on the system's full contribution to the home's assessed value.
The exemption may cover photovoltaic panels, batteries or both, depending on local law.
Sales-Tax Exemptions
Some jurisdictions exempt all or part of a solar system from sales tax. The exemption may apply only to equipment, only to the state portion of sales tax, or only when the homeowner submits specific forms to the installer or tax authority.
The Database of State Incentives for Renewables & Efficiency, known as DSIRE, lets homeowners search for programs by state and ZIP code. The U.S. Department of Energy identifies DSIRE as a source for renewable-energy incentives and policies.
Can Your Utility Pay You for Excess Solar Electricity?
Possibly, although the payment is usually a bill credit rather than a cash rebate.
Under net metering, a utility credits a customer for electricity exported from the solar system to the grid. Under net billing or another export-compensation program, the utility may credit exported power at a rate different from the retail electricity rate.
Eligibility, system-size limits, credit rates and rollover rules depend on the state and utility.
Before signing a solar contract, ask your utility:
- Does it offer net metering, net billing or another export program?
- What rate applies to exported electricity?
- Do unused credits roll over?
- Can the utility change the export rate later?
- Are there interconnection fees or system-size limits?
- Does installing a battery change the compensation rules?
A high retail electricity rate does not mean solar exports receive the same rate.
Can Homeowners Earn Money From SRECs?
Yes, but only in some states and utility markets.
Solar Renewable Energy Certificates, or SRECs, represent the renewable-energy attributes associated with a specific amount of solar electricity generated and delivered to the grid. SRECs may be sold to utilities or other buyers that need them for renewable-energy compliance.
SREC values can change, and your solar contract may transfer ownership of the certificates to the installer, financier or utility. If a company promises SREC income, check:
- Who owns the SRECs?
- Who sells them?
- Is the payment guaranteed or market-based?
- How long does the agreement last?
- Can the installer use the SRECs to make renewable-energy claims?
Are There Solar Incentives for Low-Income Households?
Yes. Some states, utilities, housing authorities and nonprofit programs offer income-qualified assistance.
Support may include:
- Rebates
- Grants
- Discounted solar installations
- Community-solar bill credits
- Solar projects for affordable housing
- Weatherization or energy-bill assistance
Federal energy-assistance programs can sometimes reduce energy costs. The Department of Energy also warns that the federal government does not provide a universal "free solar panels" program for homeowners.
Be cautious with advertisements claiming that the government requires companies to install free solar panels.
What Happens if You Lease Solar Panels or Sign a PPA?
With a solar lease or power purchase agreement, the solar company generally owns the system. You then pay a monthly charge or buy the electricity the system produces.
The main benefit is a lower upfront cost. The tradeoff is that the system owner, not the homeowner, generally receives the tax benefits and may control the renewable-energy certificates. The Department of Energy says customers who do not own the solar system are not entitled to the related tax benefits.
Review the contract for:
- Annual payment increases
- Contract length
- Roof-removal and replacement terms
- Home-sale transfer requirements
- System-performance guarantees
- Battery replacement responsibility
- SREC ownership
- Early-termination charges
What Incentives Are Available for Businesses?
Businesses and utility-scale solar projects may qualify for different federal rules, including the Clean Electricity Investment Credit under Section 48E.
The credit can include bonus amounts tied to prevailing-wage and apprenticeship compliance, domestic content, energy-community locations and certain low-income-community projects.
The One Big Beautiful Bill Act also changed the timing rules for some solar projects. For applicable solar facilities, the IRS says the Section 48E credit can end for facilities placed in service after December 31, 2027, when construction begins after July 4, 2026, subject to statutory rules and exceptions.
Businesses should get project-specific tax advice before relying on this credit.
How to Find Your Exact Solar Incentives
Use this process before accepting a quote:
- Search your address or ZIP code in DSIRE.
- Check your state energy office for current rebates and tax credits.
- Ask your utility for its written solar-interconnection and export-compensation rules.
- Request an itemized quote showing the gross price, rebates, tax assumptions and net price.
- Confirm who owns SRECs and other renewable-energy certificates.
- Ask whether a rebate changes the system's tax treatment.
- Verify tax-credit claims with a qualified tax professional.
- Compare the offer with a cash purchase, solar loan and third-party-owned option.
For a new residential system in 2026, build the quote around state and utility programs, export rules and the contract terms. Leave out the federal 30% residential credit unless the installation was completed by December 31, 2025 and meets the IRS requirements.