Solar Panel Rebates

Saving Money on Solar: A Guide to Tax Credits in 2026

The federal residential solar tax credit is gone for homeowners who buy solar outright in 2026, but federal savings aren’t completely off the table, and strong state programs are still very much alive. Here’s the short version: if you’re buying a system with cash or a loan, there’s no federal tax credit. If you’re open to a solar lease or power purchase agreement (PPA), you may still benefit from federal savings indirectly. And depending on where you live, state credits, sales tax exemptions, and utility rebates could cut several thousand dollars off your installation cost, no matter how you pay for it.

Is There a Federal Solar Tax Credit in 2026?

If you’re buying a solar system with cash or a loan in 2026, there’s no federal tax credit. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, ended the 30% Residential Clean Energy Credit (Section 25D) for systems installed on or after January 1, 2026. That’s about seven years earlier than originally planned. For a typical $30,000 installation, that credit was worth $9,000 in federal tax savings. Losing it changes the math on owning a solar system outright, which is why a lot of homeowners are taking a closer look at leases and PPAs in 2026.

What about solar leases and PPAs?

Here’s something most coverage misses: federal tax benefits haven’t fully disappeared from residential solar. They’ve just shifted to a different ownership structure. When a solar company owns the panels on your roof (through a lease or PPA), it can claim the commercial Section 48E Investment Tax Credit. That credit is still available for projects that started construction before July 4, 2026 (with a placed-in-service window extending to 2030). Projects that miss that deadline must be placed in service by December 31, 2027 to qualify.

Companies typically pass those savings on to homeowners through lower monthly rates or per-kilowatt-hour (kWh) pricing. So if you sign a lease or PPA in 2026, you may still benefit from federal-level savings — even though you can’t claim a credit on your own tax return. It’s worth comparing both ownership models with your contractor before you decide.

If you installed solar before January 1, 2026, talk to a tax professional to make sure you’ve claimed or carried forward any credit you’re owed under the old rules.

What State and Local Solar Incentives Are Available in 2026?

Even without a federal credit for owned systems, many states, counties, and cities offer programs that can meaningfully reduce what you pay for solar. These programs were largely untouched by the OBBBA, and now they carry more weight than ever.

Common types of state and local incentives include:

• State solar tax credits
• Sales tax exemptions on solar equipment
• Property tax exemptions on solar-driven home value increases
• Performance-based incentives tied to electricity generation
• Net metering or net billing programs through your utility

For a comprehensive, regularly updated list of programs by state, visit the Database of State Incentives for Renewables & Efficiency (DSIRE). Below is a detailed look at the states with the strongest solar incentive packages in 2026, followed by a broader state-by-state overview.

New York solar incentives

New York is widely considered the top state for residential solar incentives. Between the NY-Sun upfront rebate, a 25% state tax credit, permanent tax exemptions, and strong export compensation, most homeowners can get more than half their system costs covered through some combination of incentives.

NY state solar tax credit

You can claim a state income tax credit equal to 25% of installation costs, up to $5,000. The credit is non-refundable, but you can carry it forward for up to five years. It also applies to both owned systems and certain lease and PPA arrangements — making it one of the most flexible state credits out there.

NY-Sun program

The NY-Sun program, run by NYSERDA, offers per-watt upfront rebates applied directly at installation. Most utility territories offer $0.15–$0.35 per watt (with higher amounts for income-eligible households). Availability varies by utility territory and program block, so confirm current levels with your installer before signing.

Sales tax exemption

Solar equipment purchases are exempt from New York state sales tax.

Property tax exemption

Under New York Real Property Tax Law Section 487, any home value increase from solar is exempt from property tax for 15 years in most municipalities.

Net metering and VDER

New York is moving from traditional net metering to the Value of Distributed Energy Resources (VDER) framework. VDER pays homeowners for exported solar based on several value components (energy, capacity, environmental, and demand reduction). Most residential customers under 25 kilowatts (kW) can still access traditional net metering in most utility territories, though it varies by utility. Ask your installer which compensation structure applies to your area.

New Jersey solar incentives

New Jersey has one of the most valuable solar incentive programs in the country. Its strength is an ongoing income stream that lasts 15 years. Homeowners who own their system outright can keep earning long after installation is done.

Successor Solar Incentive (SuSI) program

Through the SuSI program, you earn one Solar Renewable Energy Certificate (SREC-II) for every 1,000 kWh your system generates. Each certificate pays $85 (the current ADI rate; confirm the live rate at cleanenergy.nj.gov before installation, since it’s subject to periodic review). For a typical 8 kW system generating around 8,000 kWh per year, that works out to roughly $680 per year — or more than $10,000 over the 15-year program term. Your rate locks in at registration, so signing up sooner locks in the current structure. One important note: if you go solar through a lease or PPA, the company that owns the system claims the SREC-II income — not you. If you want to capture the full value of the SuSI program, buying the system outright is the better path.

Net metering

New Jersey utilities offer true one-to-one, retail-rate net metering for residential solar owners. That means exported electricity is credited at the same rate you pay to import it.

Sales and property tax exemptions

Solar equipment is exempt from New Jersey’s 6.625% state sales tax, and the added home value from a solar installation is exempt from property tax.

Massachusetts solar incentives

Massachusetts consistently ranks among the top states for residential solar. High electricity rates and a well-designed mix of state and utility programs make the economics work, even without a large federal credit.

Massachusetts solar tax credit

You may qualify for a state tax credit equal to 15% of your solar installation costs, up to $1,000.

Solar Massachusetts Renewable Target (SMART) program

The SMART program pays you for the solar electricity your system generates over time. Under the redesigned SMART 3.0 framework (approved May 2026), the Massachusetts Department of Energy Resources now adjusts incentive rates and capacity allocations each year. Residential systems under 25 kW receive a flat base rate per kWh generated for 10 years, with bonus payments available for battery storage and other qualifying features. Program terms change annually — check current rates with your utility or installer before installation.

Sales and property tax exemptions

Solar equipment purchases are exempt from Massachusetts state sales tax. You also won’t pay additional property taxes on any increase in home value from your solar installation.

Net metering

Massachusetts utilities let you earn bill credits for excess solar energy you send back to the grid.

Illinois solar incentives

Illinois doesn’t get the most sunshine, but it has one of the strongest state solar incentive programs in the country. The Illinois Shines program is a standout, especially now that the federal credit is gone.

Illinois Shines program

Through Illinois Shines, you sign a 15-year contract to sell the Renewable Energy Credits (RECs) your solar system produces. REC values are set each year by the Illinois Power Agency and paid through your approved vendor installer. For a typical 7–8 kW residential system, this can add up to $9,000–$12,000 over the program term, depending on your utility territory and enrollment year. Starting in the 2026–27 program year (June 2026), proposed rates are 34%–43% higher than the prior year — a direct response to the loss of the federal tax credit. Confirm finalized rates and block availability at illinoisshines.com, since capacity fills on a first-come, first-served basis each year.

Net metering and utility rebates

Retail-rate net metering is available to most Illinois customers. ComEd and Ameren residential customers can also earn a $300-per-kW upfront rebate for installing a qualifying smart (grid-interactive) inverter — on top of the Illinois Shines payment.

Property tax exemption

Any home value increase from solar is excluded from your property tax assessment statewide.

Maryland solar incentives

Maryland offers a well-rounded package: upfront grants, an active SREC market, a strong battery storage credit, and statewide tax exemptions. Several counties also have their own add-ons.

Maryland Solar Access Program

Income-qualified homeowners may receive a grant of up to $7,500 toward installation costs through the Maryland Solar Access Program (MSAP). It’s one of the most generous income-targeted solar grants available at the state level.

Solar Renewable Energy Credits (SRECs)

Maryland homeowners earn one SREC for every 1,000 kWh their system generates. SRECs can be sold on the open market — values fluctuate, but at current rates, an average system producing around 7,000 kWh per year could earn roughly $350 or more annually.

Energy Storage Income Tax Credit

Maryland offers a state income tax credit worth 30% of the total cost of a battery storage system, up to $5,000. It’s one of the most valuable battery incentives available at the state level.

Sales and property tax exemptions and local credits

Solar equipment is exempt from Maryland state sales tax, and the added home value from solar is fully exempt from property tax statewide. Several counties — including Baltimore, Anne Arundel, Prince George’s, and Harford — also offer local property tax credits worth up to $5,000 per year. A tax advisor can help you map out how to stack these benefits.

Net metering

Maryland utilities pay residential solar owners at the full retail rate for excess electricity sent to the grid.

More States with Solar Incentives Worth Knowing

The five states above have the deepest incentive packages, but they’re not the only places where solar makes strong financial sense. Here’s a quick look at what’s available elsewhere, all independent of the federal credit.

California

No broad state tax credit, but the Self-Generation Incentive Program (SGIP) offers rebates up to $1,000 per kWh of battery storage capacity. Low-income households in disadvantaged communities may qualify for deeply discounted or no-cost installations through the DAC-SASH program. High electricity rates mean solar pays back quickly even without a big upfront incentive.

Arizona

A 25% state income tax credit (up to $1,000), statewide sales and property tax exemptions, and net billing for excess generation. Mohave Electric Cooperative customers can also earn a $0.05-per-watt rebate through the SunWatts program (up to $2,500).

Colorado

Statewide sales and property tax exemptions, plus a low-cost RENU Loan program for financing up to $75,000. Xcel Energy customers can add a $1-per-watt upfront rebate through the Solar Rewards program (up to 7 kW).

Connecticut

The Residential Energy Solutions program pays you for solar production, with options to either net it against your bill or sell all generation at a fixed rate. Sales and property tax exemptions also apply.

Florida

A 100% property tax exemption on the value solar adds to your home, plus a full sales tax exemption on equipment. Full retail-rate net metering is available statewide. Some cities also offer local rebates on top of state programs.

Minnesota

Retail-rate net metering statewide, plus full sales and property tax exemptions. Xcel Energy and Minnesota Power customers can access performance-based utility incentives, including Xcel’s Solar*Rewards program.

Nevada

A property tax exemption on solar-added home value, a sales tax exemption on equipment, and net metering through NV Energy. Strong sun and above-average electricity rates make the economics work even without a state income tax credit.

Texas

No statewide tax credit or rebate, but a property tax exemption on solar-added home value applies across the state. Beyond that, it depends on your local utility — Austin Energy, Oncor, AEP Texas, and several municipal utilities offer rebates ranging from $2,500–$6,000 depending on your provider.

Virginia

A property tax exemption on solar-added home value, retail-rate net metering, and an active SREC market that generates ongoing income from solar production.

This list covers the most widely available programs but isn’t exhaustive — local utilities and municipalities often layer in additional rebates. The DSIRE database is the most reliable way to see every active program in your ZIP code.

Do Utility Companies Offer Solar Incentives?

In addition to state programs, many electric utilities offer their own incentives to encourage solar adoption. These vary widely by location and provider, but common types include:

• Net metering: Earn bill credits for excess electricity your solar panels produce and send to the grid.
• Net billing: Similar to net metering, but surplus generation is compensated at wholesale or reduced rates rather than the full retail rate.
• Battery incentives: Some utilities offer rebates for home energy storage systems, particularly in areas where batteries help stabilize local grid demand.

Utility incentives change frequently — contact your local provider to confirm current program details and eligibility before installation.

Do Solar Panel Manufacturers or Installers Offer Incentives?

Solar manufacturers and installation companies sometimes run their own promotions — cash rebates, limited-time discounts, equipment bundles, or promotional financing. These vary by provider, region, and time of year. Ask your contractor what’s currently available when you request a quote.

If you’re comparing installers, you can look into options like Sunrun, Tesla Solar, Palmetto, Blue Raven, and Freedom Solar to see what each offers in your area.

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What Are My Solar Financing Options in 2026?

Solar installation is a significant upfront investment for most homeowners. The good news: there are more ways to structure the cost than ever before.

Solar loans

Many installers offer loan programs that let you spread the cost over several years. You own the system, which means you’re eligible for state tax credits and any applicable utility rebates. Loan terms, interest rates, and eligibility requirements vary by lender.

Solar leases and PPAs

Solar leases and power purchase agreements (PPAs) let you go solar with little or no money down. You pay a monthly fee (lease) or a per-kWh rate (PPA) to use a system the solar company owns. In 2026, this setup is especially worth understanding. Because the company owns the panels, it can potentially claim the commercial Section 48E tax credit — and may pass those savings to you through lower rates. You don’t claim the credit yourself, and you don’t own the equipment (which affects your eligibility for some state incentive programs).

Still, for homeowners who can’t use a state tax credit or want to keep upfront costs low, a lease or PPA can offer solid Day 1 savings. Learn more about what Sunrun leases cost or explore PosiGen, which specializes in solar for low-to-moderate income households.

How Do I Apply for Solar Rebates and Incentives?

1. Research what’s available in your area

Start by identifying which programs apply to your location — state, municipal, and utility programs are each separate. The DSIRE database is one of the most comprehensive resources for finding currently active solar incentive programs by ZIP code.

2. Check timing requirements before you install

Some rebate programs require applications before installation begins, and others have limited funding that can run out mid-year. Ask your contractor about deadlines and application steps as part of your initial quote conversation.

3. Complete installation and inspections with a certified contractor

Most incentive programs require professional installation and a passed final inspection. Certified installers typically help you gather the documentation you’ll need, including:

• Proof of purchase and itemized installation receipts
• Inspection approvals
• System specifications and output documentation

Solar Incentives Takeaways

The federal solar tax credit is gone for homeowners buying systems outright in 2026, but that doesn’t mean the financial case for solar falls apart. Leases and PPAs may still deliver federal-level savings indirectly, and strong state programs across dozens of states continue to lower installation costs through credits, exemptions, and performance payments. The key is knowing what’s available where you live, and acting before program funding runs out.

Ready to go solar? Explore our network of professional solar contractors near you and get customized quotes for your home. You can also review how solar panels work, common solar myths debunked, and what to know about solar inverters to help you make the best decision for your home.