Solar Incentives & Tax Credits 2026: Every Active Program Explained
The federal 30% solar incentive tax credit expired December 31, 2025 — but state solar incentives, net metering, property & sales tax exemptions, and utility rebates are saving homeowners thousands in 2026. This guide covers every active program and how to stack them for maximum savings.
Federal Tax Credit — Expired December 31, 2025
If your system was installed before December 31, 2025, claim it on your 2025 return via IRS Form 5695. Unused credits carry forward indefinitely.
State Tax Credits (2026)
6 states offer direct solar incentives in the form of income tax credits — a dollar-for-dollar reduction on your state tax bill, independent of federal law:
Unused credit rolls to future tax years — you never lose it. New York and Hawaii allow up to 5 years. Confirm with your state Department of Revenue.
How to claim it: File the credit on your state income tax return for the year the system was placed in service — not the year you signed the contract. Each state has its own form (e.g. South Carolina Form SC1040TC, Arizona Form 310). Keep your final inspection date, signed contract, and itemized invoice; some states require proof of in-state licensed installation to qualify.
Some older lists also mention Utah's Renewable Energy Systems Tax Credit, but that credit ended for residential solar PV systems installed in 2024 or later — only carryforwards from earlier installations remain. Always confirm current availability for your state at DSIRE before counting on a specific program.
Net Metering Explained
Net metering is one of the most valuable ongoing solar incentives. When your panels produce more than you use, you earn credits on your bill for every kWh exported. Full retail 1:1 net metering is available in 35 states.
| NEM Type | Export Rate | Best Strategy |
|---|---|---|
| Full Retail (1:1) | Full retail rate | Maximize production |
| NEM 3.0 / Net Billing | Below retail | Add battery storage |
| No NEM | Avoided cost only | Self-consumption + battery |
Net metering vs. net billing — the technical difference: True net metering credits exports at the full retail rate you'd otherwise pay (1:1). Net billing credits exports at the utility's wholesale "avoided cost" rate instead, which can be 70–80% lower than retail. That gap is exactly what battery storage is designed to close: instead of selling cheap and buying back expensive, you store your own surplus and use it later at full retail value.
How to Find Your NEM Rate
Your exact NEM tariff is set by your utility, not just your state — two utilities in the same state can run different programs, and policy here changes often enough that we don't list a fixed state-by-state breakdown. To find your current rate: confirm which utility serves your address, then check that utility's net metering or net billing tariff page, or search your utility's name directly on DSIRE. You can also see your state's general NEM posture (full retail, reduced, or none) on our state-by-state solar guide before confirming the specifics with your provider.
Property & Sales Tax Exemptions
These two solar incentives reduce your upfront and ongoing cost without depending on your utility or income tax situation.
Property tax exemption — usually automatic, sometimes not: Property assessment is handled at the county level, not the state, so the exemption is enabled by state law but processed locally. Most counties apply it automatically when your installer files the permit, but some require a one-page exemption form sent to your county assessor after final inspection — check with your county to confirm. In the 16 states without this exemption, adding solar can raise your assessed home value and therefore your annual property tax bill.
Sales tax exemption is applied automatically by your installer at the point of purchase — it shows as a line-item reduction on your contract, not something you file for afterward.
State & Utility Rebate Programs
Beyond state-wide tax exemptions, many states and utilities run direct cash rebate programs as additional solar incentives. These can take the form of a one-time payment, a deduction applied directly to your installation invoice, or a credit issued on a future utility bill — the structure varies by program. But unlike tax credits, these are not available to every customer in the state. They depend on which utility serves your address, your utility's current program budget, and sometimes your specific rate class.
Budgets cap mid-program, waitlists are common, and rates change — sometimes within a single week. That volatility is exactly why we don't list specific program names or dollar amounts here: by the time you read this, a program could be paused, replaced, or fully subscribed. Always confirm directly with your utility before counting on a rebate, and find current programs for your address at DSIRE.
SREC Programs — Earn Per kWh Generated
Some states require electric utilities to source a set percentage of their power from renewable sources under a Renewable Portfolio Standard (RPS). In states where solar specifically counts toward that requirement, utilities that fall short of their quota are often required to purchase tradeable certificates — called Solar Renewable Energy Certificates (SRECs) — from homeowners and businesses with solar systems, rather than build their own solar capacity.
When your system generates 1,000 kWh, it creates one SREC, which you can sell — separately from any net metering credit you already earn on your electricity bill. This creates a second, ongoing solar incentives income stream entirely independent of how much electricity you use yourself.
Why we don't list specific states or prices here: SREC markets only exist in a handful of states, and that list changes — states have added, paused, or fully ended their programs in recent years as RPS laws are amended. Even within active markets, SREC prices fluctuate constantly based on supply and demand, similar to a stock price, and a typical 7 kW system can generate meaningfully different income from one year to the next. For accurate, current information — whether a market exists in your state, what SRECs are trading for, and whether pre-registration is required before installation — check DSIRE or ask your installer, who will know the active trading platform for your area.
How to Maximize Your Savings in 2026
- ✓Own, don't lease Leases forfeit all state credits, SREC income, and long-term equity. Cash or a solar loan always wins.
- ✓Claim state credits in installation year Most credits must be claimed in the year of installation. Carryforward is available but plan your timing.
- ✓Check SREC enrollment before installation Some states require pre-registration before your system goes live — missing the window can cost years of income. Confirm with DSIRE before signing a contract.
- ✓Submit utility rebate paperwork early Rebate programs often have budget caps — apply as soon as you have a signed contract, not after installation.
- ✓Confirm property tax exemption with county assessor Most are automatic, but some counties require a short form after installation.
- ✓Check DSIRE before signing New programs launch and old ones close regularly. Find every active incentive for your ZIP at DSIRE.
See exactly how much you'll save in 2026 including all active state incentives — no signup required.
Solar Savings Calculator →Solar Incentives FAQ
No. The federal ITC (Section 25D) expired December 31, 2025 under the One Big Beautiful Bill Act (OBBBA). State credits, net metering, property and sales tax exemptions remain fully active. If your system was installed before Dec 31, 2025, claim it via IRS Form 5695.
Yes. Cash, solar loans, and HELOCs all qualify. You must own the system — leases and PPAs do not qualify because the leasing company owns the equipment and claims any available credits.
The unused credit carries forward — you never lose it. New York and Hawaii allow up to 5 years. Check your specific state's rules with a tax professional.
When it comes to solar incentives, states that combine a meaningful state income tax credit with full retail net metering and property/sales tax exemptions consistently rank well — currently that includes New York, Hawaii, South Carolina, Arizona, and Massachusetts. Several Northeast and Mid-Atlantic states also have active SREC markets that add ongoing income beyond the tax credit. Utility rebate availability changes constantly, so always check DSIRE for what's currently active in your specific state and utility.
For most state programs, yes — professional installation with proper permitting is required. Some states additionally require NABCEP-certified installers. DIY installations typically do not qualify.
Free Tools & Guides
Solar incentives data sourced from U.S. EIA, NREL, and DSIRE. Last updated May 2026.