Incentives & Tax Credits

Solar Incentives by State: Tax Credits, Exemptions and Export Rules in 2026

Solar incentives by state for 2026: state tax credits, property tax exemptions, rebates, SRECs and the export rules that matter most now that 25D is gone.

By Solar & Battery Guide Editorial Team Updated Reviewed 9 min read
A paper map of the United States on a table with a few colored pins, a notebook and a pair of reading glasses

Key takeaways

  • With the federal 25D credit gone for systems you own installed after 2025, state and utility incentives now do more of the work in solar payback.
  • As of October 2026, state income tax credits exist in New York (25% up to $5,000), South Carolina (25%, capped each year), Arizona (25% up to $1,000) and Massachusetts (15% up to $1,000).
  • Property tax exemptions are common: Texas, Florida, New York and others exclude the value solar adds, while California's exclusion only covers systems completed before January 1, 2027.
  • Your utility's export rule is often worth more than any rebate: full retail credit in Florida's investor-owned utilities, 75% in Nevada, and far lower avoided-cost values in California.
  • Battery and performance programs such as California's SGIP, Massachusetts SMART and Illinois Shines change often, so confirm funding with the program before you sign.

Solar incentives by state matter more in 2026 than they have in years. With the federal 25D credit gone for systems you own that were installed after 2025, state tax credits, property and sales tax exemptions, rebates, certificate payments and your utility's export rules now decide much of your payback. What's available varies widely by state and even by utility.

This guide sorts the incentives into types, then shows what major solar states offer as of October 2026, with links to the official program pages. Programs open, close and change rates often, so treat every figure here as a starting point and confirm it before you sign.

What kinds of solar incentives do states offer?

States use six main tools: income tax credits, property tax exemptions, sales tax exemptions, upfront rebates, performance payments such as SRECs, and rules for how utilities credit the power you export. Most states offer only a few of these. The export rule usually affects your savings the most.

Here is how each type works:

  1. State income tax credits reduce what you owe the state, usually a percentage of cost with a dollar cap.
  2. Property tax exemptions keep your assessment from rising because of the value solar adds.
  3. Sales tax exemptions remove state sales tax from equipment, which you see directly on the quote.
  4. Rebates pay a fixed amount per kW or per kWh of battery, usually from a utility or state fund with a limited budget.
  5. Performance payments pay for the solar power you produce, often through renewable energy certificates (SRECs).
  6. Export credit rules set what your utility pays for the power you send to the grid.

Which states still offer a solar tax credit?

As of October 2026, New York, South Carolina, Arizona and Massachusetts are among the states with personal income tax credits for home solar. They range from 15% to 25% of cost, with caps from $1,000 to $5,000, and most let you carry unused credit to later years.

StateCreditCapCarryforwardWorked example on a $25,000 system
New York25% of equipment costs$5,000Up to 5 years$5,000
South Carolina25% of costsLesser of $3,500 or 50% of state tax, per yearUp to 10 years$6,250, used over several years
Arizona25% of cost$1,000 per residenceUp to 5 years$1,000
Massachusetts15% of cost$1,000Check state rules$1,000

The New York Department of Taxation and Finance (opens in a new tab) confirms the 25% rate, the $5,000 limit and the five-year carryover; you claim it on Form IT-255. South Carolina's credit, run by the state Department of Revenue (opens in a new tab), is the most generous in percentage terms, but the yearly cap stretches it out. A household with $5,000 of state income tax could use $2,500 a year. Arizona's credit is claimed on Form 310 (opens in a new tab).

Example: state tax credit on a $25,000 systemSouth Carolina's 25% credit is the largest on paper but is spread over several years by its yearly cap; Arizona and Massachusetts cap out at $1,000.
South Carolina (25%)South Carolina (25%)South Carolina (25%) · State credit: $6,250$6,250New York (25%)New York (25%)New York (25%) · State credit: $5,000$5,000Arizona (25%)Arizona (25%)Arizona (25%) · State credit: $1,000$1,000Massachusetts (15%)Massachusetts (15%)Massachusetts (15%) · State credit: $1,000$1,000
  • State credit
View as table
State credit
South Carolina (25%)$6,250
New York (25%)$5,000
Arizona (25%)$1,000
Massachusetts (15%)$1,000

Source: Worked example; credit rules from NY Dept. of Taxation and Finance, SC Dept. of Revenue, Arizona Form 310 and Mass.gov (as of 2026-10)

State credits are separate from the federal credit, so they still apply to 2026 installations. Our federal solar tax credit guide explains what ended federally and how carryforwards from 2025 systems work.

Will solar raise your property taxes?

Usually not in sunny states. Texas, Florida and New York, among others, exclude some or all of the value solar adds from property assessments. California's exclusion now covers only systems completed before January 1, 2027, so the timing of a California install matters this year.

Texas

Texas Tax Code §11.27 exempts the value a solar energy system adds to your property. You file Form 50-123 with your county appraisal district, according to the Texas Comptroller (opens in a new tab). Without the filing, the added value may be taxed. Our Texas solar guide covers buyback plans and the rest of the Texas math.

Florida

Florida Statutes 193.624 (opens in a new tab) excludes renewable energy devices, including solar and storage, from the assessed value of residential property. It applies automatically in most counties, but check with your property appraiser.

California

California's active solar energy system exclusion (Revenue and Taxation Code §73) means new solar isn't added to your assessed value. The Board of Equalization (opens in a new tab) says the exclusion becomes inoperative on January 1, 2027. Systems completed before then keep the exclusion until the property changes ownership. A system finished in 2027 or later could raise your property tax bill.

How much do export rules matter compared with incentives?

Often more than any rebate. Export rules decide what each kWh you send to the grid is worth every year for decades. Full retail credit can add hundreds of dollars a year compared with an avoided-cost rate, while most rebates are paid only once.

Using our net metering calculator defaults (10,000 kWh of solar a year, 40% used at home, an 18.2 cent retail rate), the same system is worth about $1,820 a year with full retail credit, $1,547 at 75% of retail and $968 at a 4 cent export rate. That's an $852 yearly gap between the best and worst case, larger than many one-time rebates.

Example: yearly value of the same system under three export rulesThe gap between full retail credit and a 4¢ export rate is about $852 every year, more than many one-time rebates.
$0$500$1.0k$1.5k$2.0kFull retail creditFull retail credit75% of retail75% of retail4¢ export rate4¢ export rateFull retail credit · Yearly value: $1,820$1.8k75% of retail · Yearly value: $1,547$1.5k4¢ export rate · Yearly value: $968$968
  • Yearly value
View as table
Yearly value
Full retail credit$1,820
75% of retail$1,547
4¢ export rate$968

Source: Worked example: net metering calculator defaults (10,000 kWh/yr, 40% self-use, 18.2¢ retail) (as of 2026-10)

StateMain export rule for new customers (as of Oct 2026)Other notable incentives
FloridaInvestor-owned utilities credit exports 1:1 at retail, monthly rollover, annual true-up at avoided costProperty tax exclusion
NevadaNV Energy credits excess exports at 75% of retail, locked 20 yearsAsk about battery programs
CaliforniaNet Billing Tariff: exports earn hourly avoided-cost values, roughly 15% of retail on averageSGIP (limited), property tax exclusion through 2026
ArizonaAPS and TEP net billing at a locked export rate that can fall for new customers each yearState credit up to $1,000
TexasNo statewide rule; your retail provider or city utility decidesProperty tax exemption; some city rebates
New YorkRetail-rate credits for most home systems, locked 20 years25% state credit up to $5,000; NY-Sun

The Florida rule is Rule 25-6.065 (opens in a new tab). Nevada's terms are on NV Energy's net metering page (opens in a new tab). California's rules are on the CPUC Net Billing Tariff page (opens in a new tab). For how each method works, read our guide to net metering explained, and for California's specifics see our California NEM 3.0 guide.

What rebates and performance payments are still available?

Rebates and performance programs still exist, but most are capped and change often. As of October 2026, examples include California's SGIP for batteries, Massachusetts SMART for solar production, Illinois Shines for solar certificates, New York's NY-Sun and New Jersey's SREC-II payments. Funding status shifts, so check before you count on any of them.

California SGIP

The Self-Generation Incentive Program pays for batteries. The SGIP program metrics page (opens in a new tab) shows most residential budgets closed or waitlisted as of October 2026, including General Market small residential, which closed February 18, 2025. Some equity funding remains open for certain customers.

Illinois Shines

The Illinois Power Agency's Illinois Shines program (opens in a new tab) pays upfront for 15 years of renewable energy certificates. Its posted prices for small systems of 10 kW or less in the 2025-26 program year were roughly $66 to $75 per certificate. Illinois Solar for All offers income-qualified options.

New Jersey, Massachusetts and New York

New Jersey's Board of Public Utilities pays a fixed SREC-II value for 15 years to net-metered residential systems, and a May 2026 board order (opens in a new tab) lowered that value for new registrations. Massachusetts' redesigned SMART program launched October 15, 2025, paying a per-kWh incentive over 20 years, with an adder for storage. New York's NY-Sun (opens in a new tab) program continues income-qualified incentives.

Does your utility matter as much as your state?

Yes. Many state rules apply only to investor-owned utilities, so customers of electric co-ops and city-owned utilities can face different export credits and rebates in the same state. Look up your utility's own solar tariff and rebate page, not just the statewide summary.

Florida shows the pattern. Its retail-rate rule covers investor-owned utilities such as FPL, Duke Energy Florida and TECO, while co-ops and municipal utilities set their own terms. Texas goes further: with no statewide net metering, homes in competitive areas depend on their retail electric provider's buyback plan, and city utilities such as Austin Energy (opens in a new tab) pay their own Value of Solar rate. In Arizona, Salt River Project is not regulated by the state commission and runs its own solar plans, separate from APS and TEP.

The practical step is simple. Before you compare quotes, find your utility's name on your bill and read its solar or net metering page. The answer can change which system size and battery choice make sense.

How do you find every incentive you qualify for?

Check four places: DSIRE, your state energy office, your state tax agency and your utility. Local cities, counties and co-ops sometimes run programs that statewide lists miss. Then confirm each program's current status and rules directly, because budgets and rates change during the year.

DSIRE (opens in a new tab), the database run by the N.C. Clean Energy Technology Center, lists state and utility programs and lets you filter by state and technology. Use it as a map, then follow each listing to the official page. The Treasury Department's consumer advisory also suggests contacting your state energy office before you sign.

Watch for these traps:

  • Incentives the installer collects. With a lease or PPA, the company usually keeps credits, rebates and certificates.
  • Expected, not approved, rebates. A rebate that runs out of money before your application is processed is worth nothing.
  • Federal credit math in 2026 quotes. If a quote for an owned system still subtracts 30%, ask for a corrected version.
  • Forms with deadlines. Property tax exemptions often need a filing with your appraisal district by a set date.

How do state incentives change solar payback?

A state credit or rebate lowers your net cost once; export rules change your savings every year. Together they can move payback by several years. Run both through a calculator rather than relying on the installer's projection, which may assume generous rate increases.

Take a $25,000 system with $1,900 of first-year savings in New York. The $5,000 state credit cuts the net cost to $20,000, and the property tax exemption keeps your assessment from rising. In Arizona, the same system gets a $1,000 credit, but much more sunshine. In both cases, the export rule usually decides more of the outcome than the credit.

Use our solar panel cost calculator to subtract state incentives from your quote, then check whether the result is worth it in our guide to whether solar panels are worth it.

Frequently asked questions

Which states have the best solar incentives in 2026?

It depends on what you count. States with a state tax credit plus full-retail net metering, such as New York, offer the most direct help. Florida has no state credit but credits exports at retail through its investor-owned utilities and excludes solar from property tax. California pays little for exports, so batteries matter more there.

Do state solar tax credits still work without the federal credit?

Yes. State credits are separate from the federal 25D credit, so they can apply to systems installed in 2026 if you meet each state's rules. For example, New York's credit is 25% of qualified equipment costs up to $5,000, with five years to use any excess.

Will solar panels raise my property taxes?

In many states, no. Texas, Florida and New York, among others, exclude some or all of the value solar adds from property tax, though you may need to file a form. In California, the exclusion covers systems completed before January 1, 2027, and stays until the property changes ownership.

What is an SREC?

A solar renewable energy certificate represents 1 MWh of solar power. In states with solar requirements for utilities, you can sell them for extra income on top of bill savings. New Jersey, Maryland, Pennsylvania and Illinois have programs, each with different prices and terms.

Are there rebates for home batteries?

Some, but funding is limited. California's SGIP had most residential budgets closed or waitlisted as of October 2026, with some equity funding open for certain customers. Massachusetts pays batteries for helping during peak events. Check your utility's current program before you count on money.

How do I find incentives in my area?

Start with DSIRE, the database run by the N.C. Clean Energy Technology Center, then check your state energy office, state tax agency and utility. Local utilities and cities sometimes offer rebates that statewide lists miss. Confirm every program's status directly before you sign a contract.

Do incentives go to me if I lease solar?

Usually not directly. With a lease or PPA, the company owns the system and generally collects tax credits, rebates and certificates. Some of that value may lower your payment. Read the contract to see who keeps each incentive, since you generally can't claim them yourself.

Do state rebates reduce a federal credit?

For systems completed in 2025 that still get the federal credit, public utility subsidies for installing solar are subtracted from qualified costs, per the IRS. Many state incentives are not, unless they count as a purchase-price rebate. For 2026 installs you own, there is no federal credit to reduce.

Sources

Checked against these sources. Dates show when each was last reviewed.

  1. Database of State Incentives for Renewables & Efficiency (DSIRE) (opens in a new tab), N.C. Clean Energy Technology Center (as ofOctober 2026)
  2. Solar Energy System Equipment Credit (opens in a new tab), New York State Department of Taxation and Finance (as ofOctober 2026)
  3. Income Tax Solar Energy Credit (opens in a new tab), South Carolina Department of Revenue (as ofOctober 2026)
  4. Credit for Solar Energy Devices (Form 310) (opens in a new tab), Arizona Department of Revenue (as ofOctober 2026)
  5. Property Tax Exemptions (opens in a new tab), Texas Comptroller of Public Accounts (as ofOctober 2026)
  6. Florida Statutes 193.624: Assessment of renewable energy source devices (opens in a new tab), Florida Legislature (as ofOctober 2026)
  7. Rule 25-6.065: Interconnection and Net Metering of Customer-Owned Renewable Generation (opens in a new tab), Florida Administrative Code (as ofOctober 2026)
  8. Active Solar Energy System Exclusion (opens in a new tab), California State Board of Equalization (as ofOctober 2026)
  9. SGIP Program Metrics (opens in a new tab), Self-Generation Incentive Program (California) (as ofOctober 2026)
  10. Net Metering (NMR-405 Opt-In) (opens in a new tab), NV Energy (as ofOctober 2026)
  11. Net Billing Tariff (opens in a new tab), California Public Utilities Commission (as ofOctober 2026)
  12. Renewable Resources (Illinois Shines and REC prices) (opens in a new tab), Illinois Power Agency (as ofOctober 2026)
Published: Updated: Reviewed:

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