Solar Incentives by State 2024

Solar power is energy converted from the sun to thermal or electrical energy. Solar power is a renewable power source that is clean, inexpensive, and readily available everywhere in the world. Because solar energy comes from the sun, it represents an infinite source of energy.

The most common way solar energy is captured is by using photovoltaic (PV) solar panels. PV panels generate electricity directly from sunlight using semiconductors. When the silicon photovoltaic solar cell absorbs solar radiation, photons strike and ionize semiconductor material on the solar panel, causing electrons to break free of their atomic bonds. Electrons are forced to flow in one direction, creating a flow of electrical current. Only some of the light spectrum is absorbed, while other parts of the spectrum are reflected, too weak (infrared), or create heat instead of electricity (ultraviolet).

The first PV device was introduced in 1954 by Bell Labs in the United States. Interest in using solar energy increased during the 1970s because of the energy crisis. However, the cost of the implementation of these devices made large-scale adoption of solar devices impractical. Today, the price of PV devices has dropped dramatically, falling more than 59% over the last decade. Additionally, solar panels can be financed.

Solar power has several benefits such as eliminating electrical bills and avoiding utility inflation. The use of solar panels also protects the environment, creates jobs, and helps the U.S. become energy-independent. Additionally, many states offer tax incentives, rebates, and credits for installing solar panels on homes.

Types of Solar Incentives

State Tax Credits

State credits are similar to the Federal Solar Tax Credit, but the credit is instead applied to the homeowner's state taxes. Most often homeowners would be able to apply this to their taxes the year after their solar panel system was installed. State tax credit amounts vary widely from state to state.

Sales Tax Exemption

Some states offer homeowners a tax exemption on the purchase of solar panel system equipment. The homeowner pays zero sales tax on their solar panel system, which can result in a substantial discount, particularly on larger installations. Some of the states that offer this are Texas, Florida, California, and New Mexico.

Property Tax Exemption

This exemption prevents a homeowner's property taxes from increasing when they add solar panels to their home. Under normal circumstances, the installation of a home solar panel system is considered an upgrade that adds value to the home, and the home's property taxes increase accordingly. States with this exemption create a more appealing scenario for potential upgraders.

Net Metering

Net metering enables a homeowner to receive credit on their utility bills for sending excess solar energy generated by their home solar panels up the grid to the power company, which then redistributes that power to other customers.

Solar Renewable Energy Credits (SRECs)

Solar Renewable Energy Credits, more commonly known as SRECs, are offered by some state governments. SRECs are a measure of the benefits a home's solar system provides to the environment. The idea is simple: One SREC is generated for every megawatt-hour (MWh), or 1,000-kilowatt hours (kWh) of solar electricity a solar panel system generates, and utility companies then purchase those SRECs under the state’s Renewable Energy Portfolio (RPS) standards.

As of early 2023, SRECs are offered by Delaware, the District of Columbia, Illinois, Maryland, Massachusetts, New Jersey, Ohio, and Pennsylvania.

Solar Energy Incentives By State

State solar incentives are in addition to the Solar Investment Tax Credit that allows solar panel owners to recoup 26% of their equipment and installation costs for an unlimited amount. In addition to rebates, credits, and exemptions, states may offer net metering credits. Net metering credits solar electric users, reducing their electric bill because of the electricity they add to the grid. This helps to lower the electric bill and is a bonus for many homes using solar energy.

Some states also offer Solar Renewable Energy Certificates (SRECs) that are issued for every megawatt hour of energy produced. These act as vouchers that can be exchanged for energy savings on homeowners’ electric bills.

Alabama

• Sales tax and property tax exemptions available

Alaska

• No state-level exemptions

Arizona

• Arizona has a property tax exemption for solar installations

Arkansas

• Net metering is available in Arkansas

California

• California has an extensive solar rebate program through the California Solar Initiative (CSI). Local solar rebates can range from $500 to $0.95 per watt of installed capacity.
• California has a Property Assessed Clean Energy (PACE) financing program that allows homeowners to finance their solar panels and pay them back through their property taxes. Additionally, California offers property tax exemptions for solar installation.
• California guarantees access to solar installation and energy, so groups like homeowners associations (HOAs) cannot stop residents from installing solar energy systems

Colorado

• Colorado offers a tax credit of 15% of the solar system’s purchase price up to $1,000
• Colorado offers Solar Power Performance Payments, which are paid at a rate of $0.005 to $0.0375 per kilowatt-hour depending on the system.
• Colorado offers both state sales tax and property tax exemptions for installed solar systems.

Connecticut

• Connecticut has solar power rebates for systems up to 10kW in size.
• Connecticut has a net metering program
• There are no state income tax credits but the state has offered property tax exemptions for installed systems since 1977.
• Connecticut offers state sales tax exemptions.

Delaware

• Utilities in Delaware offer many rebate programs.
• Because Delaware does not have a state income tax, there is no need for a sales tax exemption.
• Delaware offers SRECs
• Rebates of $700 per kilowatt hour up to $6,000 are available

District of Columbia

• The District of Columbia has a strong district-wide energy rebate program.
• There is a property tax exemption.
• D.C. has net metering and a low-income residential solar program (Solar Advantage Plus)
• D.C. offered the highest payment for SRECs in 2021 ranging from $365-$435 per megawatt

Florida

• Because there is no state income tax in Florida, there is no need for state income tax credits.
• Florida offers both state sales and property tax exemptions for installed solar systems.
• Florida also has net metering programs in place

Georgia

• Georgia offers a net metering program
• There are also low-interest loans to help small businesses purchase and install solar energy systems

Hawaii

• No state-level incentives
• Low-interest loans are available to help low-income homeowners install solar energy systems
• Honolulu offers a property tax exemption, but the rest of the state does not

Idaho

• Idaho has a State Energy Loan program that provides low-interest loans

Illinois

• Illinois offers state rebate programs for solar system installation through ComEd and Ameren.
• Illinois Shines gives SRECs to solar energy users for each megawatt of electricity generated for 15 years
• Illinois offers a property tax exemption for installed solar systems.
• Solar easement laws help to ensure sunlight can reach the system by allowing for the removal of trees and other obstructions
• Net metering is used

Indiana

• No state-level incentives

Iowa

• There are both sales tax and property tax exemptions on solar panel installations. The property tax exemption last for five years after installation
• Iowa offers net metering for systems under 500 kilowatt

Kansas

• Kansas offers property tax exemptions for installed solar systems.
• Kansas has a net metering program

Kentucky

• No state-level incentives

Louisiana

• Louisiana offers property tax exemptions but does not offer state sales tax exemptions.
• The Home Energy Loan Program offers low-interest loans to assist with purchase and installation costs

Maine

• No state-level incentives
• There is a Home Energy Loan that offers low-interest loans

Maryland

• There are property tax exemptions
• Maryland has a net metering program
• Maryland issues SRECs for each megawatt produced

Massachusetts

• Property tax exemptions are offered for up to 20 years.
• The Solar Massachusetts Renewable Target (SMART) incentive offers cost-effective programs to help develop solar energy usage in the state
• Net metering is offered in Massachusetts
• SRECs are offered

Michigan

-No state-level incentives

Minnesota

• No state-level incentives

Mississippi

• Net metering is available

Missouri

• Missouri offers state rebates for solar systems through three electric utilities.
• Missouri does not offer state income tax credits or sales tax exemptions but does offer property tax exemptions.
• Missouri also has net metering

Montana

• No state-level incentives

Nebraska

• No state-level incentives

Nevada

• No state-level incentives.
• Solar access and solar easement laws make it easier for residents to install and use solar energy

New Hampshire

• Because there is no state income tax and no state sales tax, there are no income tax credits and no sales tax exemptions.
• New Hampshire offers property tax exemptions for solar installations.
• Net metering is available for systems up to one megawatt
• There is a low-income energy assistance program statewide

New Jersey

• New Jersey’s SRECs were worth about $90 in 2021

New Mexico

• New Mexico offers sustainable building efforts credit that can allow taxpayers a credit of $6.50 per square foot of their residence
• New Mexico offers state sales tax exemptions on solar systems.

New York

• Affordable Solar helps low-income residents install solar energy systems
• Solar panel installations are exempt from both state sales tax and property tax.
• Net metering is available

North Carolina

• Rebates for solar differ in North Carolina. Duke Energy Progress offers a rebate of $250/kW and Tennessee Valley Authority (TVA) offers a $1,000 payment after installation.
• North Carolina does not offer sales tax exemptions but does offer property tax exemptions.

North Dakota

• North Dakota has solar easement laws that ensure homeowners have access to solar energy
• No state-level incentives

Ohio

• SRECs in Ohio were worth $10 each in 2021

Oklahoma

• Because there is no state income tax, Oklahoma does not offer an income tax credit for solar.
• Oklahoma allows local jurisdictions to provide net metering incentives

Oregon

• Oregon offers state rebates through two utility providers. Portland General Electric customers receive a rebate of $1,200 and Pacific Power customers receive a rebate of $900.
• Solar installations are exempt from property tax and state sales tax.
• Oregon offers net metering

Pennsylvania

• PennsylvaniaSRECs were valued at $24-$41 in 2021

Rhode Island

• Rhode Island provides solar grants up to $5,000
• The Renewable Energy Growth program pays $0.2875 per kWh for 15 years.
• Both sales tax and property tax are exempt for solar installations.

South Carolina

• South Carolina offers sales and property tax exemptions
• Net metering is also offered in South Carolina

South Dakota

• No state-level incentives

Tennessee

• Because there is no state income tax, there is no tax credit offered for solar.
• Tennessee does not offer property tax exemptions for solar but offers state sales exemptions.

Texas

• Texas does not offer state solar rebates but many utilities and local governments do.
• Sales tax is not exempt for solar installations but property tax is.
• Texas does have solar rights laws to protect residents

Utah

• No state-level incentives

Vermont

• Sales tax is exempt for solar installations.
• Vermont offers net metering programs

Virginia

• Virginia does not have state solar rebates but the Tennessee Valley Authority offers a $1,000 payment after installation.
• There is a property tax exemption for solar installations.
• Net metering is available in Virginia

Washington

• There is no state income tax in Washington, so no tax credit is offered.
• Solar installations are not exempt from property tax but are exempt from state sales tax.
• Washington has production incentive payments that range from $0.08 to $0.12 per kWh depending on the size and type of equipment.

West Virginia

• No state-level incentives.
• West Virginia Solar Rights protect the residents’ rights to install and use solar energy systems

Wisconsin

• No state-level incentives
• Wisconsin protects solar access rights

Wyoming

• No state-level incentives