Solar energy incentives in the United States have changed significantly as of 2026. The federal landscape shifted with the One Big Beautiful Bill signed July 4, 2025, and homeowners and businesses considering solar need current information — not guidance based on incentive structures that are no longer in effect. This article covers what’s actually available in 2026.
Federal Solar Tax Credits in 2026
Section 25D — Residential Energy Efficient Property Credit: EXPIRED. The 30% residential solar tax credit (Section 25D of the tax code) that applied to homeowners who purchased and owned their solar system has expired effective December 31, 2025. Homeowners who installed and placed solar in service on or before December 31, 2025, may still claim the credit on their 2025 tax return. Installations placed in service in 2026 or later do NOT qualify for the Section 25D residential credit.
Section 48E — Clean Electricity Investment Credit: Active through 2027. This commercial/installer-side credit applies to solar installations by businesses, utilities, and installers offering leases and power purchase agreements (PPAs). The installer — not the homeowner — claims the Section 48E credit. This credit is 30% of the system cost and applies to systems placed in service through 2027 (subject to sunset provisions).
How 48E affects homeowners on leases/PPAs: When a solar installer offers a lease or PPA, they own the system and can claim the 48E credit. Some installers pass a portion of this value to customers in the form of lower monthly lease payments or reduced PPA rates. If you’re comparing buying vs. leasing solar in 2026, factor in that leased systems may carry some indirect benefit from the installer’s 48E credit, while purchased systems no longer benefit from any federal residential ITC.
Section 25C — Energy Efficient Home Improvement Credit: Still active. While the solar-specific 25D credit expired, Section 25C — which covers certain home energy improvements — remains in effect. 25C provides credits of up to 30% for: heat pump HVAC systems ($2,000/year), heat pump water heaters ($600/year), air sealing and insulation ($1,200/year), energy audits ($150), and electrical panel upgrades ($600). This doesn’t cover solar panels themselves, but it’s relevant for homeowners doing a broader home energy upgrade alongside or instead of solar.
State Solar Incentives
State-level incentives vary significantly and remain an important part of the solar economics calculation even as federal residential credits have expired. Key types:
State tax credits: A number of states offer their own solar tax credits. Notable examples: New York (25% state credit, up to $5,000), Maryland (30%, up to $5,000 with income limits), South Carolina (25% state credit), Massachusetts (15% state credit, up to $1,000). State tax credit availability, amounts, and caps change frequently — verify with your state’s tax agency or department of energy.
Net metering: The most financially significant ongoing incentive for grid-tied solar. Net metering credits you for excess solar energy exported to the grid, offsetting your bill when you draw from the grid at night. Policy varies dramatically by state: traditional full-retail-rate net metering (most states), reduced “avoided cost” rate metering (California’s NEM 3.0 at 5–8 cents/kWh), or no net metering requirement (some states). Net metering policy is set by state utility commissions and can change.
Property tax exemptions: Many states exempt the added value of a solar system from property tax assessment, meaning a $30,000 solar installation doesn’t increase your property tax bill even though it raises your home’s assessed value. States with solar property tax exemptions include California, Florida, New York, New Jersey, Texas, Massachusetts, and many others. Some are permanent; some are time-limited.
Sales tax exemptions: Some states exempt solar equipment purchases from state sales tax. States with full or partial sales tax exemptions include Arizona, California, Florida, Maryland, Massachusetts, New York, New Jersey, and others. Saves 5–10% of equipment purchase price depending on state sales tax rate.
State rebates: Some utilities and state programs offer direct rebates for solar installation. Examples: the New York NYSERDA program, Connecticut’s ZREC program, and various utility-level programs. These are often first-come, first-served and may have income limits or caps.
Solar Renewable Energy Certificates (SRECs)
In states with Solar Renewable Portfolio Standards (RPS carve-outs), solar system owners can generate and sell Solar Renewable Energy Certificates (SRECs) — tradeable credits worth one per 1,000 kWh of solar generation. SREC markets exist in: New Jersey, Massachusetts, Maryland, Washington DC, Ohio, Pennsylvania, Delaware, and a few other states.
SREC prices vary by state supply and demand: New Jersey SRECs have ranged from $200–$300 recently; Massachusetts SRECs (technically SMART program incentives) have offered $50–$150/MWh in recent years; DC SRECs have been among the highest at $300–$450. A typical 8 kW system produces 8–10 SRECs per year. In New Jersey, that might generate $1,600–$3,000/year in additional income on top of electricity savings.
SREC markets are volatile — prices depend on the number of new solar installations relative to the RPS mandate. Check current SREC prices on platforms like SRECTrade or Sol Systems before factoring SREC income into your solar financial model.
Low-Income Solar Programs
Several federal and state programs specifically target low- and moderate-income households:
Low Income Home Energy Assistance Program (LIHEAP): Provides energy bill assistance and may fund some energy efficiency upgrades, though not typically solar installation directly.
Community solar with low-income subscriptions: Many states with community solar programs require a portion of capacity to be reserved for low-income subscribers, often with discounted rates. This allows renters and those without suitable roofs to benefit from solar without installation.
USDA Rural Energy for America Program (REAP): Grants and loan guarantees for renewable energy systems in rural areas — covers agricultural producers and rural small businesses, not residential homeowners directly.
Weatherization Assistance Program (WAP): Federal program covering insulation, air sealing, and some energy-efficient equipment for income-qualifying households; not solar specifically but reduces the total energy bill.
How to Find Incentives in Your State
The most comprehensive and current database of US solar incentives is the Database of State Incentives for Renewables and Efficiency (DSIRE) at dsireusa.org. DSIRE tracks federal, state, utility, and local incentives — updated regularly. Enter your zip code to see what’s available in your specific utility service territory.
Your solar installer should also know the current incentives in your area — incentive capture is part of the value a good installer brings. Ask specifically about: state tax credits, net metering policy, property and sales tax exemptions, utility rebates, and any SREC market. Call (855) 427-0058 to get a free quote and incentive assessment for your location.
Frequently Asked Questions
Is there still a federal solar tax credit in 2026?
For homeowners purchasing their own solar system: No — the Section 25D residential solar tax credit expired December 31, 2025. Installations placed in service in 2026 do not qualify for any federal residential solar tax credit. For commercial installations, businesses leasing solar, and installers offering PPAs and leases: the Section 48E Clean Electricity Investment Credit (30%) remains in effect through 2027. Some homeowners on leased systems may indirectly benefit from the installer’s 48E credit through lower lease rates.
What solar incentives are available in 2026?
Depending on your state: state-level solar tax credits (NY, MD, SC, MA, and others), property tax exemptions on solar value (many states), sales tax exemptions on solar equipment (many states), net metering credits for excess solar exported to the grid (policy varies by state and utility), SREC markets in states with solar RPS carve-outs (NJ, MA, MD, DC, PA, OH), and utility-specific rebate programs. Federal residential solar credits have expired, but state incentive programs remain significant in many markets. Use DSIRE (dsireusa.org) to find current incentives in your zip code.
Do I still get a tax credit for solar panels?
Federal residential tax credit (Section 25D): No, it expired December 31, 2025. If you placed your solar system in service in 2025 or earlier, you may still claim the credit on your 2025 tax return. For 2026 installations, the federal residential credit is not available. However, state-level solar tax credits exist in some states and may provide meaningful offsets — New York offers 25% (up to $5,000) and Maryland 30% (up to $5,000) for example. Consult a tax professional familiar with your state’s current solar incentive rules.
What is an SREC and do I qualify?
An SREC (Solar Renewable Energy Certificate) is a tradeable certificate representing 1 MWh (1,000 kWh) of solar electricity generation. Solar system owners in states with SREC markets (New Jersey, Massachusetts, Maryland, Washington DC, Ohio, Pennsylvania, Delaware) can sell SRECs to utilities that need them for RPS compliance. A typical 8 kW residential system generates 8–10 SRECs per year. You qualify if your state has an active SREC market and your system is registered with the state’s tracking program. Current SREC values and market liquidity vary significantly by state — check SRECTrade.com for current prices.
Does solar affect my property taxes?
In most states, solar installations are exempt from property tax assessment — meaning the added home value from solar (approximately $4/W or $32,000 for an 8 kW system per LBNL research) is not included in your property’s assessed value for tax purposes. States with solar property tax exemptions include California, Florida, New York, New Jersey, Texas, Massachusetts, and many others. Some exemptions are permanent; some are time-limited. Verify with your local assessor’s office or check your state’s listing on DSIRE. Without an exemption, a $32,000 home value increase could add $300–$800/year in property taxes (depending on local assessment rates).
Summing Up
The federal solar incentive landscape changed significantly effective January 1, 2026: the Section 25D residential solar tax credit (30%) has expired for homeowners purchasing their own systems. Section 48E (commercial credit, 30%) remains available through 2027 for installers, and some leased-system homeowners may benefit indirectly. State-level incentives — tax credits, property tax exemptions, sales tax exemptions, net metering, and SREC markets — remain important and vary significantly by location. The most complete resource for current state and utility incentives is DSIRE (dsireusa.org). Getting quotes from multiple installers and asking specifically about available incentives in your utility service territory is the best way to understand your full incentive picture.
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