Which states have solar incentives? [Top FAQs]
In addition to the federal tax incentive, many states and Puerto Rico offer incentives for going solar as well. Each state has different incentives and requirements, so it’s best to search for incentives in your region, or speak to a qualified Solar Energy Specialist to fully understand every opportunity available to you.
Here is a list of states that have solar incentives. Even if your state isn’t listed here, you could still be eligible for the 30% Federal Solar Tax Credit. To fully understand what’s available to you, it’s a good idea to speak with a qualified solar energy specialist.
Now that we covered which states have solar incentives, let’s find out what all those incentives are. Here’s some information about each type of solar incentive and what it could mean for you, depending on your eligibility.
What type of state solar incentives are available?
State tax credits
State credits are similar to the Federal Solar Tax Credit, but the credit is instead applied to your 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 state to state.
Sales tax exemption
Some states offer an exemption on the purchase of your solar panel system equipment. This means you’d pay zero sales tax on your system and depending on the size of your system could add up to a pretty substantial discount. Some of the states that offer this are Texas, Florida, California and New Mexico.
Property tax exemption
This exemption means your property taxes will not increase when you have a solar panel system installed on your home. As this is considered a home upgrade, your property taxes could increase like any other home construction project. However, not in the states with this exemption.
Some of the states that offer this are Texas, Florida and Arizona.
Net metering
Net metering allows you to receive credits on your utility bills for sending your unused solar energy back to the grid. It’s a pretty important incentive for going solar. We’ll get into net metering in more depth further down this article.
State government rebates
State government rebates are when you can receive a rebate upfront during the year your solar panel system was installed. Most of these state rebates are available only for limited amounts and once the funds are used for a year, the state will stop offering them. A good idea is to get ahead of the crowd by researching rebates for your state and applying well before the deadline. Some allow you to only apply after your system has been installed, so it’s Smart to plan this out ahead of time.
Solar Renewable Energy Credits (SREC)
Solar Renewable Energy Credits, or more commonly known as SRECS, are offered by some state governments. This incentive is a certificate of the benefits your solar system provides to the environment. It works like this:
One SREC is generated for every megawatt-hour (MWh), or 1,000 kilowatt hours (kWh) of solar electricity a solar panel system generates.
In the states where SRECS are in effect, utility companies will purchase SRECs under the state’s Renewable Energy Portfolio (RPS) standards, which require utilities to generate a portion of their energy from renewable sources. This standard is determined by the state governments and varies depending on your state.
The states that currently offer SRECs are: New Jersey, Massachusetts, Pennsylvania, Maryland, Washington D.C, Delaware, and Ohio. New Jersey and Massachusetts are not currently accepting new applications for this program.
Which 11 states get free solar panels?
There is a rumor that the federal government is giving away free solar panels in 11 states. Unfortunately, it’s just that – a rumor. While there are many solar incentives including the federal solar tax credit, state tax credits and net metering, there is no government program in the United States that provides free solar panel systems.
You may have seen ads for “free solar panels” on social media. These ads are usually for power purchase agreements (PPA). In this arrangement, a homeowner rents or leases a solar panel system rather than buying it with cash or financing the purchase with a loan. Learn more about leasing versus buying solar panels.
What states have net metering?
Net metering is an arrangement between you and your electricity company. It allows you to receive credit towards your utility bill when your solar energy system produces more power than your home consumes. It’s one of the great factors of solar energy, there’s so much energy to go around!
Here are the states that currently offer net metering:
Even though not every state has net metering, it’s changing quickly. For example, Mississippi is on its way to cleaner energy with new net metering rules as of January 2022. These new rules will expand their current net metering program, improve total compensation rates for solar customers, and prioritize solar adoption for low-to-moderate income (LMI) customers. Solar in Mississippi has been slowly growing the last couple of years, and with this plan the state is hoping to boost its solar growth even more.
Net Metering 3.0
California’s Net Metering program, known as NEM 3.0, applies to any solar energy system submitted for approval after April 15, 2023, in the territory of the state’s three investor-owned utilities, PGE, SCE and SDGE. The new policy recalibrated how homeowners are paid for the energy they send into the grid. The policy credits solar system owners at the “avoided cost” rate which is based on what the utility would pay commercial-scale generators.
Although the avoided cost rate means users are generally paid less for the electricity they send to the grid, the new payment structure is designed to encourage solar adopters to add a backup battery to their solar energy system. The state’s Self-Generation Inventive Program can help offset the cost of a backup battery if you meet certain conditions.
What is the federal solar tax credit?
The residential clean energy credit itself isn’t totally new. Previously called the investment tax credit, it’s been around for years but was expanded significantly under the Inflation Reduction Act.
It actually had been scaling down prior to the passing of the IRA, said Gilbert Michaud, an assistant professor in the School of Environmental Sustainability at Loyola University Chicago. As part of the Inflation Reduction Act, they just said, ‘We’re going to mitigate all the risk and the changes and uncertainty’ and bump it back up.
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The credit now covers up to 30% of the cost of new, qualified clean energy improvements in your home, made between now and 2033. That includes projects like solar, but also water heaters, wind turbines, geothermal heat pumps, fuel cells and battery storage technology.
How does the federal solar tax credit work?
This federal incentive, while generous, won’t come directly in the form of cash in your Instead, it’ll reduce the amount of money you pay in federal taxes.
For example, if you installed a 15,000 solar array, you’d qualify for a federal tax credit of 4,500. That means your tax bill in the following year would be lowered by 4,500. (This is different from a typical tax deduction, which lowers your total taxable income and could result in a reduction in your tax bill as well.)
If the credit you’re eligible for is more than the amount you owe in taxes to begin with, you can carry forward any excess unused credit. and apply it to reduce the tax you owe in future years, according to the IRS.
What is covered by the solar tax credit?
The residential clean energy credit covers a broad array of home energy improvements. When it comes to solar, the credit covers:
- The expense of the actual solar panels and related hardware.
- The cost of labor for installation and assembly.
- Any electrical work required to connect the solar array to your home.
- Any soft costs, like permitting fees.
It’s basically an all-in.- ‘How much did you spend to put this on your roof?’ Michaud said.
Other roofing costs, like new support beams or shingles, aren’t covered by the solar tax credit.
How do I claim the federal solar tax credit?
The process for claiming the federal tax credit is fairly straightforward. Here’s how it works:
- Work with a solar installer to complete the installation of your rooftop solar system.
- The following year, when filing your taxes for the year in which your solar array was installed, fill out the IRS Form 5695, Residential Energy Credits.
- Because the credit reduces your tax bill, you won’t necessarily receive anything. But when you file your taxes, the credit will reduce your tax bill for that year.
If you use software like TurboTax, it’s even simpler: The system will ask you if you’ve installed solar in the last year, and you check the box if you have.
These software packages make things easy for consumers, Michaud said.
Smart Shopping Tips for Solar
Becca Jones-Albertus is the the Director of the Solar Energy Technologies Office within the Energy Efficiency and Renewable Energy Office.
Connect the Dots on Solar Energy: Learn more about the benefits of choosing to power your home with solar energy.
Free solar panels from the federal government? Not so fast — it could be a consumer scam.
Millions of Americans are deciding to power their homes with solar energy and take advantage of its numerous benefits, including cost-savings on electricity bills that accrue over the lifetime of the solar system. As more people choose solar energy, the increase in popularity has opened the door for some bad actors who are spreading misinformation and engaging in fraudulent business practices. Every solar company has a responsibility to be honest and upfront with consumers, but to avoid scams, consumers should also be on the lookout for red flags as they plan to go solar.
Don’t Give In to Pushy Sales Tactics
Going solar is a process that requires careful consideration. The U.S. Department of Energy Solar Energy Technologies Office has a list of commonly asked questions for homeowners thinking about powering their homes with solar energy. Do your research before signing any contracts and be wary of aggressive sales pitches. While there could be a legitimate reason to act quickly, such as taking advantage of local incentives before a deadline, pressure to act immediately could also be a red flag. When viewing your contract. make sure you understand the terms, consult multiple trusted sources, and don’t hesitate to ask questions.
When looking for price quotes on a solar system, make sure you go through a legitimate platform such as, but not exclusive to, EnergySage, which clearly states how it will use your information. Online forms that are not associated with an official business and request your name, address, or other personal data to “see if you qualify” or make offers like “no more energy bills” are another warning sign, as these forms can sometimes serve to generate leads for other businesses without your knowledge or consent.
Talk to Certified Installers
An ad for solar panels without any branding or business affiliation should be a red flag. Reputable companies stand behind their products and take ownership of their behavior.
As you research solar installers, read customer reviews to make sure you are selecting a good fit. Another helpful step is talking to your neighbors and friends who have gone solar. Ask them about their experiences and for recommendations on local installers.
Make sure the person who will be installing your panels is licensed and certified by a reputable organization like the North American Board of Certified Energy Practitioners. Ask multiple installers to come assess your roof and compare their quotes.
Understand Your Financing Options
Offers claiming to provide free solar panels or other services deserve a closer look at the fine print. The federal government does not have any programs that install solar panels on the homes of Americans for free. However, there are legitimate programs that can help you take the plunge with very little up-front cost. Some states subsidize solar energy for income-qualified households, but check to see that the program is listed on a.gov website or call the state office to make sure the offer is real and to learn how to participate.
If you choose to buy your solar energy system, a variety of loans are available that can lower the up-front costs of the system. Additionally, a 30% tax credit is available to those who purchase a solar energy system. The tax credit is a dollar-for-dollar reduction in the amount of income tax you would otherwise owe; it is not a rebate or a government check. Read our Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics to learn more about the tax credit and eligibility.
Solar leases and power purchase agreements allow consumers to host solar energy systems that are owned by solar companies and purchase back the electricity generated. Consumers enter into agreements that often allow them to have lower electricity bills without monthly loan payments. In some cases, that means putting no money down to go solar.
Shop Safely and Spread the Word
Now that you know how to spot a scam, go forth and go solar! Be sure to tell any friends and family who are considering going solar how they can avoid falling victim to a scam.
Pros and Cons of Solar Energy ( When the Disadvantages Outweigh Benefits)
Size of Standard Solar Panel: Solar Sizing Calculator Finds How Many
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