Every US homeowner can claim the 30% federal solar tax credit, but that’s just the floor. Most states add their own incentives on top — state tax credits, upfront rebates, performance payments (SRECs), and net metering — and they stack. Knowing what your state offers can shave thousands more off your system. Here’s how the pieces fit together.
The four types of solar incentives
1. The federal tax credit (everyone gets this). 30% of your total system cost, including battery, as a credit against federal taxes through 2032. No income or dollar cap. This is the big one — full guide here.
2. State tax credits. Some states add their own income-tax credit on top of the federal one. Examples:
- New York: 25% (up to $5,000)
- Hawaii: 35% (up to $5,000)
- South Carolina: 25% (up to $3,500/year)
- Arizona: 25% (up to $1,000)
- Massachusetts: 15% (up to $1,000)
3. Rebates. Upfront cash back from a state program or your utility, often per-watt or a flat amount. Utilities like Duke Energy, Xcel, and Ameren have run residential solar rebates. These reduce your cost before the tax credit is even calculated.
4. Performance payments (SRECs). In states with a Solar Renewable Energy Certificate market — like New Jersey, Massachusetts, Pennsylvania, Maryland, and Illinois — you earn certificates for the power you generate and can sell them for ongoing income, sometimes worth thousands over the system’s life.
Net metering: the quiet incentive
Net metering isn’t a rebate, but it’s one of the most valuable policies. It lets the excess power your panels send to the grid credit your bill at the retail rate, effectively using the grid as a free battery.
- Strong net metering (most states) → faster payback, less need for a battery.
- Limited net metering (e.g., Texas has no statewide rule, Indiana is phasing it out) → excess power is worth less, which can make a battery more attractive.
Check whether your state offers broad net metering — each of our state pages lists it.
Property and sales tax exemptions
Many states also offer:
- Property-tax exemptions — solar raises your home’s value, but these exemptions stop that added value from raising your property taxes.
- Sales-tax exemptions — no sales tax on the equipment, saving a few hundred dollars upfront.
How to stack them (the order matters)
- Apply utility/state rebates first — they lower your net system cost.
- Then take the 30% federal credit on the post-rebate cost.
- Claim any state tax credit.
- Enroll in SRECs / net metering for ongoing value.
Done right, a homeowner in a generous state can cut their effective cost well below the headline price.
Find your state’s incentives
Incentives change and vary by utility, so always confirm current programs. Our state pages summarize the headline incentives and net-metering status for all 50 states, and the DSIRE database is the authoritative source for program details.
Bottom line
The 30% federal credit is universal, but your state and utility incentives can add thousands more — especially in high-incentive states like New York, Hawaii, New Jersey, and Massachusetts. Look up your state, stack the incentives in the right order, and run the calculator to see your net cost and payback.
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