2026 update: The 30% federal residential solar tax credit (25D) was eliminated for new installations after December 31, 2025, by the One Big Beautiful Bill Act signed July 4, 2025. This guide has been updated to reflect that reality. State and utility incentives are now the primary financial levers for homeowners going solar in 2026.
The end of the federal credit is significant, but it doesn’t mean all incentives are gone. Several states offer their own tax credits, utilities run rebate programs, SREC markets pay you for the power you generate, and net metering policies determine how much exported solar is worth. The difference between incentive-rich states and low-incentive states is now sharper than ever. Here’s how to find and use what’s available to you.
What Changed in 2026
Before 2026, the incentive stack for most US homeowners looked like this: 30% federal credit (the big one) + whatever your state offered on top. The federal credit alone was worth $6,000–$10,000+ on typical systems.
In 2026, that first layer is gone for homeowners who buy with cash or a loan. The framework now is: state and utility incentives are the only upfront levers you have.
There is one important exception: solar companies that offer leases or PPAs may still qualify for the commercial 48E credit through 2027. They can pass some of that savings to customers through lower monthly rates. But you personally cannot claim any credit if you don’t own the system. See our tax credit guide for the full breakdown.
The Four Types of Solar Incentives That Still Exist
1. State Income Tax Credits
Several states offer income tax credits that directly reduce what you owe the state — similar in structure to how the federal 25D credit worked, but at the state level.
Best state tax credit programs in 2026:
New York — 25% credit, capped at $5,000 One of the most generous state programs available. On a $20,000 system, that’s $5,000 back on your NY state taxes. Combine it with the NY-Sun rebate program from NYSERDA and the Long Island Power Authority’s programs for additional savings.
Hawaii — 35% credit, capped at $5,000 The highest percentage state credit in the country, which helps offset Hawaii’s very high electricity rates ($0.35–$0.40/kWh). Even capped at $5,000, this meaningfully reduces the effective system cost for smaller systems.
South Carolina — 25% credit, no cap Unusual in having no dollar cap. On a $25,000 system, that’s $6,250 back. SC also has an active SREC market. One of the better environments for going solar in the Southeast.
Massachusetts — 15% credit, capped at $1,000 Lower cap limits its impact on larger systems, but Massachusetts also has SMART (Solar Massachusetts Renewable Target), an SREC-like program that provides ongoing per-kWh payments.
Montana — 15% credit, capped at $500 Modest benefit, but useful given Montana’s limited solar hours.
Maryland — 30% credit for solar water heaters, SREC market for PV Maryland’s direct tax credit applies specifically to solar water heating, but the state has one of the oldest and most active SREC markets for photovoltaic systems.
Oregon — tax credit through Energy Trust of Oregon Oregon’s Energy Trust provides rebates and incentives; check their current programs as they change annually.
Arizona — 25% credit, capped at $1,000 Lower cap reduces the impact on full systems. Combined with high sun hours, Arizona is still a strong solar market despite the modest state credit.
2. Utility and State Rebates
Utility rebates are upfront cash payments — either per-watt or flat-dollar amounts — that directly reduce what you pay the installer. They’re essentially free money against the system cost, and unlike tax credits, you don’t need a tax bill to use them.
How rebates work:
- A utility might offer $0.20/W × 8,000W = $1,600 off your installation
- The rebate is typically paid to the installer and deducted from your invoice
- They’re first-come, first-served and programs open and close without much warning
Who runs rebates:
- State agencies (like NYSERDA in New York)
- Municipal utilities (Austin Energy, Sacramento Municipal Utility District)
- Investor-owned utilities (Duke Energy, Xcel Energy, Ameren have all run programs)
Check your utility’s website directly and your state energy office. The DSIRE database is the most current aggregator — but call your utility too, since some programs aren’t listed publicly.
3. SREC Markets: Getting Paid for What You Produce
Solar Renewable Energy Certificates (SRECs) are a performance-based incentive: you earn one SREC for every megawatt-hour (1,000 kWh) your panels produce, and you can sell those certificates to utilities that need them to meet state renewable portfolio standards.
Active SREC markets in 2026:
New Jersey — historically one of the most valuable SREC markets, though prices fluctuate with supply and demand. NJ has been running SRECs for years; prices are lower now than peak but still meaningful income.
Massachusetts — SMART (Solar Massachusetts Renewable Target) program operates similarly to SRECs. A 10-year fixed-rate program administered by the utility, providing per-kWh payments for everything your system produces. Unlike traditional SREC markets, SMART rates are locked in when you enroll.
Pennsylvania — active SREC market, though prices vary. Check current broker prices before counting on SREC income in your payback calculation.
Maryland — SREC program is well-established. Check Maryland SREC prices through registered brokers.
Illinois — Adjustable Block Program (similar structure to SMART) provides per-kWh payments for a fixed term.
Virginia, Ohio, Delaware — smaller markets with variable pricing.
The value of SRECs can be significant — potentially hundreds to thousands of dollars per year — but prices are market-driven and can drop. Build conservative SREC estimates into your payback projections.
4. Net Metering: The Policy That Determines How Much Your Solar Is Worth
Net metering isn’t a rebate or a credit — it’s a billing policy. But it may be the most financially important factor after your electricity rate.
How it works: When your panels produce more power than you’re using (typically midday), the excess flows to the grid. With good net metering, your utility credits your bill for that export at the retail rate — the same price you’d pay to buy that electricity. You bank credits in sunny hours and draw on them at night or on cloudy days.
Why it matters: Without net metering (or with weak net metering), excess solar production is worth much less — utilities might pay you wholesale rate (typically $0.03–0.06/kWh) instead of retail rate ($0.12–0.35/kWh). That’s a 5–10× difference in value per exported kWh.
Net metering status by state (2026):
- Strong retail-rate net metering: Connecticut, Massachusetts, New Jersey, New York, Colorado, Minnesota, Wisconsin, most Mid-Atlantic and New England states
- Modified or reduced net metering: California (NEM 3.0 significantly reduced export rates — makes batteries more valuable in CA), Indiana (phasing down), Nevada (reduced rates after 2015 rollback was partially restored)
- No statewide net metering policy: Texas (each utility decides), Mississippi, Alabama, South Dakota
- Actively favorable: Hawaii (despite NEM 3.0-style changes, high rates make even reduced net metering valuable)
Check your specific utility — even in states with a statewide net metering law, the exact rates and rules vary by utility company.
Property Tax and Sales Tax Exemptions
These are the quiet incentives that don’t require you to do anything special — they just make your solar investment a bit less expensive in passive ways.
Property tax exemptions: Solar panels add to your home’s assessed value — which would normally raise your property tax bill. Most states have passed exemptions that prevent this: the added value from solar is excluded from property tax assessment. Available in roughly 35+ states.
Sales tax exemptions: Some states waive sales tax on solar equipment. On a $20,000 system in a state with 8% sales tax, that’s $1,600 in savings — real money. Available in about 20+ states.
These won’t show up in your installer’s quote necessarily — they’re just what you don’t pay. Check your state’s pages to see which apply to you.
How to Stack Incentives: The Correct Order
With the federal credit gone, the stacking order is simpler in 2026:
- Apply utility/state rebates first — they reduce your net system cost before any tax calculations
- Calculate state tax credit on the post-rebate cost (or on full cost if no rebate — depends on state program rules)
- Enroll in net metering with your utility when the system interconnects
- Register for SREC market if your state has one — this provides ongoing annual income
A homeowner in New York with NYSERDA rebates + 25% state credit + net metering + potentially an SREC program can come meaningfully closer to the old economics that the federal credit enabled. The total varies enormously by state.
Your State Matters More Than Ever in 2026
The variance between high-incentive and low-incentive states is now stark. Rough comparison:
High-incentive state (e.g., New York, $21,000 system):
- NY-Sun rebate: −$2,000
- NY 25% state credit (up to $5,000): −$5,000
- Net effective cost: ~$14,000
- Payback at $0.22/kWh: ~8–9 years
Low-incentive state (e.g., Georgia, $21,000 system):
- No state credit, no significant rebate
- Net effective cost: $21,000
- Payback at $0.13/kWh: ~18–20 years
Same system, same federal situation — but vastly different economics. This is why checking your state’s specific programs before deciding isn’t optional.
Where to Look
DSIRE (dsireusa.org) — the authoritative federal database of state energy incentives. Updated regularly. Search by state to see all current programs.
Your state energy office — most states have a dedicated energy agency that lists current programs and can answer questions.
Your utility’s website — rebate programs, net metering policy, interconnection process.
Our state pages — each of the 50 states has a summary page with headline incentives, net metering status, average electricity rate, and NREL sun hours.
Bottom Line
The 30% federal credit is gone for 2026 residential buyers. What remains is a patchwork of state tax credits, utility rebates, SREC markets, and net metering policies that vary dramatically by state. In generous states like New York, Hawaii, Massachusetts, and South Carolina, the incentives are still meaningful. In low-incentive states, the financial case for solar is now genuinely harder.
Check your state, look up your specific programs on DSIRE, stack the available incentives in the right order, and run the calculator with your actual numbers. The calculator reflects 2026 reality — no federal credit, real state electricity rates, real sun hours.
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