In short: Now that the 30% federal tax credit no longer applies to homeowners who buy solar in 2026, state and local incentives carry more weight. The main types are state income tax credits, upfront rebates, performance payments (paid per kWh your system produces), and sales and property tax exemptions. A handful of states, including New York, Massachusetts, Arizona and South Carolina, offer meaningful direct credits or programs, and many others offer tax exemptions or utility programs.
Incentives change often, funding can run out, and eligibility rules are detailed. This directory is general information, not tax advice. Confirm current terms with your state, utility and a tax professional before you sign anything.
Use this page as a starting point: it explains how state incentives work, highlights well-established programs, and shows you how to find what applies to your address. For the federal side of the story, read Federal Solar Tax Credit Changes: What Homeowners Can Still Claim.
The main types of state and local solar incentives
| Type | How it works | Watch out for |
|---|---|---|
| State income tax credit | Reduces your state income tax by a percentage of system cost, often up to a cap | Usually only helps if you owe state income tax; some credits carry forward, some don’t |
| Upfront rebate | A payment or discount based on system size or cost, often applied through your installer | Funding can run out; some require approval before installation |
| Performance payments (SRECs, TRECs, feed-in style programs) | Payments for each kWh (or MWh) your system produces, sometimes for 10–15 years | Rates and eligibility vary; some are declining-block programs where earlier participants get more |
| Sales tax exemption | No state sales tax on solar equipment | Applies at purchase; may not apply to leases or all components |
| Property tax exemption | The value solar adds to your home isn’t taxed (fully or for a period) | Rules and durations vary; may require an application |
| Utility rebates and programs | Local utilities offer their own rebates, battery programs or special rates | Limited budgets and changing rules |
| Net metering or export credits | Credits or payments for the excess power you send to the grid | Not an upfront incentive, but it changes your savings a lot. See Net Metering vs Export Tariffs |
State solar tax credits at a glance
The following states have long-standing direct income tax credits that appear consistently across current sources. Amounts, caps and eligibility change, so verify before relying on them:
| State | Credit (approximate) | Also worth knowing |
|---|---|---|
| New York | 25% of cost, up to $5,000 | NY-Sun rebates, sales tax exemption, 15-year property tax exemption; extra abatement in New York City |
| Massachusetts | 15% of cost, up to $1,000 | SMART program (performance payments over about 10 years), sales and property tax exemptions |
| Arizona | 25% of cost, up to $1,000 | Sales tax and property tax exemptions; utility rebates vary |
| South Carolina | 25% of cost, up to about $3,500 per year, carried forward up to 10 years | Confirm the exact cap and carryforward with the state |
Other states are also reported to have state-level solar tax credits or similar programs, including Hawaii, New Mexico and Iowa, and some sources mention Utah, Oregon and Maryland’s storage credit. Details differ between sources, so check each state’s official page and DSIRE before counting on them.
How to use a state tax credit
- Check your tax liability. A credit only reduces tax you owe; it may not produce a refund.
- Look for carryforward rules, which let you use unused credit in later years.
- Ask a tax professional whether the credit affects other parts of your return.
Performance payments and rebates: where they matter most
Several states run programs that pay you based on your system or its production rather than through the tax system:
- Massachusetts: the SMART program pays for solar production over a multi-year term, with declining rates as more capacity is installed.
- New York: NY-Sun offers rebates through NYSERDA, with enhanced options for income-eligible households.
- New Jersey: performance-based programs (such as the current successor to the SREC program) pay for production; check the current structure and rates.
- Illinois and Minnesota: programs such as Illinois Shines and Minnesota Solar*Rewards have paid for solar, but details and funding change, so check the current status.
- Others: some Washington, DC and regional markets have active certificate markets. See SRECs by State.
Because these programs are often first-come, first-served with declining rates or limited budgets, timing and installer participation matter. Ask your installer whether they’re approved for the program and whether your application must be made before you install.
Property and sales tax exemptions
Many states exempt solar equipment from sales tax, from property tax on the added home value, or both. Among the states highlighted above, Arizona, Massachusetts and New York offer property tax exemptions, and Arizona, Massachusetts, Minnesota and New York offer sales tax exemptions. Rules differ widely (for example, length of exemption and whether batteries are included). See Property Tax Exemptions for Solar Panels by State for details.
Battery incentives
Some states and utilities offer incentives for battery storage even when the federal credit no longer applies, such as rebates or programs that pay you to share stored power with the grid. Availability, amounts and eligibility vary, and some target income-qualified households or specific outage-prone regions. See Battery Storage Incentives by State and Do You Need a Solar Battery?
How to find the incentives available at your address
- Start with DSIRE (the Database of State Incentives for Renewables & Efficiency, at dsireusa.org), which lists state, local and utility programs.
- Check your state’s energy office and tax agency for official program pages and credit forms.
- Check your utility’s website for rebates, battery programs and net metering or export rules.
- Look at your city and county: some local governments offer grants, permitting benefits or property tax rules.
- Ask installers which programs they’re approved for, and get the incentives in writing on the quote. See How to Compare Solar Quotes and Spot Red Flags.
- Confirm with a tax professional for tax credits and exemptions.
Utility Solar Rebates: How to Find Yours goes deeper on the utility side.
Stacking incentives: what a realistic package looks like
Incentives can add up, but rarely to the size of the old 30% federal credit everywhere. As an illustration only: a household in a state with a capped tax credit, a sales tax exemption and a rebate might see thousands of dollars in combined value, while a household in a state with no direct incentives may only benefit from its net metering rules and any utility programs. The difference between states can be large, so always base your decision on the incentives you can document for your own address.
Once you know your incentives, recalculate your payback: How to Calculate Your Solar Payback Period and Is Solar Worth It Without the Federal Tax Credit?
Solar guides by state
Read our state guides for costs, incentives and grid rules:
- Texas
- Florida
- Arizona
- California
- North Carolina
- New Jersey
- Colorado
- Massachusetts
Common mistakes
- Assuming a state credit works like the old federal credit without checking the cap, carryforward and your tax liability.
- Counting incentives the installer promised verbally instead of documenting them.
- Missing pre-approval steps, so the incentive is lost after installation.
- Assuming funds are still available in a rebate program that has run out.
- Ignoring local and utility programs because the state offers nothing.
- Applying an incentive from another state, or an older year, to your case.
Next steps
- Search DSIRE and your utility for your address.
- Note which incentives require pre-approval or a specific installer.
- Ask installers to itemize incentives on each quote.
- Recalculate your payback: How to Calculate Your Solar Payback Period.
Where to next:
- 🇺🇸 Solar payback period by state
- 🇬🇧 Solar Grants and Funding Schemes in the UK
Frequently asked questions
Which states have the best solar incentives in 2026?
New York, Massachusetts, New Jersey and several others are often cited as strong, thanks to tax credits, rebates or performance payments. South Carolina and Arizona also have state tax credits. The best option for you depends on your address, so check DSIRE and your utility.
Are there still solar tax credits in 2026?
The federal residential credit no longer applies to systems bought after 2025, but several states offer their own solar tax credits. Amounts and rules vary, and most are capped.
How do I find solar rebates near me?
Search DSIRE for your state and utility, check your utility’s website, and ask installers which programs they participate in. Rebates often have limited funding and may require approval before installation.
Do state solar incentives require a specific installer?
Some do. Programs may require an approved or certified installer, so confirm eligibility before you choose a company. See How to Choose a Solar Installer.
Can I combine state, local and utility incentives?
Often yes, but rules vary by program, and some incentives reduce the eligible cost for others. Ask each program administrator and consult a tax professional.
Do solar incentives apply to leases and PPAs?
It depends on the incentive. Tax credits and rebates that go to the system owner usually go to the leasing company, not to you, and exemptions may work differently. Ask the provider what value is passed on to you.