Solar rebates and incentives guide: How much money can you save?

Solar can save you thousands of dollars over its lifetime, but the upfront cost can feel steep. While solar prices have dropped substantially over the last decade, installing solar panels still costs an average of $29,649 for a typical 12 kW system before incentives. That's where solar incentives come in—they can slash that number by thousands.

Many state and local governments offer various incentives to make solar energy more affordable and encourage the adoption of clean energy. These range from tax credits and rebates to performance-based payments and sales tax exemptions. Together, they can significantly reduce your upfront costs and accelerate your savings timeline.

Understanding what incentives you qualify for is key to making solar work for your budget. Some incentives apply automatically when you install solar, while others require applications or specific equipment choices. We'll walk you through the different types of solar incentives available, explain how they work, and help you figure out how much you can save when you go solar.

Solar rebates directly lower what you pay for solar by providing cash back after (or sometimes before) your installation. Unlike tax credits that reduce what you owe on your tax bill, rebates put money back in your pocket or reduce your upfront costs.

Rebate availability varies significantly by location. Many early solar rebate programs have reached their funding caps or been phased out as solar has become more affordable. Some current programs now require adding a battery to your solar installation to qualify.

There are four main places to check for rebates: Your state or local government, your utility company, your installer, and your equipment manufacturer.

The biggest rebates come from local governments or utility companies

Local and utility-sponsored rebates often provide the most significant savings—sometimes over $5,000. These programs aim to reduce grid strain, meet renewable energy targets, or support local clean energy goals.

Applying for these rebates can involve submitting detailed information about your solar equipment, system design, performance expectations, project costs, and installation company. Your installer usually handles this process or assists you with the application.

Rebates sometimes come with requirements. You may need to choose specific equipment brands, meet system size restrictions, or work with approved installers. For example, New York's Megawatt Block incentive program requires working with a pre-vetted, state-approved contractor. If your system qualifies, you could earn around $2,000.

Sometimes you won't receive the rebate directly—the program provides it to your installation company, which should subtract that amount from what they charge you. However, some installers use rebates as an opportunity to increase prices and capture more profit. Compare quotes from installers both inside and outside rebate programs to ensure you get the best deal.

Search for an installer offering rebates

Business slows down for installers during the winter months when fewer people think about solar. Some installers offer seasonal rebates and limited-time promotions to maintain steady sales. These installer-specific rebates usually don't require separate applications—you simply sign the installation contract, and the rebate gets subtracted from your total cost.

Get a few hundred dollars back by choosing rebate-eligible equipment

Solar panel, inverter, and battery manufacturers sometimes offer rebates or promotions to make their products stand out. Getting these equipment rebates is typically straightforward—you can often apply directly through the company's website. You'll likely need to provide proof of installation, such as photos, a signed contract, or verification from your utility company that your system is operational.

Some equipment brands partner with EnergySage to offer rebates to customers who find installers through our platform. If you're claiming an equipment rebate through EnergySage, you'll work directly with us to receive the incentive once your system is running.

Tax credits reduce your federal or state income tax bill dollar-for-dollar. Unlike deductions that lower your taxable income, credits directly offset what you owe. For solar installations, tax credits have historically provided some of the most substantial savings.

The federal solar tax credit: What changed and what it means for you

The federal solar investment tax credit (ITC) provided a credit worth 30% of your total system cost that you could apply directly to your federal tax bill. In July 2025, Congress passed legislation that ends the credit for purchased residential solar systems installed after December 31, 2025.

But, this credit expiration applies specifically to purchased solar systems. Third-party owned projects—solar leases and power purchase agreements (PPAs)—continue to qualify for the federal tax credit if they begin construction before July 2026 or are placed in service before 2028. The solar company that owns the system claims the credit, but they should pass those savings along to you through lower monthly rates.

With limited installer capacity remaining before year-end, most homeowners exploring solar now won't be able to access the federal tax credit through a purchased system. However, if you're considering solar through a lease or PPA, ask providers how they pass federal tax credit savings through to customers via reduced rates.

Some states offer their own tax credits

Beyond the federal ITC, some states provide additional tax credits that apply to your state income tax bill. Massachusetts, for example, offers a state solar tax credit that can add hundreds or thousands to your total savings. These state credits vary significantly:

• Credit amounts: Range from a few hundred to several thousand dollars, depending on system size and state policies

• Eligible expenses: Some states only credit equipment costs, while others (like the federal ITC) include all installation expenses

• Rollover rules: You may be able to carry forward unused credits for a few years, indefinitely, or not at all

When combined with other incentives, state tax credits can substantially improve your solar economics. Check your state's specific program details to understand what you qualify for.

Tax exemptions and deductions may sound less exciting than rebates or credits, but they can save you thousands over time—especially in states with high tax rates.

Sales tax exemptions

Adding sales tax to an already substantial solar investment can push the total cost higher than many homeowners expect. Several states eliminate this barrier by exempting solar installations from state sales taxes. In states with sales tax rates of 6-10%, this exemption can mean savings of $1,500-$3,000 on an average system.

Property tax exemptions and exclusions

Installing solar typically increases your home's value—a 2025 study by SolarInsure shows that solar can boost home values by about 5-10%. Normally, that increase would raise your property tax bill. However, many states offer property tax exemptions or exclusions for solar installations.

With an exemption or exclusion, you benefit from the increased home value when you sell, but your annual property tax bill stays the same. California, for example, excludes solar from property tax assessments entirely. Property tax incentives often accompany sales tax exemptions, although policies vary by state and sometimes by municipality.

Solar tax deductions (rare but valuable)

Tax deductions reduce your taxable income rather than directly reducing your tax bill. They're rare for residential solar but can provide meaningful savings where available.

Idaho offers a unique solar deduction: You can deduct 40% of your system's cost (up to $5,000) from your taxable income in the first year after installation, then 20% (up to $5,000) for each of the following three years. While Idaho is currently the only state offering this type of incentive, it's worth noting as an example of the creative ways states support solar adoption.

While rebates and credits reduce your upfront costs, performance-based incentives increase your savings over time by paying you for the electricity your system generates. The value depends directly on how much energy your panels produce.

Net metering, net billing, and other solar buyback programs

Net metering is one of the most important policies affecting home solar economics—it ensures you benefit from your panels even when the sun isn't shining.

When your solar panels produce more electricity than your home needs (which typically happens during sunny midday hours), the excess flows back to the electric grid. With net metering, you receive credits for this excess generation. Later, when you need to pull electricity from the grid—at night or on cloudy days—those credits offset your consumption.

Your utility bills you only for your "net" energy consumption each billing cycle. Sometimes your bill will be $0 or show a credit balance if your utility allows credits to roll over between billing periods. The value of your credits varies by utility:

• Retail rate net metering: Credits match what you pay for electricity—the most favorable arrangement

• Wholesale rate net metering: Credits match what your utility pays for electricity—typically much lower than retail rates

• Net billing: Similar to net metering but with credits valued below retail rates, often based on avoided cost calculations

Some utilities don't offer net metering at all. Others provide alternative solar buyback programs with different credit structures. Understanding your utility's specific policy is crucial for calculating your solar savings potential.

Solar renewable energy certificates—disappearing fast

Many states have renewable portfolio standards (RPS), which require utilities to source a certain percentage of their electricity from renewable sources. Utilities subject to RPS requirements must obtain renewable energy certificates (RECs) to meet their targets. One REC equals the environmental benefit of one megawatt-hour of renewable generation.

Some states with RPS mandates also have solar carve-outs, requiring a specific portion of renewable energy to come from solar sources. In these states, you can sometimes sell the environmental attributes of your solar generation through solar renewable energy certificate (SREC) markets.

Selling SRECs can generate hundreds or even thousands in annual income. However, only a handful of states maintain active SREC markets—most states capped their programs, and many caps have been reached. If you live in a state with an active SREC market, you'll want to install solar and enroll quickly before programs reach capacity.

Performance-based incentives: Electricity over environment

While SRECs represent solar's environmental attributes, performance-based incentive (PBI) programs focus on electricity generation itself. In PBI programs, you earn money per kilowatt-hour your system produces.

Payments typically arrive monthly, annually, or at another set interval. PBIs can exist alongside or instead of net metering and other buyback programs. Unlike SRECs, you don't need to navigate market fluctuations—PBI rates are usually locked in when your system is installed.

Most PBI programs have been phased out as solar has become more affordable, but a handful of utilities still offer them.

With solar installation costs averaging nearly $30,000 before incentives, finding affordable payment options matters. Some states, nonprofits, and utility companies offer grants or subsidized loans that make solar ownership accessible to more homeowners.

Grants: Free money for solar

Grants essentially provide free money that lowers your solar installation cost. These programs typically target lower-income households or larger-scale community solar projects meeting specific criteria. Broadly available grant programs are rare, but they do exist—particularly for income-qualified households or in states with strong clean energy commitments.

Subsidized loans

Subsidized loan programs are often more widely available than grants. They feature lower interest rates and longer repayment periods compared to standard financing. Some programs require minimum credit scores and specific debt-to-income ratios. Others specifically serve lower-income households or provide enhanced terms for income-qualified applicants.

These programs recognize that upfront costs remain the biggest barrier to solar adoption. By reducing financing costs, subsidized loans help more homeowners benefit from long-term solar savings.

Solar incentive availability varies dramatically by location. Some states offer comprehensive programs combining tax credits, exemptions, and performance incentives. Others provide minimal support.

We're tracking incentives in the states where the EnergySage Marketplace is open—click on yours to learn how much you can save.

• Arizona

• Arkansas

• California

• Colorado

• Connecticut

• Delaware

• Florida

• Georgia

• Idaho

• Illinois

• Indiana

• Iowa

• Kansas

• Kentucky

• Louisiana

• Maine

• Maryland

• Massachusetts

• Michigan 

• Minnesota

• Missouri

• Nevada

• New Hampshire

• New Jersey

• New Mexico

• New York

• North Carolina

• Ohio

• Oklahoma

• Oregon

• Pennsylvania

• Rhode Island

• South Carolina

• Tennessee

• Texas

• Utah

• Vermont

• Virginia

• Washington

• Washington D.C.

• West Virginia

• Wisconsin

Solar incentives make a significant difference in your project's economics. Understanding what you qualify for—and working with installers who can help you claim every dollar available—ensures you get the most value from your solar investment.