Solar incentives & tax credits

Incentives can meaningfully lower the cost of going solar — but they vary by where you live and they change over time. Here's the landscape and how to check what applies to you.

The federal tax credit

The headline federal incentive is the Residential Clean Energy Credit (often called the ITC). Historically it has let homeowners claim a percentage of the cost of an owned solar system as a credit against their federal income taxes. The percentage and availability are set by federal law and have changed before and can change again, so confirm the current rate and eligibility for the year you install. You generally must own the system (cash or loan) to claim it — with a lease or PPA, the third-party owner gets the credit instead.

State and local incentives

On top of the federal credit, states, cities, and utilities may offer:

State tax credits or rebates — direct reductions in cost.
Property- and sales-tax exemptions — so adding solar doesn't raise your property tax, and you skip sales tax on equipment.
Performance payments / SRECs — in some states you earn credits for the energy your system produces and can sell them.
Net metering — the policy that credits you for surplus power sent to the grid. Strong net metering greatly improves the economics; weaker “net billing” reduces it.

How to look up your area

The most complete, independent database is DSIRE (the Database of State Incentives for Renewables & Efficiency) at dsireusa.org — a public project run by N.C. State University. Search your ZIP to see federal, state, and utility programs. Also check your own utility's website, since utility programs change frequently.

Bottom line: the federal credit is the big one for most homeowners, but your state's net-metering and rebate rules often make the difference between a good and a great payback. Verify everything for the current year before you sign.

See how incentives differ where you live — browse by location →