Solar incentives in the United States changed substantially in 2025, and a lot of what is still written online — including, until recently, on this site — describes a world that no longer exists. This guide sets out what is actually available now, federally and state by state.
We sell solar equipment. We are not tax advisors. Everything below is general information, and anything touching your tax return should be checked with a CPA or enrolled agent.
Federal incentives
The 30% residential tax credit has ended
Public Law 119-21, signed on 4 July 2025, terminated the Residential Clean Energy Credit (Section 25D) early. It had been due to run to 2032 at 30%, stepping down to 26% in 2033 and 22% in 2034. That schedule no longer applies.
The credit is not allowed for any expenditure made after 31 December 2025. Critically, the IRS treats an expenditure as made when the installation is completed — not when you paid. A system paid for in 2025 but commissioned in 2026 does not qualify.
If your system was finished during 2025, you claim it on your 2025 return using IRS Form 5695. File the form even if you cannot use the whole credit this year, because that is what preserves the unused portion, which carries forward to 2026.
The Energy Efficient Home Improvement Credit (Section 25C) — insulation, windows, heat pumps — ended on the same date.
Our guide to solar tax credits and incentives in 2026 covers this in more detail, with links to the IRS source documents.
USDA Rural Energy for America Program (REAP)
REAP funds renewable energy for agricultural producers and rural small businesses. Its status is currently split:
- Grants are paused. USDA has stopped making new REAP grant awards pending revised regulations and says it will not resume until those are in effect. No reopening date has been published.
- Guaranteed loans continue for FY 2026, including for solar projects.
Historically, grants have covered 25% or 50% of project cost depending on the project, from $2,500 up to $1 million for renewable energy systems. Eligibility runs to agricultural producers earning at least half their gross income from agriculture, and to small businesses in areas of 50,000 people or fewer. Check current terms with your USDA Rural Development state office.
Business and commercial buyers
Solar bought for business use falls under a different part of the code from the residential credit that expired. The Clean Electricity Investment Credit (Section 48E) remains available, with a base rate of 6% rising to 30% where prevailing wage and apprenticeship conditions are met, and further additions possible for domestic content and for projects in designated energy communities. Accelerated depreciation (MACRS) may also apply.
The 2025 law attached new conditions and timing rules to this credit. If you are buying as a farm, business or rental property owner, take advice — the details matter and they are not simple.
State and utility incentives
With the federal residential credit gone, state and utility programmes are where the remaining money is. They change frequently, so this guide names the programmes rather than quoting rates — a stale number is worse than no number. For current figures, look up your ZIP code on DSIRE, the Database of State Incentives for Renewables & Efficiency, maintained by NC State University.
California
- Net billing (NEM 3.0) — exports are credited well below retail, which changed the economics considerably in favour of storing rather than exporting.
- SGIP — the Self-Generation Incentive Program, rebates for battery storage.
- Property tax exclusion — an active solar system does not raise your assessment.
New York
- NY-Sun — a per-watt rebate, varying by region and block.
- Megawatt Block Program — incentives for commercial installations.
- State income tax credit, plus a property tax abatement in New York City.
Texas
- Utility buyback — Texas has no statewide net metering, so what you are paid for exported power depends entirely on your retail provider. Compare plans before you size an array around exporting.
- Property tax exemption — the value solar adds is exempt from assessment.
- Utility rebates in some service areas.
Florida
- Net metering, with terms set by your utility.
- Sales tax exemption on solar equipment.
- Property tax exemption for residential renewable energy property.
Massachusetts
- SMART — the Solar Massachusetts Renewable Target programme, which pays per kilowatt-hour generated over a fixed term.
- Mass Save — interest-free financing for qualifying efficiency and renewable work.
- State income tax credit for residential systems.
Arizona
- State income tax credit for residential solar.
- Utility rebates from some providers, and export rates that vary by utility.
New Jersey
- SuSI — the Successor Solar Incentive, which replaced the earlier TREC programme and pays per megawatt-hour generated.
- Sales tax exemption on solar equipment.
Colorado
- Utility rebates, notably from Xcel Energy.
- Net metering with generally favourable terms.
Hawaii
- Battery Bonus — payments for storage that discharges to the grid at peak.
- State income tax credit for renewable energy technologies.
- The highest electricity prices in the country, which is the real incentive.
Illinois
- Illinois Shines — the Adjustable Block Program, paying for renewable energy credits over a fixed term.
- Illinois Solar for All — for income-qualified households.
What matters most now
With no federal residential credit, the ranking has changed:
- Your electricity price does the heavy lifting. Solar competes against what you currently pay. At 35¢/kWh the sums work; at 11¢/kWh they are much harder, whatever incentives exist.
- Export rules matter more than rebates over twenty years. Find out what your utility pays for exported power, in writing, before you size a grid-tied system.
- Off-grid and pumping applications are less affected, because they were never competing against cheap grid power — they were competing against generator fuel, diesel pumping, or the cost of a new grid connection. Those cases still stack up quickly.
- Farms and rural businesses have the most left to claim, between REAP and the business credits.
Next steps
- Look up your ZIP code on DSIRE for current state and utility programmes.
- Ask your utility, in writing, what it pays for exported power.
- If you are a farm or rural business, talk to your USDA Rural Development state office.
- If you finished a system in 2025, file Form 5695 with your 2025 return.
Not sure what size you need? Tell us what you are running and we will size it with you, priced against what you actually pay for power — with no federal credit assumed.
Last reviewed September 2026. Incentive programmes open, close and change their rates without much notice — verify anything you intend to rely on with the programme administrator, and anything touching your taxes with a qualified professional.