Solar · Incentives · 2026 · 22 States
Solar Incentive Stack Calculator
Select your state and system size to see every available solar incentive — federal ITC, state tax credit, sales tax exemption, utility rebates, and SREC value — with a total dollar breakdown and net cost.
Every U.S. homeowner qualifies for the 30% federal ITC — that alone saves $7,500 on a $25,000 system. On top of that, states like New York (25% credit + NY-Sun rebate), Massachusetts (15% credit + SMART program), and Arizona (25% credit) stack significant additional savings. Total incentive packages range from 30% of system cost in states with no additional programs (FL, TX, GA) to 50–60%+ in top incentive states.
State Solar Incentive Calculator
Federal ITC · State tax credit · Sales tax exemption · Utility rebates · SREC value · 22 states
* SREC values are annual income estimates based on current market prices and fluctuate. Federal ITC basis is reduced by any utility rebates received. State tax credits may have income limitations — verify with a tax professional.
Solar Incentive Reference — All 22 States (2026)
| State | State Tax Credit | Cap | Sales Tax Exempt | Property Tax Exempt | SREC Market | Notable Utility Program |
|---|---|---|---|---|---|---|
| Arizona | 25% | $1,000 | Yes | Yes | No | APS / SRP incentives |
| California | None | — | No | Partial | No | SGIP (battery storage) |
| Colorado | None | — | No | Yes | No | Xcel Solar*Rewards |
| Connecticut | None | — | Yes | Yes | ZREC | RSIP rebate program |
| Florida | None | — | Yes | Yes | No | Some utility rebates |
| Georgia | None | — | No | Partial | No | None major |
| Illinois | None | — | No | Yes | ABP/SREC | Illinois Shines program |
| Maryland | None | — | Yes | Yes | SREC-II | MEA grant up to $1,000 |
| Massachusetts | 15% | $1,000 | Yes | Yes | SMART | SMART production incentive |
| Minnesota | None | — | No | Yes | No | Xcel Solar*Rewards MN |
| Nevada | None | — | Partial | Partial | No | NV Energy incentives |
| New Jersey | None | — | Yes | Yes | SREC-II | SREC-II market |
| New Mexico | 10% | $6,000 | Yes | Yes | No | PNM / TEP rebates |
| New York | 25% | $5,000 | Yes | Yes | VDER | NY-Sun Megawatt Block |
| North Carolina | None | — | No | Yes | No | Duke Energy rebates |
| Ohio | None | — | No | Yes | SREC | None major |
| Oregon | None | — | No | Yes | No | Energy Trust rebates |
| Pennsylvania | None | — | No | Yes | SREC | None major |
| South Carolina | 25% | $3,500/yr×5 | No | Yes | No | None major |
| Texas | None | — | No | Yes (§11.27) | No | Austin Energy / CPS rebates |
| Virginia | None | — | No | Yes | No | Dominion / APCo programs |
| Washington | None | — | Yes | Yes | No | Puget Sound Energy rebates |
How the Federal Solar Tax Credit Works in 2026
The federal Investment Tax Credit (ITC) under IRC §48 / §25D reduces your federal income tax liability dollar-for-dollar by 30% of the total eligible system cost. Key facts for 2026:
- Rate: 30% through December 31, 2032. Steps down to 26% in 2033, 22% in 2034, then 0% for residential systems from 2035 unless extended by Congress.
- Eligible costs: Solar panels, inverters, racking, wiring, battery storage (if charged by solar), installation labor, permitting fees, and inspection costs.
- ITC basis reduction: If you receive a utility rebate or grant, that amount reduces your ITC basis. A $25,000 system with a $1,500 utility rebate earns ITC on $23,500 = $7,050.
- Carry-forward: If your credit exceeds your tax liability in year 1, the unused portion carries forward to future tax years indefinitely. You cannot receive a refund — only an offset against future liability.
- Claim on: IRS Form 5695 (Residential Energy Credits), filed with your federal income tax return for the year the system is placed in service.
Frequently Asked Questions
What solar incentives are available in 2026?
Every U.S. homeowner qualifies for the 30% federal ITC on residential solar installed through 2032. On top of that, 10+ states offer state income tax credits (Arizona 25%, New York 25%, Massachusetts 15%, New Mexico 10%, South Carolina 25%). Many states exempt solar equipment from sales tax and property tax assessment increases. Several active SREC markets pay ongoing production income — NJ, MA, IL, MD, PA, OH, CT, and others. Use the calculator above for your state's complete picture.
Can I stack the federal ITC with state incentives?
Yes — federal and state incentives can generally be stacked. The federal credit is claimed on IRS Form 5695; state credits on your state income tax return. One important interaction: utility rebates and grants typically reduce the federal ITC basis (not the state credit basis in most states). Example: $25,000 system, $2,000 utility rebate → federal ITC = 30% × $23,000 = $6,900. State credit (if applicable) still calculated on full $25,000 in most states. Confirm with a tax professional for your specific situation.
What is an SREC and how do I sell one?
An SREC (Solar Renewable Energy Credit) represents 1 MWh (1,000 kWh) of solar production and is separately tradeable from the electricity itself. Utilities in SREC-mandate states (NJ, PA, MD, OH, IL, CT, MA, VA, DC) must purchase SRECs to meet state renewable portfolio standards. Your solar system generates SRECs automatically — register with your state's SREC registry (e.g., PJM-GATS, NEPOOL-GIS) and sell through brokers like SRECTrade, Flett Exchange, or directly to utilities. Current prices: NJ ~$210/SREC, MD ~$70/SREC, IL ~$55/SREC, PA ~$30/SREC.
Does the solar tax credit apply to battery storage?
Yes — battery storage installed with solar earns the same 30% federal ITC as the panels. For batteries added to an existing solar system after the original installation, they must be charged exclusively by solar to qualify for the residential ITC. The Inflation Reduction Act (2022) expanded battery eligibility, and standalone battery storage installed from January 1, 2023 forward also qualifies for the commercial ITC (§48). Residential batteries installed standalone (without solar) are not eligible for the residential credit under §25D.
What states have the best solar incentives?
New York: 30% federal + 25% state (cap $5,000) + sales and property tax exemptions + NY-Sun rebate — total often 50–55% of system cost. Massachusetts: 30% federal + 15% state ($1,000 cap) + SMART production incentive + full exemptions. Arizona: 30% federal + 25% state ($1,000 cap) + both exemptions. New Mexico: 30% federal + 10% state ($6,000 cap) + sales tax exemption. States with only federal ITC (FL, TX, GA, CA, CO, VA) still see 30%+ reduction, plus property tax exemptions reduce carrying cost.
Sources
Related Solar Tools & Guides