A guide to solar rebates and incentives

Learning about solar incentives can make a major difference in what you could pay for a home solar energy system. Between the soon-to-expire federal tax credit, state and local programs, and utility rebates, these tools can significantly bring down upfront costs and shorten your system’s payback period. 

In this guide*, you’ll find a clear breakdown of how each type of solar incentive works, where to find them, and how to combine multiple programs for maximum savings. We’ll also cover timelines, eligibility requirements, and practical tips to help you navigate the paperwork and secure every dollar of available support.

(* We were going to call this “The definitive guide to solar rebates and incentives,” but that is basically an impossible mission. There are so many incentives, that change so often, a definitive guide is tough. This is our best effort, and all we can promise is that we’ll update it as things change.)

In this article:

• Understanding solar rebates and incentives
• Federal solar incentives
• State-level solar incentives
• Local solar incentives
• Utility solar programs
• Other financial programs to consider
• How to apply for solar incentives
• Benefits of solar incentives
• Getting started with solar
• Frequently asked questions

Understanding solar rebates and incentives

When you start looking into solar, one of the first things you’ll notice is how many ways there are to save. Between federal programs, state and city rebates, and utility-based incentives, homeowners have more support than ever to make solar a smart investment. These programs cut the upfront price and make clean energy more accessible for everyone.

You’ll see a few main kinds of incentives, which differ mainly in how and when you receive the savings:

• Rebates are offered by local or state programs and sometimes by your electric utility. These work like a refund once your system is up and running.
• Tax credits reduce the amount you owe on your income taxes, based on a percentage of your system’s total cost.
• Performance-based incentives pay you for the energy your panels produce, often through Solar Renewable Energy Certificates (SRECs).

Key terms to know Solar Incentive: Any program that helps reduce the cost of going solar, including tax credits, rebates, and performance payments. Tax Credit: A reduction in the amount of income tax you owe, claimed when you file your taxes (for example, the 30% federal solar tax credit). Rebate: Cash back or a partial refund provided after installation, usually from your state, city, or utility. Performance-Based Incentive (PBI): Payments or credits you earn over time for the energy your solar system generates. Net Metering: A utility billing program that credits you for excess power your solar panels send back to the grid. Solar Renewable Energy Certificates (SRECs): Tradable credits that represent the clean energy your system produces, which can be sold for additional income. Grant: A funding award that helps cover installation costs, typically for nonprofits, farms, or low-income households. Payback Period: The number of years it takes for your energy savings to equal the cost of your solar system.

Most homeowners qualify for more than one of these programs, and layering them can noticeably reduce the total cost of a solar installation. 

Federal solar incentives

The main federal program that helped homeowners go solar was the Residential Clean Energy Credit, often called the federal solar investment tax credit (ITC). This credit let you deduct 30% of your total installation cost — including panels, inverters, labor, and battery storage — from your federal taxes. However, due to recent policy changes, it expired on December 31, 2025 for most solar installs.

And this hurt the residential solar market. According to Aurora Solar’s 2026 Solar Snapshot, 49% of homeowners interested in solar think they won’t be able to afford it without the ITC solar federal tax credits.

But, it’s not all bad news. Third-party ownership (TPO) financing still qualifies for the 30% tax break, but that rebate goes to the financier that owns the system. However, many financiers are passing those savings on to customers. And there are even financing methods like pre-paid third-party ownership that transfer ownership of the system to the homeowner after a certain number of years (often six years). 

Beyond the ITC, several federal agencies offer programs that expand access to solar. The U.S. Department of Energy and the U.S. Department of Agriculture both provide grants and low-interest loans for homeowners, farmers, and small businesses, especially in rural areas or agricultural settings. Builders and developers who focus on energy-efficient construction can also qualify for additional clean energy tax incentives.

There’s also recent policy updates — like extended ITC eligibility for battery storage and expanded low-income solar access — that made going solar more valuable than ever. Aurora’s overview of why now is the best time to go solar explains how these changes can boost your savings and shorten your payback period.

State-level solar incentives

In addition to federal programs, many states offer their own solar incentives to make installation more affordable. These programs vary widely across the U.S., but most fall into a few main categories: tax credits, grants or loans, and performance-based incentives (PBIs). Together, they can significantly reduce upfront costs or improve long-term returns for homeowners who qualify.

State tax credits

Some states mirror the federal tax credit by letting you deduct part of your solar installation cost from your state income taxes. These credits are typically calculated as a percentage of system expenses, capped at a set amount. For example, New York allows homeowners to claim 25% or up to $5,000 through its Solar Energy System Equipment Credit.

State grants and loan programs

Several states fund renewable energy projects directly through cash grants or low-interest financing. Programs such as California’s GoGreen Home Energy Financing help homeowners manage upfront expenses and make energy upgrades more accessible. These options often pair well with federal incentives, creating multiple layers of savings.

State-level SRECs and performance programs

In states that require utilities to meet Renewable Portfolio Standards (RPS), homeowners can earn Solar Renewable Energy Certificates (SRECs) for every megawatt-hour their system produces. Those certificates can then be sold to utilities, providing an additional source of income. Massachusetts’ SMART Program and New Jersey’s Successor Solar Incentive (SuSI) program are well-known examples of performance-based systems that reward clean energy production.

Examples of strong state solar policies

Some states even provide additional support through programs designed to encourage renewable development in designated areas.

• California: Offers multiple programs, including the Self-Generation Incentive Program (SGIP) for battery storage and long-term performance-based incentives under the state’s clean energy initiatives.
• Massachusetts: Provides incentives through its SMART Program and various property and sales tax exemptions for residential solar.
• New York: Runs the NY-Sun initiative, a statewide effort combining rebates, financing, and the Solar Energy System Equipment Credit for homeowners.
• Texas: While there’s no statewide tax credit, several utilities and municipalities — like Austin Energy and CPS Energy — offer rebates and performance incentives.
• Florida: Supports solar adoption through property tax exemptions and strong net metering policies that credit homeowners for excess power sent to the grid.

Combining state and federal programs can meaningfully reduce the total cost of going solar. A qualified installer can help you identify every incentive available in your area and ensure your project meets all eligibility requirements.

Local solar incentives

In addition to state programs, many cities and counties run their own solar incentive initiatives to make going solar more attainable. These local options are often smaller in scale but can still add meaningful savings, especially when combined with state and federal benefits.

Common types of local solar incentives

Property tax exemptions

Local governments often exclude the added value of solar panels from property tax assessments, helping homeowners avoid higher tax bills after installation. Cities such as New York and San Diego provide partial or full exemptions for eligible residential systems.

Local rebates and grants

Municipal energy offices and local utilities sometimes offer direct cash rebates or small grant programs to offset installation costs. These programs are typically funded through community sustainability initiatives or clean-energy budgets. Many work on a first-come, first-served basis, so early applications are key.

Sales tax exemptions

In select regions, homeowners can purchase solar equipment without paying local or state sales tax. This exemption can save hundreds of dollars on panels, inverters, and other major components, depending on where the project is installed.

Examples of city and county solar programs

• New York City: Offers a property tax abatement covering a percentage of system costs, spread over four years.
• Austin, Texas: Provides performance-based rebates through its municipal utility, Austin Energy.
• Washington, D.C.: Runs the Solar for All program, which helps income-qualified residents install low- or no-cost solar systems.

Local incentives can change frequently as budgets renew each year. Checking with your city or county’s energy or building department, and confirming eligibility with your installer can help ensure you capture every available savings opportunity.

Want to see what’s available near you? Check out Aurora’s solar tax credit and incentive estimator.

Utility solar programs

Utility companies play a major role in how much homeowners can save with solar. Many offer programs that reward you for the clean energy your system produces or help you manage when and how you use electricity from the grid. The most common examples are net metering, net billing, and rebate or rate-based incentive programs.

Net metering vs. net billing

Net metering credits you at the retail electricity rate for every excess kilowatt-hour your panels send back to the grid. Those credits offset future utility bills, helping you lower your costs during months when production is lower. This setup works best in states that maintain one-to-one credit value, where you get the same rate for exported and imported energy.

• Pros of net metering: Higher credit value and faster payback for systems sized close to household demand.
• Cons of net metering: Fewer utilities are offering full retail credit as grid rules evolve.

Net billing, by contrast, compensates you for exported energy at a lower “wholesale” rate, while you still pay full price for the power you draw from the grid. Although you earn less per unit of excess electricity, the system encourages homeowners to store or use their solar power directly — especially when paired with battery storage.

• Pros of net billing: Encourages smarter self-consumption and can reduce stress on the grid.
• Cons of net billing: Lower export rates reduce total savings unless you shift usage or add storage.

Utility rebates and performance-based programs

Some utilities also provide direct financial incentives for installing or producing solar energy. These typically come in two forms:

• Upfront cash rebates, which reduce your initial installation cost once your system is approved and connected to the grid.
• Performance-based incentives (PBIs), which pay you over time for the electricity your system generates, similar to state-level SREC programs.

For instance, Xcel Energy’s Solar Rewards program offers ongoing payments based on actual production. Homeowners receive a per-kilowatt-hour rate for the energy their panels produce, credited to their utility account each month. Other utilities provide one-time rebates based on system size, offering immediate savings after installation.

Time-of-use (TOU) rates and storage pairings

Many utilities now use time-of-use (TOU) rate structures, where electricity prices change throughout the day depending on demand. Pairing solar panels with battery storage lets homeowners store energy when rates are low and use it when rates peak, further increasing the system’s value. Aurora’s guide to understanding time-of-use rates explains how shifting usage to off-peak hours can lower monthly costs and improve grid independence.

Other financial programs to consider

Beyond tax credits and rebates, several other programs can make solar more affordable or even generate additional income for homeowners.

Solar Renewable Energy Certificates (SRECs)

In participating states, homeowners can earn money with Solar Renewable Energy Certificates (SRECs) for every megawatt-hour of electricity their system produces. These certificates represent the environmental value of clean energy and can be sold to utilities that must meet renewable energy standards. The value of an SREC varies based on market supply and demand, ranging from a couple of dollars to several hundred per certificate. Homeowners can sell them through online marketplaces or long-term contracts, creating a steady secondary income stream that complements utility savings.

Low-income and community solar programs

For homeowners and renters who might not be able to install solar on their own property, community and low-income solar programs provide new pathways to access renewable energy. Community solar projects allow participants to subscribe to a shared solar farm and receive credits on their electricity bills for their share of the power produced.

Low-income solar programs often go a step further. Many states and cities offer higher rebate rates, additional grants, or no-cost solar installation options for income-qualified households. For example, Solar for All initiatives in places like Washington, D.C., and Illinois cover up to 100% of system costs for eligible residents. 

Solar financing options and incentive eligibility

If purchasing a system outright isn’t feasible, homeowners can explore solar loans, leases, or power purchase agreements (PPAs). Each option impacts incentives differently:

• Solar loans: You own the system, so you’re eligible for the federal tax credit, state incentives, and any performance-based programs. Loan payments can often be offset by monthly energy savings.
• Solar leases: The installer or financing company owns the system. You benefit from lower, predictable monthly payments but typically can’t claim the tax credit or rebates yourself.
• Power purchase agreements (PPAs): Similar to a lease, but you pay for the electricity your system produces rather than a flat rate. The provider retains ownership and the associated incentives.

Understanding these distinctions early can help you choose a financing path that fits your long-term goals — whether that’s maximizing upfront savings, minimizing maintenance, or earning full incentive benefits over time.

How to apply for solar incentives

Applying for solar incentives is easier when you know what to expect. Start by identifying which federal, state, local, and utility programs you qualify for. Note their eligibility rules, paperwork, and deadlines before installation so you don’t miss any savings.

Before work begins, set aside copies of your contract, invoices, proof of payment, and system details. These records show that your system meets program standards in regard to ownership, approved equipment, and your installer’s credentials. Some programs ask for a North American Board of Certified Energy Practitioners (NABCEP) certificate, which helps verify that the system was installed by a qualified professional.

Once your system is up and producing power, send in your applications. Many programs now use online portals where you can upload documents and track progress. For the federal solar tax credit, file IRS Form 5695 with your tax return for the year your system was completed, and keep your records in case they’re requested later.

Stay in close touch with your installer throughout the process. A reputable solar company can help confirm eligibility, manage deadlines, and make sure every form is filed on time. For help comparing providers and preparing your paperwork, Aurora’s guide to buying solar with confidence walks through what to expect at each stage of the process.

Benefits of solar incentives

Solar incentives lower the upfront cost of going solar and improve both your payback period and return on investment (ROI). The payback period measures how long it takes your energy savings to equal what you spent, while ROI reflects your total profit over the system’s lifetime. When incentives cut installation costs, you recover your investment faster and earn more over time.

Depending on where you live, rebates, tax credits, and net metering programs can cut a solar project’s initial price by 25% to 40%. For many homeowners, that turns a $20,000 system into roughly a $12,000–$15,000 investment before factoring in monthly bill savings or income from SRECs.

Solar can increase home value, and with the help of incentives, you can avoid higher property taxes. Many states and cities offer property tax exemptions for renewable systems, meaning the added value of your panels isn’t included in your property’s taxable assessment. Your home may be worth more when you sell, but your annual tax bill stays the same. 

Beyond the financial side, these programs encourage more households to switch to clean energy, reduce dependence on fossil fuels, and support broader community sustainability goals.

Getting started with solar

Solar incentive programs change as new policies take effect, so it’s best to act while funding and rebates remain available.  Federal, state, and utility-level programs each offer different paths to savings — some through upfront rebates, others through energy bill credits or long-term performance-based payments. 

Working with a qualified local solar installer is the easiest way to make sure you’re claiming every program you qualify for. They’ll help confirm which incentives can be combined, manage paperwork, and plan your project around deadlines or funding windows. Aurora’s solar tax credit and incentive estimator can also help you preview your potential savings before you commit. 

To explore your options and compare personalized solar quotes, visit Aurora’s Solar Marketplace. 

Frequently asked questions

What documents do I need to apply for solar rebates?

For most solar rebate applications, you’ll need the following: 

• Installation contract showing project scope and ownership
• Invoices and proof of payment for equipment and labor
• Final permit or inspection report confirming the system is operational
• Installer certification, such as NABCEP credentials, if required by your state or utility
• IRS Form 5695 when filing your federal tax credit

Keep digital copies of all paperwork in one place, as many programs use online portals where you can upload or resubmit documents if needed.

How long does it take to receive my rebate or credit?

Processing times vary by program. But most state and local rebates are handled individually by each agency or utility. Many are processed in 4–10 weeks after approval, though some take longer if funding cycles reset or budgets are temporarily paused.

Delays are most often caused by incomplete paperwork, missing signatures, or inaccurate permit information. To avoid issues, double-check your application before submitting and keep digital copies of every document.

Many state and utility programs now offer online portals where you can log in to verify receipt, upload missing items, and track payment status in real time. If no portal is available, your installer or program administrator can usually provide an update on when to expect your rebate.

Are there deadlines or expiration dates for solar incentives?

Yes. Every incentive program has its own timeline, and some end sooner than others.

For the federal level, the Residential Clean Energy Credit stays at 30% through December 31, 2025. After that, homeowners who buy their systems will no longer qualify for the 25D credit, while leased or third-party-owned systems remain covered under different rules.

At the state and local level, most rebates and performance programs renew once a year and can close early if funds run out. Others phase down gradually under new legislation, with smaller payments each year until they end.

You can check program timelines on your state’s energy office website, your utility’s rebate portal, or through the Database of State Incentives for Renewables & Efficiency (DSIRE). If you plan to install solar soon, it helps to start early so your system is approved and connected before funding windows close.