What Rebates and Incentives Are Available for Solar Energy?

Solar incentives in the US changed a lot at the start of 2026. The big federal tax credit for homeowners is gone, so what’s left depends heavily on your state, your utility and whether you buy the system or lease it.

The federal tax credit for homeowners has ended

For years, the biggest incentive for home solar was the federal Residential Clean Energy Credit (called the Residential Renewable Energy Tax Credit before 2022). It let homeowners take 30% of the cost of a solar system off their federal income taxes.

The One Big Beautiful Bill Act, signed on July 4, 2025, ended that credit for any expenditure made after December 31, 2025. The IRS treats the expenditure as made when installation is completed, so a system finished in 2026 doesn’t qualify even if you signed the contract or paid a deposit in 2025.

If your system was completed by the end of 2025, you can still claim the credit on your 2025 tax return. Any amount you couldn’t use that year can be carried forward to later years. The same credit also covered solar water heaters, home batteries, small wind turbines and geothermal heat pumps, and those ended on the same date.

Leases and power purchase agreements

With a solar lease or a power purchase agreement (PPA), a company owns the panels on your roof and you pay it each month. That company, not you, may be able to claim a business tax credit known as Section 48E. The 2025 law also put deadlines on that credit for solar: projects that begin construction after July 4, 2026 must be in service by the end of 2027, and there are new limits on equipment sourced from certain foreign companies.

Industry analysts expect more homeowners to go this route in 2026 for exactly that reason. If a salesperson says a lease or PPA “includes the tax credit,” ask how it shows up in your monthly payment and escalator, and read the full contract. Our article on “free” solar panels explains what to look for.

Payments for the power you produce

Some states pay solar owners for the renewable energy their systems generate, usually through certificates called SRECs or RECs. Examples in 2026 include:

• New Jersey: the ADI program pays a fixed rate per MWh for 15 years. The residential rate is $77 per MWh for systems registered on or after July 27, 2026.
• Massachusetts: SMART 3.0, which opened in January 2026, pays 3 cents per kWh (6 cents for low-income households) for 20 years on systems up to 25 kW.
• Illinois: the Illinois Shines program buys RECs from small systems, recently around $57 to $75 per REC depending on size and location.
• Washington, DC: SRECs have traded around $330 to $350 each, among the highest in the country. Maryland and Pennsylvania markets pay far less.

Prices and rules change often, so check the current terms with your state program before counting on a number.

Net metering and net billing

How your utility credits the power you send back to the grid is often worth more than any rebate. Under full net metering, exported power earns credit at the retail rate. Many states have moved new customers to net billing, which pays much less for exports. California’s version, which took effect April 15, 2023, cut export credits by roughly 75%. Our article on solar meters and net metering explains the differences.

Battery programs

Some utilities pay homeowners to let their batteries help the grid during peak demand, sometimes called virtual power plant programs:

• Massachusetts ConnectedSolutions pays $275 per kW of average summer performance, which works out to around $1,200 a year for many participants.
• Connecticut’s Energy Storage Solutions program offers an upfront payment per kWh of storage plus yearly performance payments.
• California’s DSGS program paid battery owners for summer grid support, but its funding is set to end after 2026.
• Green Mountain Power in Vermont offers battery lease and bring-your-own-battery programs.

Tax exemptions and local rebates

Many states exempt solar equipment from sales tax, or keep the added value of a solar system out of your property tax assessment. Some cities and utilities also run their own rebates, low-income programs or low-interest loans. These can be modest, but they add up.

How to find what’s available where you live

• DSIRE, the Database of State Incentives for Renewables & Efficiency run by NC State University, lists programs by state.
• Your state energy office and your utility’s website list current rebates, export rules and battery programs.
• Installers can help too, but they’re also trying to make a sale. Check their claims against the program’s own website, and be wary of anyone still promising the 30% federal credit for a system installed in 2026.

Tax rules are complicated and this article isn’t tax advice. A tax professional can tell you how the rules apply to your situation.

Related: Is solar still worth it without the federal tax credit? · Solar lease vs. loan vs. cash

Sources

• IRS: FAQs on changes to energy credits under the One Big Beautiful Bill
• Congressional Research Service: Expiration and carryforward rules for the Residential Clean Energy Credit
• SEIA: Solar Market Insight Report Q3 2026
• MassCEC: Guide to the SMART 3.0 program
• Illinois Shines: Small distributed generation
• CPUC: Net energy metering and net billing
• DSIRE: Database of State Incentives for Renewables & Efficiency