State and Local Solar Incentives by Region: Complete 2026 Guide

State and Local Incentives Overview

Beyond the federal 30% Investment Tax Credit, numerous state and local programs can significantly reduce your solar installation cost and accelerate payback. These incentives vary dramatically by location and may include tax credits, cash rebates, performance payments, property tax exemptions, sales tax waivers, and favorable net metering policies. This comprehensive guide surveys major programs across the United States to help you identify all available incentives in your area.

According to the Database of State Incentives for Renewables and Efficiency (DSIRE), over 2,000 solar incentive programs operate across the United States at the federal, state, and local levels. Navigating this complex landscape requires research and often professional guidance, but the financial rewards make the effort worthwhile. A homeowner who stacks the federal ITC with state tax credits, utility rebates, and property tax exemptions can reduce net installation costs by 50% or more.

Incentive programs evolve constantly as legislatures revise policies and funding pools are exhausted or replenished. Always verify current program status and eligibility requirements before making installation decisions. Your solar installer should help identify applicable incentives, but ultimate responsibility for claiming benefits rests with you as the homeowner.

Northeast Region

These incentives stack with the federal solar tax credit for maximum savings.

Massachusetts - SMART Program

Massachusetts leads the Northeast in solar incentives through its Solar Massachusetts Renewable Target (SMART) program. This performance-based incentive provides monthly payments to solar producers based on their electricity generation, with rates varying by utility territory and system size. Current base rates range from $0.20 to $0.40 per kWh for the first 10 years of operation, providing substantial ongoing income beyond electricity bill savings.

Additional SMART program adders provide enhanced payments for projects meeting specific criteria, including energy storage pairing, low-income property eligibility, and location within environmental justice communities. Massachusetts also exempts solar equipment from property tax assessments and offers net metering with favorable credit terms. The combination of SMART payments, the federal ITC, and high electricity rates produces some of the nation's fastest solar payback periods.

New York - NY-Sun Initiative

New York's NY-Sun program provides direct cash rebates for residential solar installations, with incentive levels varying by region and declining over time as funding is allocated. Current residential rebates range up to $0.20 per watt, providing $2,000 for a typical 10 kW system. Additionally, New York offers a 25% state tax credit up to $5,000, one of the most generous state credits available.

New York uses the Value of Distributed Energy Resources (VDER) mechanism rather than traditional net metering, providing credits based on calculated value of exported solar energy rather than simple one-to-one exchange. While more complex than net metering, VDER can provide favorable compensation depending on location and time of export. The state also exempts solar equipment from sales tax and property tax assessments.

New Jersey - Successor Solar Incentive (SuSI) Program

New Jersey transitioned from its highly successful SREC program to the Successor Solar Incentive (SuSI) program, which provides fixed-price Solar Renewable Energy Certificates (SRECs) known as TRECs (Transition Renewable Energy Certificates). Residential systems earn one TREC for every 1,000 kWh produced, with current values approximately $80 to $100 each. A typical 10 kW system generates 12 to 15 TRECs annually, providing $1,000 to $1,500 in yearly income for 15 years.

New Jersey also maintains full retail net metering, exempts solar equipment from sales tax, and provides property tax exemptions for the value added by solar installations. The combination of TREC income, net metering, and tax exemptions makes New Jersey one of the most financially attractive states for residential solar despite moderate solar resource availability.

West Coast and Southwest

California's NEM 3.0 has changed the economics. Read is solar plus battery worth it? for the full analysis.

California - SGIP and Net Metering

California's Self-Generation Incentive Program (SGIP) provides substantial rebates for battery storage installations, particularly for customers in high fire-threat areas and those on critical medical equipment. General market rebates range from $150 to $250 per kWh of battery storage, with equity budget enhancements up to $1,000 per kWh for qualifying low-income and medically vulnerable households. A Tesla Powerwall 3 receiving the maximum equity rebate could see $13,500 in direct incentives.

California's net energy metering (NEM) 3.0, implemented in April 2023, fundamentally changed solar economics by reducing export credits to avoided cost rates averaging 5 to 8 cents per kWh. This policy shift makes battery storage nearly essential for new installations seeking reasonable payback periods. However, California's high electricity rates (30 to 50 cents per kWh in many territories) and abundant sunshine still support strong solar economics when paired with storage and time-of-use optimization.

Arizona - Residential Solar Tax Credit

Arizona offers a 25% state tax credit for solar installations up to $1,000 maximum credit. While modest compared to some states, this credit stacks with the federal ITC for additional savings. Arizona also exempts solar equipment from sales tax and provides property tax exemptions for solar improvements.

However, Arizona's major utilities have implemented net billing programs similar to California's NEM 3.0, reducing compensation for exported solar energy. Time-of-use rates with high peak period pricing create opportunities for battery storage to improve economics through rate arbitrage. Arizona's abundant sunshine (300+ sunny days annually) remains its greatest solar asset.

Nevada - Modified Net Metering

Nevada revised its net metering policies after the highly publicized 2015 decision by the Public Utilities Commission to slash net metering credits, which caused a collapse in the state's solar industry. Current policies restore more favorable treatment with credits at 75% of retail rate for new installations. While not as generous as full retail net metering, this represents significant improvement and supports viable solar economics given Nevada's excellent solar resource and high summer air conditioning loads.

Southeast Region

Florida - Net Metering and Property Tax Exemption

Florida maintains full retail net metering, one of the most solar-friendly policies in the Southeast. Under this arrangement, each kWh exported to the grid earns a credit equal to the full retail rate, effectively using the grid as a free battery. Florida also exempts solar equipment from property tax assessments and sales tax, reducing both upfront and ongoing costs.

However, Florida lacks state-level tax credits or rebate programs, and the state's relatively low electricity rates (10 to 14 cents per kWh) produce longer payback periods than high-rate states. Florida's abundant sunshine and strong net metering policy still support reasonable solar economics, with typical payback periods of 8 to 12 years.

North Carolina - Duke Energy Rebates

Duke Energy offers residential solar rebates on a first-come, first-served basis, providing $400 per kW up to $4,000 maximum for a 10 kW system. These rebates are highly popular and typically exhaust their annual funding allocation quickly, requiring prompt application after installation. North Carolina also provides property tax exemptions for 80% of solar system value and maintains favorable net metering policies.

South Carolina - Solar Tax Credit

South Carolina offers a 25% state tax credit for solar installations, capped at $3,500 per year with unused portions carrying forward for up to 10 years. This generous credit, combined with the federal ITC, can cover over half of total system costs for homeowners with sufficient state tax liability. South Carolina also exempts solar equipment from property tax assessments.

Midwest Region

Illinois - Adjustable Block Program

Illinois' Adjustable Block Program (ABP) provides upfront Renewable Energy Credits (RECs) payments to solar producers based on expected 15-year production. Residential systems receive approximately $70 to $80 per REC, with typical 10 kW systems earning $6,000 to $8,000 in upfront ABP payments. This substantial incentive dramatically reduces net installation costs and shortens payback periods.

The ABP operates in discrete "blocks" with incentive rates declining as each block fills, creating urgency for homeowners to install before rates drop. Illinois also exempts solar equipment from property tax assessments and maintains net metering policies, though these are under continuous utility pressure.

Minnesota - Xcel Energy Solar Rewards

Xcel Energy's Solar Rewards program provides performance-based incentives of $0.04 to $0.08 per kWh produced for 10 years, providing ongoing income beyond electricity bill savings. While Minnesota's limited sunshine reduces total production, these payments improve solar economics for Xcel customers. The state also exempts solar equipment from property tax assessments.

Ohio - ECO-Link and Net Metering

Ohio offers the Energy Conservation for Ohioans (ECO-Link) program providing reduced-interest rate loans for energy improvements including solar. While not a direct incentive, reduced borrowing costs improve project economics. Ohio maintains net metering without capacity limits and exempts solar equipment from property tax assessments for renewable energy projects.

Solar Renewable Energy Certificates (SRECs)

Incentives affect your total investment. See current solar pricing to plan your budget.

Several states operate Solar Renewable Energy Certificate (SREC) markets that provide ongoing income for solar production. One SREC represents 1,000 kWh (1 MWh) of solar electricity generated. Utilities purchase SRECs to meet state-mandated renewable portfolio standards, creating market demand that determines SREC prices.

States with active SREC markets include New Jersey (TRECs), Pennsylvania, Maryland, Washington D.C., Massachusetts (through SMART), and Illinois (through ABP). SREC prices vary dramatically by state based on supply and demand dynamics, ranging from $10 to $400 per SREC. A typical 10 kW residential system generates 10 to 15 SRECs annually, providing hundreds to thousands of dollars in yearly income.

Property and Sales Tax Exemptions

Beyond direct incentives, many states reduce solar costs through tax exemptions. Property tax exemptions prevent your property taxes from increasing due to the value added by solar installation, even though solar typically increases home resale value by $15,000 or more. States with property tax exemptions for solar include Arizona, California, Colorado, Connecticut, Florida, Indiana, Maryland, Massachusetts, Minnesota, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Rhode Island, Texas, Washington, and Wisconsin.

Sales tax exemptions reduce upfront costs by waiving state sales tax on solar equipment purchases. States offering sales tax exemptions include Arizona, California, Colorado, Connecticut, Florida, Iowa, Maryland, Massachusetts, Minnesota, Missouri, Nevada, New Jersey, New Mexico, New York, Rhode Island, Vermont, and Washington.

Finding Incentives in Your Area

The most comprehensive resource for solar incentives is the Database of State Incentives for Renewables and Efficiency (DSIRE) at dsireusa.org. This free, federally funded database catalogs all renewable energy and energy efficiency incentives available across the United States. Search by state and technology to find programs applicable to your installation.

Additionally, consult with multiple solar installers during your quote process. Reputable installers stay current on available incentives and can help you navigate application procedures. Some installers even handle incentive paperwork as part of their turnkey service. Utility websites often list programs specific to their service territory, and state energy office websites provide information on state-level programs.

Stacking Incentives for Maximum Savings

The key to maximizing solar value is stacking multiple incentives. A homeowner in Massachusetts, for example, might combine the 30% federal ITC with SMART program payments, a property tax exemption, sales tax exemption, and net metering credits. A homeowner in New York could stack the federal ITC with the NY-Sun rebate, 25% state tax credit, property tax exemption, and sales tax exemption.

Careful planning and timing help capture maximum incentives. Some programs operate on first-come, first-served bases with limited funding that exhausts quickly. Others decline in value as capacity targets are met. Research all available programs early in your solar evaluation process, and work with your installer to schedule installation to capture the most favorable incentive combinations.