State Solar Rebates and Incentives: The Complete 2026 Guide
By MySolarWidget Team · February 20, 2026 · 9 min read
Every solar buyer knows about the federal 30% Investment Tax Credit (ITC). But fewer know that most states layer additional incentives on top — reducing the effective out-of-pocket cost even further.
This guide catalogs the major state-level solar incentives available in 2026, organized by type. Check your state to see what you can stack on top of the federal credit.
Types of State Solar Incentives
State solar incentives fall into four main categories:
1. State Income Tax Credits
Direct credits against your state income tax bill, similar to the federal ITC. Available in about 15 states. Amounts range from 15–35% of system cost.
2. Upfront Rebates
Cash rebates paid after installation — typically by the state energy office or utility. These reduce your net cost immediately and do not require owing taxes to use them.
3. Property Tax Exemptions
Solar panels increase home value — but most states exempt this added value from property tax assessment. Without this exemption, a $20,000 solar system could increase your annual property tax bill by $200–$400.
4. Sales Tax Exemptions
Some states waive sales tax on solar equipment purchases, saving 5–10% on equipment costs. On a $20,000 system, this can be worth $1,000–$2,000.
Best State Solar Incentive Programs (2026)
These states offer the most generous additional incentives beyond the federal ITC:
| State | Income Tax Credit | Rebate | Property Tax Exempt | Sales Tax Exempt |
|---|---|---|---|---|
| New York | 25% (max $5,000) | NY-Sun up to $5,000 | Yes (15 years) | Yes |
| Massachusetts | 15% (max $1,000) | Up to $1,000 (MassCEC) | Yes | Yes |
| New Jersey | None | None statewide | Yes | Yes |
| Maryland | None | $1,000 residential | Yes | Yes |
| South Carolina | 25% | Varies by utility | Yes | Yes |
| Montana | $500 | None | Yes | No |
| Oregon | None | Up to $5,000 (IDA) | Yes | No |
| Texas | None | Varies by utility | Yes (100%) | Yes (equipment) |
Note: New Jersey's lack of upfront rebates is offset by one of the nation's best SREC markets. See our SREC guide for details.
Utility Rebates: Often Overlooked Savings
Beyond state programs, many individual utilities offer their own solar rebates — sometimes substantial:
- Austin Energy (Texas): $2,500 rebate for systems up to 20 kW
- Los Angeles DWP (California): Solar incentive program with rebates based on production
- Green Mountain Power (Vermont): Up to $1,500 in rebates
- PSEG Long Island (New York): Additional rebates on top of NY-Sun
- National Grid (MA/NY): Smart Energy incentive programs
Always ask your installer to identify all utility-level programs in your service territory — these are often not well-advertised but can add $500–$2,500 to your total savings.
How to Stack Incentives for Maximum Savings
Example: New York homeowner, $22,000 system:
| Incentive | Amount | Running Total |
|---|---|---|
| Gross system cost | $22,000 | |
| Federal ITC (30%) | −$6,600 | $15,400 |
| NY state tax credit (25%, max $5,000) | −$5,000 | $10,400 |
| NY-Sun rebate | −$3,000 | $7,400 |
| Sales tax exemption (8%) | −$1,760 | $5,640 |
Net cost after all incentives: $5,640 — a 74% reduction from the gross cost. This is an exceptional example (New York has some of the best stacking potential), but illustrates why incentive research matters.
Frequently Asked Questions
Can I claim both the federal ITC and a state tax credit?
Yes — federal and state tax credits are independent and can be claimed in the same year. Some states calculate their credit on the gross cost before the federal credit; others calculate it on the net cost after. Check your state's specific rules.
Do solar rebates count as taxable income?
Utility rebates typically reduce the basis for your federal ITC calculation (not a separate income). State rebates may or may not be taxable depending on the program. Consult a tax professional for your specific situation.
How long will the 30% federal ITC last?
The Inflation Reduction Act locked in the 30% ITC through 2032. In 2033 it steps down to 26%, and in 2034 to 22%, before expiring in 2035 unless extended by Congress.