State solar incentives in 2026: what's still available after the federal credit ends

State income tax credits: the top 10 markets

State income tax credits reduce your state income tax liability in the year claimed (or across multiple years if the credit is structured as a recurring incentive). Unlike §25D, they are state-law programs — entirely independent of what Congress does with federal credits. The following table shows the top-10 state credit programs by estimated value as of 2026. Verify current caps and eligibility at dsireusa.org — these programs have changed materially in the past and will change again.

Source: DSIRE database (dsireusa.org). Programs change quarterly. Verify before signing any installation contract. This table is for educational orientation, not financial or tax advice.

SREC programs: recurring income that most online calculators ignore

A Solar Renewable Energy Certificate (SREC) represents one megawatt-hour (MWh) of electricity generated by a solar installation. State utilities with solar carve-outs in their Renewable Portfolio Standards (RPS) must purchase SRECs to demonstrate compliance — which means SREC program states pay solar owners an ongoing income stream for electricity they generate, separate from the avoided utility bill. You earn one SREC for every 1,000 kWh your system produces, tracked by a state-authorized registry (e.g., PJM-GATS for the mid-Atlantic states).

Active SREC markets and approximate 2026 rates (rates fluctuate with compliance demand and are not guaranteed):

• District of Columbia:~$420/MWh — highest SREC market in the country; DC’s aggressive RPS solar carve-out creates strong compliance demand
• New Jersey: ~$85/MWh (SREC II program) — one of the most valuable SREC II markets; mature, liquid, stable
• Maryland: ~$65/MWh — active market with strong utility compliance demand
• Massachusetts: ~$45/MWh (SMART program) — successor to original MA SREC market; structured as a fixed tariff payment rather than a true SREC auction, providing more income predictability
• Pennsylvania: ~$35–$45/MWh — active but less liquid than NJ/MA; aggregators like SRECTrade, Sol Systems, and RECPhilly facilitate sales

SREC income is taxable as ordinary income in the year received — report it as other income on Schedule 1, Line 8. You can sell SRECs directly through a state registry or use an aggregator (SRECTrade, Sol Systems, Flett Exchange). Aggregators charge fees of 5–15% of SREC value for handling registration, brokerage, and payment — check the net rate when comparing aggregator vs. direct sale.

SREC income example — New Jersey 7 kW system

Annual production:          8,500 kWh (typical NJ 7kW system, NREL PVWatts estimate)
SRECs earned per year:      8.5 SRECs (8,500 kWh ÷ 1,000 kWh/SREC)
SREC II rate:               $85/MWh
Gross SREC income Year 1:   $722.50
Less aggregator fee (10%):  -$72.25
Net SREC income Year 1:     $650.25

10-year present value at 5% discount rate: ~$5,021 (net of aggregator fees)
20-year present value (if SREC II remains active): ~$8,098

Note: SREC II program terms, rates, and duration are set by the NJ BPU.
Verify current program status at njcleanenergy.com before relying on these figures.

Property tax exemptions: compounding annual savings over your ownership horizon

Solar panels add assessed value to your home. Without a property tax exemption, you would owe annual property taxes on that increased value indefinitely. Over 30+ states have enacted solar property tax exemptions that prevent this additional tax from accruing. The key states and their statutory authority:

• Texas: 100% exemption on added value, Texas Tax Code §11.27. No cap, no time limit. On a $25,000 system adding $20,000 to assessed value at a 2.0% property tax rate = $400/yr savings. 20-year PV at 5% discount rate: ~$4,986.
• Arizona: 100% exemption, A.R.S. §42-11054. Strong solar market; exemption is perpetual for active systems.
• New York: 15-year exemption, Real Property Tax Law §487. Municipalities can opt out — verify your specific county and municipality before relying on it.
• New Jersey:100% local exemption in most counties. At NJ’s average 2.5% effective property tax rate, $20,000 of added value = $500/yr saved. 20-year PV: ~$6,233.
• Colorado: 100% exemption for residential installations. Strong solar state with active incentive environment.
• Florida: 100% exemption on added value for residential solar (FL Statute §196.182). Florida has no state income tax, no income tax credit, but this exemption on property tax provides meaningful savings in high-assessed-value coastal markets.

Property tax exemption rules can vary at the county and municipality level — some states allow local opt-out, meaning your specific county may not honor a state-level exemption. Confirm with your county assessor’s office before counting on this incentive. Per Autumn Proudlove, DSIRE Program Manager (DSIRE, 2024): DSIRE tracks property tax exemption programs at the state level with notes on known local opt-out provisions.

Sales tax exemptions: a one-time savings at purchase that adds up fast

Over 25 states exempt solar panels and related equipment from state sales tax. The financial impact is simple: at a 6% state sales tax rate on a $24,400 system, the exemption saves $1,464 at the time of purchase. At a 10% rate (parts of Louisiana), the savings is $2,440. This is a one-time benefit — no ongoing tracking required — but it is real money that reduces your effective installed cost.

States with active residential solar sales tax exemptions (verify current status at DSIRE before purchase):

• Arizona, Colorado, Florida, Maryland, Massachusetts, New Jersey, New York, Texas — all exempt solar equipment from sales tax
• Connecticut, Georgia, Illinois, Minnesota, North Carolina — exemptions vary by equipment type and installation method; verify at DSIRE

On a $24,400 system with a 7% sales tax rate, the exemption saves approximately $1,708 — a meaningful reduction in effective installed cost. This is applied before the property tax and income credit layers in the State Solar Incentive Stacker.

Utility rebates: available but depleting fast — check before you sign

Utility rebates are one-time payments from your electric utility for installing solar, often structured as a per-watt payment. They are less common than they were in the 2015–2022 era, and many utility programs have been restructured or reduced following §25D’s expiration and the growth of state-level incentive programs. Current active rebates include:

• National Grid (MA/NY): approximately $0.20/W rebate, capped at $1,050 for residential systems; subject to annual budget caps and waitlists
• Xcel Energy (CO/MN): varies by program year and state; check current rates at xcelenergy.com
• SMUD (Sacramento, CA): approximately $0.15/W rebate; subject to budget allocation
• California SGIP battery rebate: up to $400/kWh for battery storage (not panels); income-qualified adders available

Important note: most utility rebates are taxable income in the year received, per IRS guidance. The rebate reduces your effective system cost for incentive-layering purposes, but the tax cost of the rebate must be included in your net-cost calculation. A $1,050 rebate at a 22% federal + 5% state effective rate nets to approximately $768 in after-tax value — still material, but not the headline number.

How to use DSIRE — the authoritative program registry

DSIRE — the Database of State Incentives for Renewables and Efficiency — is maintained by NC State University with funding from the U.S. Department of Energy. It is the most comprehensive, regularly updated source for state and utility solar incentive programs in the country. Per Autumn Proudlove, DSIRE Program Manager (DSIRE, 2024): DSIRE tracks over 3,000 programs and is updated as programs change.

To use DSIRE effectively: (1) Go to dsireusa.org and select your state from the map or dropdown; (2) Filter by technology type — “Solar Photovoltaics” is the relevant selection; (3) Filter by sector — “Residential” for homeowner programs; (4) Review each program entry for current credit rate, cap, eligibility requirements, and program status (Active / Expired / Pending); (5) Click through to the program’s administering agency (state energy office, utility, or tax authority) to verify current terms directly before relying on the information in a purchase decision.

DSIRE is updated frequently but programs can change between updates. Always verify with the administering agency, and always have your installer confirm the incentives they are using in your proposal are currently available.

The full stack: a Massachusetts example where state incentives cover 55% of system cost

Per Andrew Sendy, SolarReviews Founder (SolarReviews, 2024): in high-incentive states, homeowners who do the work to understand their full incentive stack discover that state programs — even without §25D — can cover 40–60% of effective system cost. Massachusetts is the clearest example:

Massachusetts full incentive stack — $25,000 gross system

Gross installed cost:                $25,000

State income tax credit (15%, cap):  -$1,000/yr × ~7 yrs = ~$7,000 PV
  (claimed annually until cap reached; PV at 5% discount rate)
SREC income (SMART, 10yr PV):        -$4,500 (~$450/yr at $45/MWh × 10kWh)
Property tax exemption (15yr PV):    -$2,250 (est. 1.5% local rate × $15K added value)
Sales tax exemption (MA exempts):    -$0 (no sales tax on solar equipment in MA)
National Grid utility rebate:        -$1,050 (if eligible; taxable income ~$220 cost)
  Net rebate after 22% federal tax:  -$830

Total incentive value (approx PV):   $14,580
Effective net cost after incentives: ~$10,420

Notes:
- All values are estimates and depend on actual system size, production,
  SREC rates, property assessment, and tax situation.
- SREC rates fluctuate. Verify current SMART program rates at mass.gov/solar.
- Consult a CPA for your specific tax situation before relying on these figures.

Use the State Solar Incentive Stacker to build your specific state’s full stack with your system size, local utility rate, property tax rate, and state income tax rate. The stacker applies each incentive layer hierarchically — sales tax off gross cost first, then income credit and SREC PV, then property tax PV — to produce your true net effective cost.