Solar Incentives by State in 2026: SRECs, Net Metering & Rebates

The 30% federal residential solar tax credit (Section 25D) ended December 31, 2025 — terminated by the One Big Beautiful Bill Act signed July 4, 2025. There is no phase-down, no partial credit, and no transition period for homeowner-owned systems. But the end of the federal credit does not mean the end of solar incentives. State programs, utility rebates, SRECs (Solar Renewable Energy Certificates), net metering policies, and tax exemptions continue to reduce the cost of going solar across much of the country.

This guide covers the strongest remaining state-level incentives for residential solar in 2026. Programs change frequently — always verify current details through your state energy office or the DSIRE database (dsireusa.org) before making financial decisions.

States With the Strongest Incentives

New York offers a state solar tax credit worth 25% of system cost, capped at $5,000. Combined with the NY-Sun incentive (an upfront rebate from NYSERDA), net metering at full retail rate, a property tax exemption (solar does not increase your assessed value for 15 years), and sales tax exemption on solar equipment, New York remains one of the most attractive solar markets in the country despite the loss of the federal credit.

South Carolina provides a 25% state tax credit with no cap — the most generous uncapped state credit in the country. Combined with net metering and a property tax exemption, South Carolina homeowners can effectively replace a significant portion of the lost federal credit with state incentives alone.

Massachusetts operates the SMART (Solar Massachusetts Renewable Target) program, which provides performance-based payments for every kilowatt-hour your system generates. Massachusetts also has one of the most active SREC markets in the country — homeowners earn tradeable certificates for their solar production that can be sold for $80–$200+ each. Combined with net metering and state tax credits, Massachusetts remains a premier solar market.

Oregon offers a Residential Energy Tax Credit worth $2,500 for solar installations. Oregon also has net metering, no sales tax (a statewide policy, not solar-specific), and various utility-specific rebate programs.

New Jersey operates a robust SREC/TREC (Transition Renewable Energy Certificate) market where homeowners earn tradeable certificates based on solar production. New Jersey also has net metering, a sales tax exemption on solar equipment, and a property tax exemption.

Net Metering: The Most Impactful Policy

Net metering allows you to send excess solar electricity to the grid during the day and receive a credit that offsets the electricity you consume at night. In states with full retail-rate net metering, every kilowatt-hour you export earns a credit at the same rate you pay to consume — effectively making the grid your free battery.

Net metering policies vary dramatically by state and utility. Full retail-rate net metering is available in approximately 30 states but is under pressure from utilities seeking to reduce the credit rate or impose additional fees on solar customers. Several states (California, Nevada, and others) have already transitioned to net billing or successor tariffs that compensate solar exports at wholesale rates (roughly one-third to one-half of retail) rather than full retail. Before installing solar, verify your specific utility's current net metering policy and any pending regulatory changes.

SRECs and Performance-Based Incentives

SRECs are tradeable certificates earned for every megawatt-hour (1,000 kWh) of solar electricity your system produces. In states with active SREC markets, these certificates have real cash value because utilities are required to purchase them to meet renewable energy mandates. SREC prices fluctuate based on supply and demand — they have ranged from under $10 to over $400 depending on the state and market conditions.

The strongest SREC markets in 2026 are Massachusetts, New Jersey, Maryland, and the District of Columbia. If your state has an SREC market, register your system with the state tracking platform as soon as it is commissioned — certificates are typically earned from the date of registration, not the date of installation.

Property Tax and Sales Tax Exemptions

Many states exempt solar installations from property tax assessment increases. Without this exemption, a $20,000 solar installation could increase your property tax bill by $200–$500 annually (depending on your local tax rate), partially eroding the financial benefit of solar. Property tax exemptions are available in approximately 35 states.

Sales tax exemptions on solar equipment purchases eliminate the 4–10% state sales tax on panels, inverters, batteries, and racking. On a $15,000 equipment purchase, a 7% sales tax exemption saves $1,050. These exemptions are available in approximately 25 states.

Utility-Specific Rebates and Programs

Beyond state-level programs, many individual utilities offer their own solar incentives — rebates, performance payments, or favorable rate structures for solar customers. These programs are not always well-publicized and change frequently. Contact your utility directly and ask about current solar programs, time-of-use rate options (which can increase the value of solar self-consumption and battery storage), and any demand response programs that pay you for allowing the utility to draw from your battery during peak grid demand.

For a full analysis of solar economics in the post-credit era, see our Is Solar Worth It in 2026 guide. For system sizing help, check our solar system sizing guide.

The Lease and PPA Path to Federal Incentives

While the residential tax credit is gone for homeowner-owned systems, solar leases and Power Purchase Agreements (PPAs) still access the commercial Section 48E Investment Tax Credit through December 31, 2027. In these arrangements, a third-party company owns the solar equipment on your roof and claims the credit. You pay a monthly lease payment or a per-kilowatt-hour rate — typically lower than your current utility rate.

The economics of leases and PPAs depend heavily on the specific contract terms. Watch for annual escalation clauses that increase your rate 1–3% per year (they can erode savings over a 20-year agreement), transfer provisions if you sell your home, maintenance responsibilities, and buyout options. If your state has strong net metering and you can afford to purchase a system outright, ownership typically provides better long-term economics than a lease — even without the federal credit. But for homeowners who cannot or prefer not to make a large upfront investment, TPO arrangements remain a valid path to solar savings in 2026.

How to Research Your Local Incentives

Start with the DSIRE database at dsireusa.org — the most comprehensive database of state and local incentives in the country, maintained by the NC Clean Energy Technology Center. Filter by your state and zip code to see every available incentive, program, and policy. Contact your state energy office directly for the most current program details, application deadlines, and funding availability. Call your electric utility and ask specifically about solar programs, time-of-use rate options, net metering terms, and demand response programs. Finally, check with your county and municipal government for any local rebates, expedited permitting programs, or property tax exemptions that may not appear in statewide databases.

Frequently Asked Questions