A Guide to Government Solar Incentives
- Sarah Lozanova
- Jul 25
- 9 min read
Updated: Jul 31
Table of Contents
Installing solar panels is a big investment, but government incentives for solar panels can significantly reduce the cost. Programs like the federal solar tax credit, state-level solar panel rebates, and utility-based solar subsidies have made it easier for homeowners to go solar and save on energy bills.
As of mid-2025, the Residential Clean Energy Credit, commonly referred to as the federal solar tax credit, still offers 30% off eligible installation costs. Many states and utilities also provide additional solar panel rebates or performance-based incentives that can lower costs by another 10% to 20%, depending on location.
However, these benefits are changing. The residential solar tax credit is set to end after December 31, 2025, with the commercial credit expected to sunset shortly after. This may reduce overall government solar incentives starting in 2026.
If you’re considering solar, now is the time to act. By taking advantage of current solar panel subsidies and rebates, you could lock in thousands in savings before these programs expire.
GreenLancer has over a decade of solar industry experience and offers design services for installers and repair solutions for homeowners nationwide.
Government Incentives for Solar Panels: How to Lower Installation Costs
A variety of solar panel incentives are available for both residential and commercial properties. These government solar incentives help reduce upfront costs and improve the return on investment for solar energy systems.
Federal Solar Tax Credit (ITC): The 30% Solar Panel Subsidy Ending Soon
The solar ITC, often called the federal solar tax credit, provides a 30% dollar-for-dollar reduction on eligible solar installation costs. This powerful solar panel subsidy lowers federal income taxes and is one of the most impactful government solar incentives available today.
To qualify, you must own the solar system and have sufficient tax liability. Homeowners and businesses should consult a tax professional to confirm eligibility and file correctly.
As of mid-2025, the ITC still offers 30% off total system costs—including equipment and labor—but changes are coming. The residential solar tax credit will officially end after December 31, 2025. The commercial solar tax credit is expected to sunset soon after. If you’re planning to install solar, now is the time to take advantage of these government solar incentives before they expire.
How the Solar Panel Tax Credit Works: Real-Life Example
If a homeowner installs a $15,000 solar panel system, they can receive a $4,500 tax credit. That reduces the net system cost to $10,500. To be eligible, the system must be owned by the taxpayer, and both grid-tied and off-grid systems with battery storage qualify.
With the residential solar panel tax credit ending after December 31, 2025, this valuable government solar incentive won’t be available much longer. If you're planning to install solar panels, acting now ensures you can still qualify for the full 30% solar panel subsidy. Waiting could mean missing out on thousands in savings when the federal solar incentive phases out.
State Solar Panel Incentives, Rebates, and Subsidies Explained
Many states offer additional solar panel incentives alongside the federal tax credit. These programs vary widely and can include rebates, state tax credits, or production-based payments. Some states have limited funding that is available on a first-come, first-served basis. Others focus on offering solar incentives to income-qualified households or require NABCEP-certified installers to participate.
Understanding which government solar incentives are available in your state is key to maximizing savings. The DSIRE database (Database of State Incentives for Renewables & Efficiency) is a valuable tool for finding up-to-date information on state and local solar panel subsidies.
California Solar Panel Rebates and Storage Incentives (SGIP)
California’s Self-Generation Incentive Program (SGIP) encourages the use of solar batteries by offering rebates for households that install both solar panels and battery storage. The rebate amount varies based on the utility company and the capacity of the solar battery system.
New York Solar Incentives
The state offers a 25% income tax credit for residential solar systems on primary residences up to $5,000. To qualify for the credit, the homeowner must either purchase or lease solar energy equipment or enter into a Power Purchase Agreement for at least ten years.
NY Solar Tax Credit
Also, residential and small commercial installations may be eligible for the Sun MegaWatt Block program. Project funding varies depending on the solar system capacity and applies a dollar-per-watt ($/W) format until the program reaches its full capacity and the state phases it out.
NY-Sun Solar Incentive Program
The NY-Sun program offers additional solar incentives to make residential renewable energy more accessible. Through this program, residents can receive rebates that further reduce the upfront costs of solar installations. The exact rebate amount varies based on system size and location.
Government Solar Incentives: Solar Property Tax Exemptions
To encourage solar adoption without increasing property taxes, New York offers a property tax exemption for the added value of a solar energy system. This means that installing a solar system won't increase your property tax assessment, allowing you to benefit from the energy savings without additional tax burdens.
Oregon Solar Panel Rebate and Battery Incentive Program
This government incentive for solar panels is administered by the Oregon Department of Energy and offers rebates for solar electric systems and paired solar and storage systems for residential customers. Homeowners can receive up to a $5,000 solar panel rebate and an additional $2,500 solar battery. Low to moderate-income households qualify for $1.80 per watt of installed solar capacity, further enhancing the affordability of renewable energy solutions.
SRECs: A Performance-Based Solar Panel Incentive
Some states have renewable portfolio standards and must generate or procure a certain amount of renewable energy. Often, utilities purchase SRECs to comply with clean energy standards. For every 1,000 kilowatt-hour (kWh) of solar electricity generated, an SREC is issued. The exact SREC generation process varies by region and market. The SRECs are registered and tracked in an electronic registry, often administered by a regulatory body or a third-party organization.
SRECs can be bought and sold in a marketplace, typically through auctions or bilateral contracts. The value of this solar panel incentive can vary depending on factors like market demand, state regulations, and renewable energy goals. Because the solar renewable energy credit market varies by state, so does the price of the credits, and many states do not utilize this approach.
In some states, selling these certificates can bring in hundreds of dollars in income each year, making it a popular solar panel incentive. Some of the leading states for SRECs are New Jersey, Massachusetts, Pennsylvania, Maryland, Washington D.C., Delaware, and Ohio.
Performance-Based Solar Incentives: Pay for Energy Production
Performance-Based Incentives (PBIs) reward solar panel system owners based on how much energy their system produces. Instead of offering a one-time rebate or upfront solar panel subsidy, PBIs provide payments over time. These incentives pay a set amount for every kilowatt-hour (kWh) the system generates, making them one of the more production-focused solar incentives available.
Unlike Solar Renewable Energy Certificates (SRECs), PBIs do not involve market trading. Instead, the compensation rate is locked in at the time of installation, which gives homeowners and businesses predictable, long-term savings. PBIs are an important type of solar panel incentive in states that reward system performance and ongoing energy production.
Tax Exemptions for Solar Panels: Property and Sales Tax Relief
Government incentives for solar panels don’t stop at tax credits and rebates. Many states also offer property and sales tax exemptions to lower both upfront and long-term costs for solar customers.
Government Solar Incentives: Property Tax Exemptions
Installing solar panels typically increases a home’s appraised value, but property tax exemptions protect homeowners from a higher tax bill. As of 2025, 36 U.S. states offer this type of solar panel incentive, ensuring that the added home value from solar doesn't raise property taxes.
These exemptions allow you to benefit from higher resale value and energy savings without added tax burdens. However, eligibility rules can vary by state or even municipality, so it's important to review local policies when estimating customer savings.
Solar Sales Tax Exemptions: Lower Your Upfront Cost
In 25 states, homeowners and businesses can access government incentives for solar panels that exempt solar equipment purchases from state sales tax. These solar sales tax exemptions reduce the upfront cost of going solar—especially impactful for large residential or commercial systems.
Most sales tax exemptions apply to both solar materials and installation labor, lowering the total system cost by 4–10% depending on the state’s sales tax rate. Combined with other solar panel incentives, these exemptions help make solar more financially accessible across a wide range of markets.
Net Metering & Solar Buyback: Utility Incentives for Solar Panels
Net metering and solar buyback programs are utility-run initiatives that allow customers with solar systems to sell excess energy back to the grid, usually in exchange for bill credits. While these programs are not direct government incentives for solar panels, they are often influenced by state policies or mandates encouraging renewable energy integration. By making solar installations more financially attractive, these utility programs play a key role in supporting clean energy adoption without direct government funding.
Programs like Direct Energy Solar Buyback, Green Mountain Energy Buyback, and Chariot Energy Solar Buyback offer customers the option to earn credits for excess solar energy sent back to the grid. However, programs like Direct Energy Solar Buyback, Green Mountain Energy Buyback, and Chariot Energy Solar Buyback are typically available in states with deregulated energy markets.
Commercial Solar Panel Incentives and Tax Credits for Businesses
Businesses that install solar energy systems can still take advantage of several government incentives for solar panels, though that window is closing fast. While the commercial federal solar tax credit currently covers 30% of eligible costs under the Section 48 Investment Tax Credit, it is now scheduled to end after December 31, 2027. Businesses that want to lock in this major solar panel subsidy must begin construction by July 4, 2026, under the updated safe harbor provisions in the One Big Beautiful Bill Act passed in July 2025.
In addition to the ITC, businesses can also benefit from accelerated depreciation through the MACRS program and restored 100% bonus depreciation. These solar panel incentives improve project returns and reduce tax liability, even as federal solar panel rebates phase out.
MACRS Depreciation: A Key Business Solar Panel Incentive
The Modified Accelerated Cost-Recovery System, or MACRS allows businesses to recover their solar investment through depreciation deductions. This solar incentive lowers taxable income by deducting a portion of the system’s value each year. The value is calculated by multiplying the depreciation amount by the business's tax rate.
MACRS follows a 5-year schedule as outlined by the IRS. This solar panel subsidy is particularly useful for commercial projects looking to maximize their tax advantages over time.
FAQ: Government Solar Panel Incentives, Tax Credits, and Rebates
Government solar incentives can help you save thousands. From solar panel rebates to the federal tax credit, these programs are designed to lower the upfront cost of solar and improve long-term returns.
What types of government incentives for solar panels are available?
Homeowners and businesses may be eligible for various government incentives for solar panels. These include:
Federal solar tax credit:Â A 30% tax credit on eligible system costs through 2025 and longer for some commercial projects
State and utility rebates:Â Direct discounts offered in some areas, often limited by funding
Solar panel subsidies:Â Programs that reduce upfront costs through incentives or grants
Performance-based incentives (PBIs):Â Payments based on how much energy your system produces
Property and sales tax exemptions:Â Available in many states to lower the financial burden of solar adoption
To explore what’s available in your area, use the DSIRE database, a reliable source for local, state, and federal solar incentives.
How can I qualify for solar incentives and rebates?
To qualify for the federal solar tax credit, residential customers must:
Own the solar system (not lease it)
Install it on their primary or secondary residence in the U.S.
File IRS Form 5695Â with their federal tax return
Have enough tax liability to use the credit
Install the solar system by December 31, 2025
For solar panel subsidies or state-level incentives, eligibility requirements vary. Some programs may require systems to be installed by licensed or NABCEP-certified contractors. Others may have income requirements or be limited to specific utilities.
It’s best to recommend that customers speak with a qualified tax advisor to confirm eligibility. Solar installers should avoid offering tax advice unless certified to do so.
How do I apply for government solar incentives?
Because there are various solar incentives, how to apply for them varies by program. Federal tax incentives are offered through the IRS. Some local utility companies and states offer their own programs, so we recommend visiting your utility company’s website for more application details.
Government Solar Incentives Promote Renewable Energy Adoption
It’s essential to be familiar with the solar PV incentives in your area. Remember that the qualifications and availability of funds are often changing, so conducting timely research is the best way to stay current.
If your solar system needs repairs, servicing, or an upgrade, GreenLancer can help. Our nationwide team of licensed professionals restores performance and protects your investment.
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