US Solar Incentives 2026
The federal residential solar ITC expired January 1, 2026. Many states still offer rebates, tax credits, property tax exemptions, and favorable net metering — worth thousands of dollars on a typical installation.
Federal Residential ITC: Expired
The 30% federal Investment Tax Credit for residential solar installations expired on January 1, 2026. The Commercial ITC (30%) remains active for businesses beginning construction before July 4, 2026.
Federal Programs
Residential Clean Energy Credit (Form 5695) — EXPIRED
EXPIRED as of January 1, 2026. This credit was 30% of the total installed cost of a residential solar energy system, with no upper cap. It is no longer available for new installations.
The Residential Clean Energy Credit was established under the Inflation Reduction Act of 2022 at 30% through 2032, subsequently changed, and ultimately expired for new residential installations placed in service after December 31, 2025. Homeowners who installed and placed in service a qualifying solar system on or before December 31, 2025 may still claim the credit on their 2025 federal tax return (filed in 2026) using IRS Form 5695. If the credit exceeded their 2025 tax liability, any carryforward is applied to subsequent years' tax returns until exhausted. No new residential solar installations commissioned in 2026 or later are eligible. The credit covered solar PV panels, inverters, mounting equipment, wiring, battery storage systems, and installation labor costs.
Commercial Solar Investment Tax Credit (ITC) — Section 48
30% federal tax credit on the full cost of a qualifying commercial solar energy system. Applies to businesses, nonprofits (via direct pay/elective pay), and third-party owners of commercial solar installations.
The Commercial Solar ITC under IRS Section 48 remains active at 30% for qualifying businesses. To claim the full 30% base credit, construction must begin by July 4, 2026 (the 'commence construction' deadline under safe harbor provisions), and the system must be placed in service (operational) by December 31, 2027. Systems that miss either deadline may be subject to a reduced credit rate. The credit applies to the full installed cost including equipment, labor, permitting, and interconnection. Eligible entities include C-corps, S-corps, partnerships, and LLCs. Tax-exempt organizations (nonprofits, municipalities, tribal governments, schools) may use the elective pay (direct pay) option to receive the credit as a direct payment from the IRS rather than a tax offset. MACRS accelerated depreciation (5-year schedule for solar) provides additional tax benefit layered on top of the ITC. Consult a tax advisor for proper claim procedures under IRS Form 3468.
Domestic Content Bonus Credit — Commercial
Additional 10 percentage points added to the base Commercial ITC for qualifying systems that use domestically manufactured steel, iron, and manufactured products. Total credit becomes 40% (30% base + 10% bonus).
The Domestic Content Bonus under IRS Notice 2023-29 and subsequent guidance adds 10% to the base Commercial ITC when a project meets domestic manufacturing requirements. Requirements: (1) All steel and iron used in structural components must be produced in the US; (2) A minimum percentage of the manufactured products' cost must be attributable to US-manufactured components (currently 40%, rising to 55% for projects starting construction after 2026). Solar panels must use US-manufactured cells and modules to count toward the manufactured products threshold. The bonus applies to systems that also satisfy the prevailing wage and apprenticeship (PWA) requirements necessary to claim the full 30% base credit. Documentation of domestic content must be maintained and may be subject to IRS audit. Treasury guidance provides a 10% 'safe harbor' adder for tracking and verification.
Energy Community Bonus Credit — Commercial
Additional 10 percentage points added to the base Commercial ITC for qualifying systems located in designated Energy Communities — areas affected by coal and fossil fuel industry closures. Total credit becomes 40% (30% base + 10% bonus).
The Energy Community Bonus under IRS Notice 2023-29 adds 10% to the base Commercial ITC when a project is sited in a qualifying Energy Community. There are three categories of Energy Communities: (1) Brownfield sites (former industrial or hazardous waste sites); (2) Statistical areas with significant employment in coal, oil, or natural gas industries, or that have had a coal mine closure since 1999 or coal-fired electric generating unit retirement since 2009; (3) Census tracts or adjoining census tracts where a coal mine has closed since 1999 or a coal power plant has retired since 2009. The Department of Energy provides an interactive mapping tool at the application URL to verify whether a specific project location qualifies. Both the Domestic Content Bonus and Energy Community Bonus can be stacked for a potential total credit of 50% (30% base + 10% domestic + 10% energy community), provided all requirements are met simultaneously.
State Incentives (5 states)
Arizona
Arizona Residential Solar Tax Credit: 25% of the installed cost of a qualifying solar energy device, up to a maximum credit of $1,000.
California
California Solar Initiative (CSI): Program is fully subscribed and closed. Historically provided $0.25–$1.90/W depending on system size and utility territory. No longer accepting applications.
Florida
Florida Solar Energy Sales Tax Exemption: Full exemption from Florida's 6% state sales tax on the purchase of solar energy equipment and related components.
New York
NY-Sun Incentive Program: Approximately $0.20 per watt (W) of installed capacity for residential systems, up to a maximum of $5,000. Actual per-watt incentive varies by utility territory and available program budget.
Texas
No Texas State Income Tax Credit: Texas has no state income tax and therefore offers no state-level solar income tax credit. Residents cannot claim a state tax credit for solar installations.
Incentive data last reviewed March 2026. Programs change — always verify with the administering agency before making purchasing decisions.