Green Mountain Energy® Blog

A Guide to Maximizing Solar Tax Rebates in Select States

 

Over the last decade, solar power has become a popular choice for homeowners looking for ways to reduce their impact on the planet. However, the up-front cost of installing solar panels can be a roadblock on the path to sustainability. This is where solar tax rebates and incentives come into play. These financial programs can drastically lower the cost of going solar by offering rebates or tax credits that can help offset installation expenses.

Understanding how state-specific solar tax rebates work is crucial for maximizing savings. These incentives vary by state and can make a significant difference in the overall cost of installing solar panels. By taking advantage of these programs, homeowners can reduce both their initial investment and long-term energy bills.

How State-Level Solar Tax Rebates Work

Solar Rebates vs. Tax Credits

Before diving into state-specific programs, it's important to understand the difference between solar rebates and tax credits:

  • Solar Rebates: These are typically offered by state or local governments or utility companies. They provide a cash rebate or financial incentive after installation to reduce the up-front cost of solar energy systems. Some rebates may be performance-based, meaning they pay out based on the energy your solar system generates over time.
  • Solar Tax Credits: Tax credits, like the federal Investment Tax Credit (ITC), allow homeowners to deduct a percentage of their solar installation costs from their federal income taxes. Some states offer their own tax credits, in addition to the federal ITC, further reducing the total cost.

 

How Different States Offer Programs for Solar Installation

States offer various programs that cater to different needs and types of solar projects. The structure and number of rebates can vary widely, depending on the state’s goals, energy policies and available funding. Common state programs include:

Up-front rebates

Typically, this is a set rebate amount per watt of solar installed (such as $0.50 per watt, for example).

Performance-based incentives (PBIs)

Payments are based on how much electricity your solar system generates over time.

State-specific tax credits

Some states offer direct tax credits for residential solar, in addition to the federal ITC.

In some cases, utility companies also provide rebates or performance-based incentives in addition to state programs. This dual layer of support can significantly reduce the overall cost of solar installation.

 

Local and Utility-Based Incentives

While some states offer generous rebates, others like Texas do not have statewide solar incentives. However, many Texas cities and utilities provide substantial local incentives. These utility-based incentives can often be combined with federal tax credits for additional savings.

Top States Offering Solar Tax Rebates

These states provide a variety of programs, from up-front rebates to performance-based incentives, that can help homeowners reduce the initial cost of solar installation.

Illinois

The Adjustable Block Program (also known as Illinois Shines) offers incentives that help homeowners offset the cost of solar installation. Additionally, ComEd and Ameren offer local utility rebates.

Maryland

State rebates are provided through the Maryland Solar Access Program, offering rewards for solar installations, alongside net metering benefits.

Massachusetts

The Solar Massachusetts Renewable Target (SMART) program offers performance-based incentives that pay homeowners for the electricity their solar systems produce over time, in addition to net metering and state tax credits.

New Jersey

The Transition Incentive (TI) Program offers local utility rebates and incentives under the Clean Energy Program for solar installations.

New York

The NY-Sun Program provides up-front rebates for solar installations through NYSERDA, combined with state tax credits and additional local utility incentives.

Pennsylvania

The Keystone State offers solar incentives through net metering programs, along with occasional grant programs to support residential solar projects.

Texas

While Texas doesn’t have a state-level solar rebate, many local utilities, such as Austin Energy and CPS Energy, offer substantial rebates and performance-based incentives for solar installations.

California

The California Solar Initiative (CSI) offers up-front rebates for residential solar installations. These incentives are administered by utilities like PG&E, SDG&E and SCE. California also has a robust net metering program, allowing homeowners to offset their electricity costs by sending excess solar power to the grid.

Key Differences Between States

  • Monetary Savings: States like Illinois and New York offer some of the highest up-front incentives and performance-based payments.

  • Eligibility Criteria: Some states, like Massachusetts and Maryland, require a specific amount of solar capacity or a certified installer to qualify for rebates.

  • Additional Local Incentives: States like Texas and California provide utility-based incentives, compensating for a lack of state-level rebates.

 

Step-by-Step Guide for Applying for Solar Rebates

Step 1: Visit your state’s energy department website or consult with your solar provider to identify available rebates.

Step 2: Gather necessary documents, including proof of installation, purchase invoices and tax identification numbers.

Step 3: Complete all applications before deadlines. Be sure to keep a copy of all forms for your records.

Step 4: Stay on top of any required inspections or follow-up documentation to ensure rebate approval.

Double-check the eligibility criteria before applying to any program to avoid disqualification and make sure the installer is certified and follows state regulations.

How to Maximize Your Solar Savings

To ensure you get the best deal when installing solar panels, you should leverage every available incentive at the federal, state and local levels.

  1. Apply for Federal Tax Credits
    The federal Investment Tax Credit (ITC) provided a 30% tax credit in 2024.

  2. Research State Rebates and Apply Early
    Each state’s solar rebate program has different deadlines and funding limits. Be sure to apply well before the deadline so you don't miss out, as some programs can run out of funding.

  3. Leverage Local Utility Rebates
    Utility companies often offer rebates or performance-based incentives. Check with your local utility provider to see what additional savings are available.

 

Get Started on Solar

State-specific solar tax rebates are a great way to significantly lower the cost of installing solar panels and transitioning to renewable energy, and taking advantage of every available rebate and incentive can help you enjoy the benefits of solar energy without breaking the bank.

And remember, even if you never install solar panels on your home, you can still enjoy 100% clean electricity with a plan from Green Mountain Energy.