A quick search for “are there tax incentives for solar panels?” yields tons of results. You’ll see a lot about the various federal and state rebates for going solar. But you might be skeptical.

It sounds like a great thing to cash in on the benefits of solar at home and get tax breaks while doing it. But do these solar rebates have some kind of catch? Have you wondered why the government is willing to offer federal and state rebates for going solar?

In this post, we’ll talk about why governments offer rebates and incentives for solar. We’ll also go over details about the major solar tax credit from the federal government and how long it will be around, and look at which states have the best solar incentives.


What interest does the government have in where people get their energy? Quite a lot, actually. For societies to stay strong, people’s basic needs must be met. These basic needs include the energy to power our lives at home and at work.

As demand for energy increases, the power grid is further strained. Solar is a way for people to generate their own power and contribute clean power to the grid. The government is realizing the potential for solar to offload pressure from the power grid and prevent power outages.

Many state and local governments provide incentives to their citizens to encourage them to use clean energy by making solar more accessible to them. This also contributes to local economy by providing more solar jobs in their region. Incentivizing the use solar power also helps local governments to meet their own clean energy goals in an effort to contribute to a cleaner environment.


The biggest solar tax incentive is a federal tax credit called the federal solar investment tax credit (ITC). Some homeowners and business owners who went solar in 2019 are eligible to receive a federal income tax credit of 30 percent of the total cost of their solar system.1 This full 30 percent may be available to commercial customers provided the installation commenced before December 31, 2019. For homeowners to receive the full credit, the system must be “placed in service” before the end of the day December 31, 2019. It is not enough to have a signed contract, make a down payment or to have begun construction.

If your solar construction isn’t scheduled yet, know that many installers are already booked through the end of the year. But you may still be able to take advantage of the 26% federal tax credit that will be offered in 2020.1

The ITC was first enacted in 2005 and was set to expire soon after. However, it was so popular, it has been extended several times.

In 2020, the available credit will be 26 percent. In 2021, it slips down to 22 percent. Then, in 2022, the ITC reduces to 10 percent for businesses and disappears altogether for homeowners.1


Some states offer more than others, but more and more are getting behind solar. Here’s a quick look at what states have solar rebates and incentives to help you offset the cost of solar.2

New York Solar

With incentives like the Megawatt Block Solar Incentive, you can earn up to $1 per watt for installing solar. It, too, will phase out over time, so the sooner you jump on this opportunity, the better.

New York also offers net metering (earning credits for sending extra energy back to the grid) and the Solar Energy System Equipment Credit, offering 25 percent of what you pay for a solar installation, or up to $5,000 back in state taxes.

Arizona solar Programs

When it comes to solar rebates, California has some of the most generous local rebates in the country — up to $0.95 per watt (up to $500) for installing solar.

California boasts some of the most widely available net metering programs through various utilities. It’s also one of the states where homeowners can use Property Assessed Clean Energy (PACE) financing to install solar. This allows for solar to be paid for through property taxes over time.

Solar Incentives in Massachusetts

Similar to the ITC, Massachusetts offers an income tax credit for residents who invest in solar. This state tax credit means 15 percent off the cost of solar equipment, up to $1,000.

The state also offers better rates than average for producing solar energy, net metering, and both sales and property tax exemptions for going solar.

Florida, Illinois, and More States Warming up to Solar

Florida is finally taking advantage of the Southern sunshine with net metering as well as property and sales tax exemptions.

Illinois offers property tax exemption as well, along with net metering and Solar Renewable Energy Certificates (SRECS) to help the state meet its goal of 25 percent renewables by 2025.

Whatever state you’re in, it’s definitely worth looking into your local incentives and taking action so you don’t miss out on the 26 percent federal tax credit that rolls out in 2020.1

1 Tax credits vary and are subject to change. SunPower does not warrant, guarantee or otherwise advise its customers about specific tax outcomes. Consult your tax advisor regarding the solar tax credit and how it applies to your specific circumstances. Please visit the dsireusa.org website for detailed solar policy information.

2 State, local, and utility incentives vary by location and are subject to change. You may visit the dsireusa.org website for detailed solar policy information for your location. Your SunPower dealer can also help you to determine the incentives that are available to you.

This post originally appeared on the SunPower Resources Blog