Which solar tax credits and incentives are available in 2025

State-level solar incentives

State-level solar incentives may further help you reduce the costs of installing solar on your home or business. Though most states have incentives in place-though not all, unfortunately-some of the states with high solar incentives include:

• California
• New York
• Texas
• Minnesota

Check with your specific state's energy department to see which solar incentives are available to you. Here are a few common ones of which you might be able to take advantage. Keep in mind that the acceptance of some of these incentives might limit your ability to get the full federal solar tax credit:

Utility company solar rebates

Rebates you receive from your utility to install a solar system are not considered taxable income when you go to file your federal returns. They will decrease your federal solar tax credit as the rebates reduce the cost of the system installation.

State government rebates

In general, rebates from state governments will not affect your federal solar tax credit because they don't often lower the overall cost of the system.

State tax credit

State tax credits don't usually have an impact on federal credits, and federal credits don't usually affect state credits. The state tax credit, however, will reduce the amount of state tax payments you can deduct from your federal taxes. As a result, your federal taxable income will be higher, and the amount of your refund may be reduced.

Solar Renewable Energy Certificates (SRECs)

The process for obtaining SRECs varies by state. Typically, you'll need to register your solar system with the appropriate SREC-granting authority, which will then track your renewable energy production and periodically issue SRECs based on how much energy your system produces. The more energy your system produces, the more SRECs you'll get. You can then sell your SRECs to your local energy utility, which uses them to fulfill its obligations under state-mandated renewable energy targets.

The six states that have active SREC programs include New Jersey, Massachusetts, Pennsylvania, Maryland, Delaware, and Ohio. SRECs are also available in the District of Columbia.

There are one of two ways to take advantage of your SREC. If you believe you have a sophisticated enough understanding of your state's SREC market, you can certainly sell them yourself. Most homeowners, however, prefer to rely on the services of an SREC aggregator to maximize the value of their SRECs.

Like the stock market, the values of SRECs can vary significantly from state to state and even within states, depending on market conditions. Make sure you stay updated on the latest SREC prices in your area as they have the potential to reduce your solar payback period significantly.

To see the latest state solar incentives available to you, the North Carolina Clean Energy Technology Center created a valuable, searchable database of incentives by state. Visit DSIREUSA.org and start searching.

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