As the demand for clean energy grows, the U.S. government, along with many state and local authorities, offers a range of incentives to encourage homeowners and businesses to go solar. These incentives can significantly reduce the upfront cost of solar panel installations and increase long-term savings.
Solar incentives are a major driver for solar adoption, along with increasing utility rates and grid instability. Solar energy adoption has increased substantially over the past decade, with SEIA industry data showing a 28% annual growth rate.
Over that same period, the US average electric rate increased 32%, so solar will continue to have a major place in the US energy mixture.
For solar companies, staying up to date with these evolving incentive programs isn’t just helpful, it’s a best practice. Solar incentives vary significantly from state to state, and changes can happen quickly. Companies that stay current with these policies are better equipped to guide homeowners through their options, offering more thoughtful, more personalized recommendations that maximize savings. This knowledge not only empowers homeowners to make confident decisions but also strengthens the credibility and consultative value of the solar company itself.
In today’s competitive market, solar companies that proactively track and incorporate local and state-level solar incentives into their offerings can differentiate themselves. It enables them to tailor proposals, close deals more efficiently, and establish trust with customers who rely on expert guidance. As solar adoption grows and incentives continue to evolve, being informed isn’t just an advantage—it’s essential for long-term success.
This guide will walk you through some of the federal incentives available and provide links to individual walkthroughs for each state. You can view the playlist below for video forms of state solar incentive guides.
Table of Contents
Federal Solar Incentives
Federal Investment Tax Credit (ITC)
*Author’s Note – At the time of writing, a budget reconciliation bill has been moved from the US House of Representatives to the US Senate. This bill includes the removal of the Federal ITC at the end of 2025. Solar Companies and Homeowners, you can contact your senators and representatives here: https://solarunitedneighbors.org/take-action/
Residential solar systems installed in the US are eligible for the Federal ITC, which provides up to 30% credit toward the total cost of a solar system. Tax credits for solar energy systems date back to 1978, when President Carter created the Residential Energy Credit for solar thermal systems. The solar tax credit incentive we know today was created in 2005 by President George W Bush.
This solar incentive was initially set to expire through a phasedown starting in 2020. Systems installed in 2020 would receive a 26% solar tax credit, then 22% for systems installed in 2022, and 0% after that. During the COVID-19 pandemic, President Trump signed an act that, among other things, extended the tax credit to 26% until 2023.
The Inflation Reduction Act (IRA) of 2022 extended the 30% credit through 2032. Starting in 2033, the ITC value will drop to 26%, followed by a drop to 22% in 2034.
The ITC is a credit as opposed to a deduction or a rebate, so the value goes against what you owe. The solar tax credit is non-refundable, meaning it cannot exceed the amount you owe in tax and would not directly increase any refund you would receive. Excess credit can be carried forward and used in future years if not all claimed in one year..
The IRA also included standalone or retrofitted energy storage projects, so batteries added to an existing system would qualify for the 30% tax credit as well.
State and Utility Solar Incentives
While the federal solar tax credit is the only widely available residential solar incentive from the federal government, many states have incentives available to homeowners who adopt solar. Within those states, some electric utilities offer incentives as well.
Electric utilities are also responsible for Net Metering. Net Metering is a solar incentive program where homeowners can be credited for power they send back to the electric grid. Every utility offers a different version of net metering (also sometimes called solar buyback), with credit amounts ranging from full retail electric rate value, to pennies on the dollar.
A common trend being seen in the industry is for electric utilities to decrease the value of net metering credits as more solar is installed within their service territory. With this decrease, the industry is seeing a rise in battery storage adoption.
The guide below has links to all 50 states and DC, walking through some of the solar incentive programs available. The states with the asterisk (*) next to them have been updated for 2025.
As policies and programs continue to evolve across the country, staying current is essential for both homeowners and solar companies looking to maximize savings and value. By following Solar Insure, solar companies can gain quick access to state-specific incentive updates, industry news, and expert tips to serve their customers better. Whether you’re navigating rebate timelines, tax credit eligibility, or local incentive structures, having the most up-to-date information helps solar companies and homeowners stay ahead in a competitive market, ensuring homeowners can make well-informed decisions.
Be sure to check back regularly and subscribe to Solar Insure’s social media channels to stay informed about the latest updates in solar incentives.
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