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Local and State Solar Rebates Homeowners Often Forget to Claim

Last updated: October 21, 2026. Programs change often, so confirm every figure with the official source before you act.

Quick answer: Most homeowners who go solar in 2026 can still claim some mix of state income tax credits, property tax exemptions, sales tax exemptions, utility rebates and production payments. The most-forgotten items are the ones that need paperwork after installation: tax forms, exemption certificates and REC registrations. Check your state, county and utility before you sign.

The 30% federal tax credit for homeowners who buy solar ended on December 31, 2025. If a salesperson still quotes it for a 2026 installation, the quote is out of date.

That makes state, local and utility incentives the main source of savings for 2026 buyers. Some pay out automatically. Plenty of others pay only if you file a form, apply to an assessor or register your system. Those are the ones people forget.

This guide covers the US first, because “state and local” programs are most common there. UK and Gulf sections follow, since the rules in those regions work differently.

What changed in 2026

The One Big Beautiful Bill, signed on July 4, 2025, ended the homeowner credit (Section 25D) for expenditures after December 31, 2025. The only federal route left for most homeowners is a third-party-owned system, such as a lease or power purchase agreement (PPA). There, the company that owns the panels claims a business credit and may pass some of the value to you through pricing. (Solar.com)

The trade-off is real. A lease or PPA can lower your upfront cost, but you don’t own the system, so state credits and rebates usually go to the company instead of you.

The six incentives homeowners forget most

Incentive Examples we confirmed What you have to do
State income tax credit New York 25% (max $5,000); Massachusetts 15% (max $1,000); Arizona 25% (max $1,000) Add the credit form to your state return
Property tax exemption Texas, Florida, New Jersey, Massachusetts, Illinois Often file with your assessor or appraisal district
Sales tax exemption New Jersey 6.625%; Florida 6%; Massachusetts 6.25% Check your invoice; some states use a certificate
Utility rebate Illinois (ComEd, Ameren): $300/kW solar, $300/kWh battery Apply to your utility with approved equipment
Production payments (RECs) Illinois Shines; New Jersey SuSI Register the system; watch for waitlists
Leftover federal credit 25D for systems completed by Dec 31, 2025 File Form 5695, amend if missed, track carryforward

1. State income tax credits

A state tax credit cuts your state income tax bill dollar for dollar. Three we confirmed:

  • New York: 25% of qualified costs, capped at $5,000, for a system at your principal residence. You claim it on Form IT-255. It isn’t refundable, but unused credit carries over for up to five years. The state also allows it for a lease, or for a power purchase agreement of at least ten years. (NY Tax Department) Costs paid by non-taxable grants don’t count toward the base. (OpenEI)
  • Massachusetts: 15% of net cost, capped at $1,000. Excess credit carries forward up to three years. (OpenEI)
  • Arizona: 25% of cost, capped at $1,000 in total per residence, claimed on Form 310 with Form 301. Unused credit carries forward five years. (Arizona Department of Revenue)

Your installer doesn’t file your tax return. You or your preparer has to add the form, usually a year after the work is done. That gap is where credits get lost.

2. Property tax exemptions

Solar raises your home’s value. Many states stop that value from raising your property tax bill.

  • Texas: Tax Code §11.27 exempts the appraised value that a solar device adds, if the system mainly serves on-site use. (Galveston Central Appraisal District) Guides name Form 50-123 as the application, with an April 30 deadline. (NuWatt Energy) Confirm the form and date with your own appraisal district.
  • Florida: 100% exemption of the added value for residential systems installed on or after January 1, 2013. (EnergyBot, citing DSIRE data)
  • New Jersey: 100% exemption of the added value, but you apply for a certificate from your local assessor. (Solar.com)
  • Massachusetts: an exemption for a set period, generally 20 years, with local variation. (Unbound Solar, citing DSIRE)

Here’s the catch: sources disagree on whether Florida’s exemption is automatic or needs an application. Ask your county property appraiser, and don’t assume.

3. Sales tax exemptions

New Jersey exempts solar equipment from its 6.625% sales tax, which is $1,656.25 on a $25,000 system. (Solar.com) Florida has exempted solar energy systems from its sales and use tax since July 1, 1997, and the equipment must be certified by the Florida Solar Energy Center. (EnergyBot, citing DSIRE data) Massachusetts exempts qualifying solar equipment too, with Form ST-12 on the state revenue site. (Unbound Solar)

Texas is the opposite case. One 2026 guide says there is no state sales tax exemption for residential solar there. (NuWatt Energy) Read your invoice line by line either way.

4. Utility rebates and smart-inverter payments

Utilities run their own programs, and they’re the easiest to overlook because they sit outside the tax system. In Illinois, ComEd and Ameren customers can get $300 per kW of solar and $300 per kWh of battery storage with a qualifying smart inverter. (EnergySage) A 5 kW system works out to $1,500 for the solar side. (PIRG)

Local utilities can pay more than the state does. Austin Energy in Texas is listed at a $2,500 residential rebate. (SolarReviews) Treat that as a lead to check on the utility’s own site, not a promise.

5. Production payments (RECs)

Some states pay you for each unit of power your system generates, through renewable energy certificates. Illinois Shines pays an upfront amount based on the RECs your system is expected to produce, in blocks with different rates. When a block fills, you may land on a waitlist. (Solar Gardens) That payment is taxable income. (SurgePV)

New Jersey’s SuSI program works on a different clock: net-metered residential owners earn one certificate for every 1,000 kWh generated, for 15 years. (Solar.com) Nothing pays until the system is registered, so ask your installer who does it and when.

6. The federal credit you may not have claimed yet

If your system was completed by December 31, 2025, you were able to claim 30% on your 2025 return using Form 5695. If you filed without it, you can file an amended return on Form 1040-X. (Energy Rebate Calculator)

The credit is non-refundable, so a big credit can outrun a small tax bill. The unused part carries forward to later years. Keep your Form 5695 and installation records, because you’ll need them to support the carryforward. If you sell the home, the unused carryforward doesn’t pass to the buyer. (National Association of Tax Professionals)

A worked example: why the cap matters more than the percentage

These numbers use one hypothetical system, so you can see how caps work. Assumptions: a $25,000 installed cost before any grants, enough state tax liability to use the credit, and a 7 kW system for the Illinois line. A home sits in one state, so don’t add the rows together.

Incentive Calculation Result (USD)
New York credit 25% × $25,000 = $6,250, capped $5,000
Massachusetts credit 15% × $25,000 = $3,750, capped $1,000
Arizona credit 25% × $25,000 = $6,250, capped $1,000
New Jersey sales tax avoided 6.625% × $25,000 $1,656.25
Illinois utility rebate 7 kW × $300 $2,100
Texas property tax avoided, per year $20,000 added value × 1.47% effective rate about $294

The Texas rate is a statewide average effective rate; your local rate and the value solar adds to your home will differ. New York’s base also shrinks if a non-taxable rebate paid part of the cost. These are estimates. Get quotes from licensed installers and talk to a tax professional before you rely on any of them.

Why these rebates go unclaimed

  • The paperwork comes after the install. Tax forms, assessor certificates and REC registrations all land weeks or months later, when the project feels finished.
  • Nobody owns the task. The installer assumes you’ll file. You assume the installer did.
  • Funds and blocks run out. Programs like Illinois Shines fill in blocks, and late applicants wait.
  • Ownership gets blurry. With a lease or PPA, the incentives usually belong to the company, not you.

How to find every incentive before you sign

  1. Write down your state, county or city, and electric utility. Incentives hang on all three.
  2. Search your state energy office, your state revenue department and your utility’s rebate page. Then cross-check against the DSIRE database, which tracks incentives by state.
  3. Ask each installer which incentives are built into the quote, and who files each one. Get the answer in writing.
  4. Confirm whether you’re buying, leasing or signing a PPA. That decides who gets the money.
  5. Put the post-install tasks on your calendar: the state tax form, the assessor filing, the REC registration and the utility rebate application.
  6. Keep the invoice, permit, utility permission-to-operate letter and any tax forms in one folder.

UK homeowners: what to claim

The UK has no state-level programs, but three national and local routes matter. (Prices below are in pounds sterling.)

  • 0% VAT: Solar panels and batteries carry zero VAT until March 2027, when the rate is due to return to 5%. Installers normally apply it for you. (Hive) On a hypothetical £9,000 quote, a 5% VAT charge would add £450, so timing a signature before the change can matter.
  • Smart Export Guarantee (SEG): Suppliers pay you for surplus power you export. It isn’t a grant, it has no end date, and you need a smart meter that records export readings. Rates vary by supplier, so compare them. (Hive)
  • Warm Homes: Local Grant (England): Councils deliver this scheme from 2025 to 2028. Solar panels can be included for homes rated EPC D to G, with household income usually £36,000 a year or less. (Greater London Authority) It applies in England only. Scotland, Wales and Northern Ireland have separate schemes. (Bath & North East Somerset Council)

The forgotten one here is the council grant. Many homeowners who fit the income and EPC rules never ask their local authority.

Gulf homeowners: expect net metering, not rebates

In the Gulf, direct rebates are rare. What you can claim is the credit for power you send to the grid, and the rules differ by country and even by emirate.

  • Dubai (UAE): Shams Dubai offers no direct subsidy or tax incentive, but net metering lowers your DEWA bill. (Dubizzle) Exports are credited at your own tariff slab rate, and credits roll over indefinitely. Only DEWA-accredited consultants and contractors can submit applications, and ground-mounted systems have been barred since May 2020. (SurgePV) Other emirates, such as Abu Dhabi, the northern emirates and Sharjah, run their own programs.
  • Oman: The Sahim scheme pays for exports instead of offsetting imports one for one. As of mid-2026, one industry guide says the procurement for Sahim II hasn’t moved forward. (SurgePV)
  • Saudi Arabia: One 2026 regulatory summary lists a cash payment of 0.07 SAR per kWh for residential exports, about $0.019 at the 3.75 riyal-dollar peg. (SurgePV) Confirm the current rate with Saudi Electricity Company before you size a system around it.
  • Bahrain: Net metering has operated since 2017, but it gives energy credits rather than cash. Low electricity tariffs weaken the savings. (OGN News)
  • Qatar and Kuwait: The same 2026 summary reports no retail net metering program in either country. (SurgePV)

Heat and dust change the math here more than any rebate does. High temperatures reduce panel output, and dust cuts it further unless panels are cleaned. Ask your installer to show the hot-climate yield assumptions and a cleaning plan, and confirm they’re on your utility’s approved list.

Frequently asked questions

Is there still a federal solar tax credit in 2026?

Not for homeowners who buy. The 25D credit ended for systems completed after December 31, 2025. You can still claim it for a system finished in 2025, and unused credit carries forward. Leased or PPA systems may still pass on value, because the company that owns the panels can claim a business credit.

Which states still offer a solar tax credit?

New York (25%, up to $5,000), Massachusetts (15%, up to $1,000) and Arizona (25%, up to $1,000) are three we confirmed. Other states have credits too, and some change every year, so check your state revenue department and the DSIRE database.

Do I need to apply for the property tax exemption?

Often yes, but it varies. Texas guides point to Form 50-123 with your appraisal district, and New Jersey requires a certificate from your local assessor. Sources disagree on Florida, so ask your county property appraiser. Ask your installer who files, and get it in writing.

Can I claim state incentives if I lease my panels?

Usually the system owner claims them. New York is an exception: its tax department allows the credit for a lease, or a power purchase agreement of at least ten years. Elsewhere, assume the leasing company keeps the incentives unless your contract says otherwise.

Are there solar rebates in the Gulf countries?

Mostly no. Shams Dubai gives no direct subsidy, but net metering cuts your bill. Oman pays for exports under Sahim, and Bahrain gives energy credits instead of cash. A 2026 regulatory summary reports no retail net metering in Qatar or Kuwait. Check with your utility.

Bottom line

The big federal credit is gone for new buyers, which makes the small, local items worth chasing. Before you sign, ask four questions: which credits, exemptions and rebates apply here, who files each one, when, and what proof is needed. Then put the deadlines on your calendar.

Disclaimer: This article is general information, not tax, legal or financial advice. Figures are estimates based on the sources below, as of October 2026. Incentives, rates and deadlines change often and differ by location. Get quotes from licensed installers and confirm details with your tax authority, utility or local council.

Sources

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