If you’re thinking about going solar, you’re not alone. Solar installations are growing by more than 25% annually as more homeowners recognize the financial and environmental benefits. Installing solar panels can cut your monthly energy bills and reduce your reliance on fossil fuels. Plus, solar is a long-term investment that pays off for both your wallet and the planet.
Thanks to a growing number of federal, state, and local incentives, solar energy is more affordable and accessible than ever.
Here’s a breakdown of everything you need to know about solar rebates, tax credits, and financial programs in 2025.
Federal Solar Tax Credit (Residential Clean Energy Credit)
One of the most valuable incentives is the Federal Residential Clean Energy Credit, which allows you to deduct 30% of your total solar installation cost from your federal taxes. This credit applies in the year your system is installed and paid for.
For example: If your solar system costs $15,000, you could claim a $4,500 tax credit.
What’s covered under the 30% tax credit:
Solar PV panels
Solar batteries
Geothermal heat pumps
Installation and labor
Permitting and inspection fees
Important: This credit only applies to systems that are purchased, not leased. It also only applies to your primary or secondary residence.
The 30% tax credit is valid through 2032, after which it will decrease:
25% in 2033
22% in 2034
State & Local Solar Incentives
Many states and cities offer additional programs to lower the upfront cost and maximize your return on investment. These include income tax credits, rebates, and property tax exemptions.
To see what’s available in your area, visit the DSIRE database, which lists all solar incentives by state and utility provider.
Here are some standout states:
🌞 Arizona
State Tax Credit: 25% of the system cost (up to $1,000)
Sales Tax Exemption: No sales tax on solar purchases
Property Tax Exemption: No property tax increase for adding solar
Net Billing: Get paid at wholesale rates for excess energy
Mojave Electric Rebate: $0.05 per watt (up to $2,500); battery rebate up to $500
🌞 Massachusetts
State Tax Credit: 15% of system cost (up to $1,000)
Sales & Property Tax Exemptions: Fully exempt
SMART Rebate Program: Ongoing payments based on energy production (especially with solar batteries)
Net Metering: Earn utility credits for surplus energy
🌞 New York
State Tax Credit: 25% of system cost (up to $5,000)
Sales & Property Tax Exemptions: Fully exempt
NY-Sun Program: Income-based incentives for solar + storage
Net Metering: Get monthly credits for excess solar generation
Utility Company Incentives
Some utility companies offer cash rebates or monthly bill credits to encourage solar adoption. These vary by location, but two common programs are:
Net Metering: Earn full retail-rate credits for extra electricity sent to the grid
Net Billing: Get paid wholesale rates for excess energy
Check with your utility provider or search the DSIRE database for the latest programs in your area.
Manufacturer & Installer Promotions
Solar panel manufacturers and installers often run their own seasonal promotions or rebate programs. These deals vary but can include:
Direct cash rebates
Discounted financing or leasing options
Zero-down installation offers
Ask your installer about any current promotions when getting quotes.
Financing & Leasing Options
To reduce upfront costs, many homeowners choose:
Solar loans with fixed monthly payments
Leases that allow you to use solar without owning it
Note: If you lease your system, you are not eligible for federal or most local tax incentives.
How to Apply for Solar Incentives
Step 1: Research
Check DSIRE or talk to a local contractor to learn what programs apply in your area.
Step 2: Paperwork
Many programs require pre-approval before installation. A qualified contractor can often help you with applications.
Step 3: Installation & Inspection
Use a certified solar installer to ensure your system qualifies for all available incentives.
Step 4: Claim Federal Tax Credit
Use IRS Form 5695 when you file your taxes. A tax preparer can guide you through the process.
Final Thoughts
Taking advantage of federal, state, local, and utility solar incentives can significantly reduce your solar installation costs and shorten your payback period.
Ready to go solar? Connect with local pros to get custom quotes and learn which incentives you qualify for.