Solar Incentive Types Explained: Rebates, SRECs, Net Metering, and More

Published April 9, 2026 · 6 min read

⚡ Key Points — Read This First

The 30% federal solar tax credit expired December 31, 2025. There is no direct federal incentive for homeowners who buy a solar system in 2026. See our Solar Tax Credits guide for the full picture.
Five other incentive types remain. Net metering, SRECs, state tax credits, utility rebates, and property/sales tax exemptions are all still active in varying forms depending on where you live.
Incentives stack. You can often combine two, three, or even four of these at once. A New Jersey homeowner can have full retail net metering, SRECs, a property tax exemption, and a sales tax exemption simultaneously.
Location matters more than it ever did. Without the federal credit as a baseline, the difference between the best and worst states for solar incentives is now very large.
Use DSIRE to find your programs. The Database of State Incentives for Renewables and Efficiency at dsireusa.org is the authoritative source for what is available in your state.

Most homeowners who look up solar incentives find one big number: the 30% federal tax credit. That credit is gone as of 2026. But the conversation about solar incentives does not start and end with the federal government. Five distinct types of incentives remain active, and in some states they can be worth as much as the federal credit was — or more.

Understanding what each type of incentive is and how it works helps you ask the right questions when you get quotes. Installers do not always know about every program available in your area, and some incentives require you to apply separately. This guide covers each type clearly.

1. Net metering and net billing

Net metering is the policy that determines what you earn when your solar panels produce more electricity than your home uses. The excess flows to the grid, and your utility credits your account. What that credit is worth varies widely by state.

With full retail net metering, each kilowatt-hour (kWh) you export earns a credit equal to what you would have paid to buy that electricity. In effect, the grid acts as a free battery — you bank power during the day and draw it back at night at no extra cost. States with full retail net metering include New Jersey, Massachusetts, New York, Maryland, Connecticut, and most of the Northeast.

With net billing, you get paid less than retail for exports. California's NEM 3.0 program, the most prominent example, credits exports at 5 to 8 cents per kWh — far below the retail rate of 22 to 32 cents homeowners pay to buy electricity. Arizona and Nevada have moved in a similar direction. In these states, net metering is no longer a substitute for a battery. The financial gap between what you earn exporting power and what you pay to buy it back creates a strong incentive to store rather than export.

Net metering is often the most valuable ongoing incentive available to solar homeowners, and its terms have a larger effect on long-term savings than most one-time rebates.

2. Solar Renewable Energy Credits (SRECs)

An SREC is a tradable certificate that represents one megawatt-hour (MWh) — or 1,000 kilowatt-hours — of solar electricity your system produces. You earn one SREC for every MWh of generation. You can then sell those SRECs to utilities, which are required by state law to buy a certain amount of solar-generated power each year to meet their Renewable Portfolio Standard (RPS) targets.

SREC programs exist in only eight states and Washington DC: Delaware, Maryland, Massachusetts, New Jersey, Ohio, Pennsylvania, Virginia, and DC. If you do not live in one of these states, SRECs are not available to you. But if you do, they can add meaningful ongoing income on top of your bill savings.

The value per SREC varies significantly by state, driven by supply, demand, and how strict each state's RPS requirements are. A typical 8 kW home system might produce 7 to 10 SRECs per year depending on location. At current approximate prices, annual SREC income could look like this:

Washington DC: ~$330/SREC — 8 SRECs × $330 = roughly $2,640/year
Massachusetts: ~$315/SREC — roughly $2,520/year
New Jersey: ~$215/SREC — roughly $1,720/year
Maryland: ~$55/SREC — roughly $440/year
Virginia / Pennsylvania: ~$40–$45/SREC — roughly $320–$360/year
Ohio: ~$4/SREC — minimal value

SREC prices move with market conditions and can change significantly from year to year. They are not guaranteed. To sell your SRECs you register your system with your state's tracking system (often PJM-GATS for Mid-Atlantic states) and use a broker or aggregator such as SRECTrade or Sol Systems. Your installer should handle registration for you — if they do not, ask about it.

One important note: SRECs only belong to the owner of the solar system. If you lease your panels or sign a Power Purchase Agreement, the leasing company owns the SRECs, not you.

3. State tax credits

Several states offer their own income tax credits for solar, separate from the now-expired federal credit. These work the same way: you calculate a percentage of your installation cost and subtract it directly from the state income taxes you owe.

Active state solar tax credits in 2026 include:

New York: 25% of installation cost, up to $5,000
Massachusetts: 15% of installation cost, up to $1,000
South Carolina: 25% of installation cost, up to $3,500
Utah: 25% of installation cost, up to $1,600
Montana: Up to $500

These credits are non-refundable in most states, meaning they can reduce your state tax bill to zero but will not generate a cash refund. If your state tax liability is smaller than the credit, you may be able to carry the remaining credit forward to future tax years. Confirm the rules with a tax advisor in your state.

4. Utility and state rebates

Rebates are upfront payments that reduce your installation cost directly. They come from three sources: utilities, state agencies, or both.

Utility rebates vary enormously and are funded by each utility separately, so availability depends on who your electricity provider is. Some programs are generous; others are modest or no longer active. New York's NY-Sun program, administered through NYSERDA, offers upfront incentives based on system size and location that can be worth thousands of dollars. Massachusetts has a similar program through the Solar Massachusetts Renewable Target (SMART) program. Several utilities in the Pacific Northwest offer per-watt rebates as well.

Rebates are often first-come, first-served and limited by annual funding caps. A program that is active when you start shopping may be depleted by the time you are ready to install. Ask your installer to confirm current availability, and check DSIRE directly rather than taking an installer's word for it.

5. Property and sales tax exemptions

These two exemptions work quietly in the background but can add up to real money over time.

A property tax exemption means that the added value solar brings to your home is not included in your property tax assessment. Solar typically increases a home's value by 3 to 5 percent — on a $400,000 home, that is $12,000 to $20,000 of added value. Without an exemption, that increase would raise your property tax bill each year. Most states with strong solar markets offer this exemption, including New York, New Jersey, California, Florida, Texas, Massachusetts, and Arizona.

A sales tax exemption means you do not pay state sales tax on solar equipment and installation. In states with a 6 to 10 percent sales tax, this can save $1,000 to $3,000 on a typical installation. States offering full sales tax exemptions on solar include New York, New Jersey, Florida, Arizona, Colorado, and Massachusetts, among others.

Neither exemption requires any application or ongoing action on your part. They apply automatically when you file your property taxes or pay for installation. They are also among the most stable incentive types — they rarely disappear overnight the way rebate programs can.

How to stack multiple incentives

These five incentive types are not mutually exclusive. In the best-incentivized states, a homeowner can combine several at once. Here is an example of how they stack in New Jersey:

Net metering: Full retail credits for all excess generation
SRECs: ~$215/SREC, roughly $1,700/year for an average system
Property tax exemption: Full exemption on added home value
Sales tax exemption: No state sales tax on equipment and installation

New York stacks similarly but swaps SRECs for the NY-Sun upfront rebate and a 25% state tax credit up to $5,000. Massachusetts offers SREC income, a state tax credit, utility rebates through SMART, and strong net metering. These states are genuinely different from states like Georgia or South Carolina, where incentive programs are sparse and solar economics depend primarily on electricity rates and sun hours alone.

Where to find what is available in your state

The best single source is DSIRE (Database of State Incentives for Renewables and Efficiency), maintained by NC State University with US Department of Energy funding. It lists every active state and utility incentive program by state, updated regularly. Search by your state and filter for "solar" and "residential" to see what is currently available.

When you get installer quotes, ask each installer to list every incentive you are eligible for. A good installer will include this in their proposal. If they do not, or if the list seems short, cross-reference with DSIRE before signing.