The desire to save on energy bills is driving the trend toward solar panels, first and foremost. Also, capturing the sun's power with your own system gets you a degree of independence from the local grid. It is environmentally smart and furthers everyone's goal of American energy independence as well.

But goals and desires are one thing, while incentives are another. At the federal level and in many states and cities there are concrete financial incentives that any prospective home producer of solar power needs to know about.

In this article we cover:

  • Federal tax credit
  • State tax credit
  • Rebates
  • Renewable energy certificates
  • Performance-based incentives
Get A Free Solar Quote Now

Federal Solar Investment Tax Credit

Under the Federal Solar Investment Tax Credit (ITC) program, all Americans who owe federal taxes can deduct from their tax return a portion of the cost of installing solar panels, thus lowering the taxes they owe that year. It pays to get in on the program now because the ITC is worth 26% of your solar project costs in 2020, then 22% in 2021. The credit expires in 2022.

Incentives in Your State

Your state might offer a tax credit that works similarly to the federal one. How much money you can save varies by state (some programs are quite lucrative), but the general idea is that you can deduct part of the cost of your solar system from your state taxes. Use the search tool at to find out what's available to you.

Cash Rebates

Some states, municipalities, and utility companies offer cash rebates to encourage the production of solar energy. Rebates can reduce your system costs by 10 to 20 percent. Such programs usually expire once a region reaches its solar energy milestones, so early adopters are the ones who win.

Solar Renewable Energy Certificates

In some states you can sell the extra solar energy you capture to utility companies, who need it to make up a shortfall in their own production. The output from your system earns you Solar Renewable Energy Certificates (SRECs). Utility companies buy the certificates to close the gap between what the state requires them to produce and what they actually produced. The value of an SREC fluctuates wildly depending on location, and supply and demand.

Performance-Based Incentives

PBI policies pay based on the actual energy produced by the solar system over a certain period, rather than a single rebate at installation. PBIs have proven effective in getting installers and owners to focus on good installation and maintenance. A meter on the system tracks the power, and payments are made accordingly. For example, in California the incentives are paid monthly for five years (60 payments) based on actual meter readings.

Buying vs. Leasing

Only those who buy their solar panel system with cash or a solar loan are eligible for the financial incentives we mention in this article. By contrast, the benefits from a leased system go entirely to the third-party owner.


  • Incentives abound for home owners who jump on the solar power bandwagon.
  • Buy, don't lease. To the owner go the spoils.
  • Enter your ZIP at to look up what's available in your region.
Get A Free Solar Quote Now