Incentives for Rooftop Solar

What incentives are available for rooftop solar?

Federal and local incentives can have a big impact on the cost of going solar. Below, we cover a few of the most commonly available incentives.In some cases, you may qualify for additional financing options, grants, or rebates based on local and state policies.

Federal solar investment tax credit (ITC)

This tax credit currently provides 26% off the total cost of your solar installation. You still have to pay up front for the system, but you will receive a 26% credit when you file your taxes. This declines to 22% for systems placed into service in 2021 and ends for systems placed into service in 2022 and beyond. This tax credit only applies to federal income tax. The tax credit is not refundable, meaning that you can’t receive more money back than you paid. However, if you don’t owe enough in taxes to use the credit when you go solar, the IRS allows you to spread the tax credit out over several years, so you won’t lose out on your refund.

First passed in 2006, the ITC is the most impactful solar policy in U.S. history. It has led to an average of 54% annual growth in solar since it was enacted. It was designed to lower the cost of solar and jumpstart the solar industry. And it worked. Members of Congress from both major political parties voted for the ITC, and it was signed into law by President George W. Bush.

The federal solar investment tax credit (ITC) is currently scheduled to expire for residential systems after 2021. The chart below shows how much of the tax credit will be available for homeowners through 2022.

  • 26% for systems placed in service in 2020
  • 22% for systems placed in service in 2021

ITC chart

State & Local Solar Incentives

Some locations offer state- or county-level incentives to residents who want to install solar. These may be cash grants, reduced permitting fees, or specialized assistance to low-income homeowners. A small number of utilities offer incentives for solar customers. You can learn more about solar incentives and unique financing options on our state pages.

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