Texas Solar Tax Credits, Incentives and Rebates (2024)

Texas does not have a statewide solar rebate program for homeowners, but it does offer a property tax exemption for residential and commercial renewable energy systems.

Renewable Energy Systems Property Tax Exemption

• Incentive Value: Equal to 100% of your property tax value, including the assessed value of your solar power system
• Frequency: Annual tax exemption

If you install a solar energy system in Texas, you will not pay taxes for any corresponding increase in your home’s property value. For example, if a property owner in San Antonio has a $350,000 home and installs a $25,000 solar panel system, the city would calculate their property taxes at $350,000, not $375,000.

Depending on your exact location in Texas, solar incentives may be available from local governments or your utility company. The following are some of the largest solar incentive programs offered throughout the Lone Star State:

The table above covers the largest solar incentive programs in Texas. However, the state has a large number of municipal utility companies and electric cooperatives that operate in specific regions. If you’re considering rooftop solar and receive electricity from a small power company, check online to make sure you aren’t missing any financial incentives.

How To Claim Local Incentives

The solar incentive programs available in Texas are managed by different electric companies and eligibility requirements vary. Generally, these incentives are only offered through approved contractors.

Net metering is a solar buyback program that credits you for any excess energy your solar panels produce and send back to the grid. You can then use those credits towards future energy bills. Texas does not have a statewide net metering policy, but there are many retail electric providers with solar buyback plans. The benefit is also offered by some municipal power companies, such as Austin Energy.

Since net metering programs in Texas are managed by different electric companies, technical requirements and compensation rates vary.

The federal solar investment tax credit (ITC) is a nationwide incentive established by the federal government in 2006. After installing home solar panels, you can claim a federal tax credit equivalent to 30% of your system costs. For example, if you buy a 10 kilowatt (kW) system for $33,000, your tax credit would equal $9,900.

It’s important to note that the ITC is a tax credit, not a refund or rebate. You can claim the credit the year you install your solar system by applying it to your federal income tax burden. If you don’t use the full amount, you can roll any remaining credit over for up to five years.

You can also combine this benefit with state tax incentives and other local programs, reducing the upfront cost of your home solar system. You can also claim the credit for other energy efficiency upgrades such as purchasing an electric vehicle.

Texas is one of the sunniest states, as you can see on the World Bank Global Solar Atlas, and ranks second in the country for solar power. Say a typical 6 kW home solar system generates over 9,500 kWh of energy per year under favorable site conditions, and residential customers in Texas pay an average electric tariff of 14.26 cents per kWh, according to the U.S. Energy Information Administration. Based on these figures, 9,500 kWh of solar generation could save you over $1,350 in electric bills in Texas each year.

According to a 2022 study by the National Renewable Energy Laboratory (NREL), residential solar systems have a market price of $2.95 per watt in the U.S. This means that a typical 6 kW solar panel installation costs around $17,700. Here’s how solar incentives can help lower your system cost in Texas:

• You can claim the 30% solar federal tax credit — worth $4,410 in this case — and your project cost decreases to $13,290.
• Assuming you can claim additional incentives through one of the programs available in the state, your upfront cost will drop even more. For example, the AEP Texas SMART Source Solar PV Program would drop your cost by another $3,000, bringing your total to $10,290.

A home solar system with a net cost of $10,290 and annual savings of $1,350 has a payback period of seven to eight years. Plus, high-quality solar panels have a warranty of up to 30 years, which means the payback period is only a small fraction of their lifespan.

The incentive opportunities and abundant sunlight make it attractive to go solar in Texas, but choosing one of the many solar installers available can feel overwhelming. We have compiled a list of the top solar companies in Texas based on cost, financing options, services offered, reputation, warranty offerings, customer service, industry experience, and sustainability to make this process simple. Before making a final selection, we recommend getting quotes from at least three of the providers mentioned in the list below.

Texas has abundant sunshine, which increases the productivity of solar panels. In addition, many of the power companies operating in the Lone Star State have solar incentive programs, which you can combine with the federal tax credit to capitalize on savings for your solar project. Texas does not have a statewide net metering policy, but many local electricity providers offer the benefit. These factors make it worth it for homeowners to make the switch to solar in Texas.

Each incentive program has its own conditions and eligibility requirements. However, the best solar companies are familiar with the application process of each program and can check to see if your solar installation qualifies.

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