Solar energy rebates: Best and worst states

Key Takeaways

• The best state for solar energy rebates is California, with states like New York, Massachusetts, Connecticut, and Maryland not far behind.

• Rebates provide cash payments towards the cost of solar technology, rather than tax credits.

• Some states like North Dakota, West Virginia, and Arkansas lack any state-level solar rebates.

There are several types of incentives provided by public and private entities to help reduce the out-of-pocket cost of solar energy systems. Rebates are one of the most direct financial incentives, which can really help with the cost of solar panels. 

When it comes to solar energy rebates, some states are well ahead of the curve, while others lag behind. In this guide, we cover the ins and outs of solar rebates as well as the states that offer the most—and least—generous rebates in the country.

What are solar rebates?

Solar rebates are a form of government incentive that issues cash payments to homeowners who purchase eligible solar equipment or services. Let’s say your state offers a 10% rebate for buying solar panels, and you purchase a set of panels for $12,000. The relevant state agency would send you a payment of $1,200, bringing your out-of-pocket cost down to $10,800 (before federal tax credits and other incentives are applied).

These rebates vary by state. Some states offer generous benefits that make solar energy equipment substantially more affordable. Others provide a smaller rebate. Some states don’t provide rebates at all.

Solar rebate vs. tax credit

Solar rebates and tax credits both share the goal of encouraging people to buy solar panels. But whereas solar rebates pay cash back to the homeowner, tax credits are applied when you file taxes.

To give an example, we’ll use the federal government’s Residential Clean Energy Credit (RCEC) of a 30% tax credit. This credit covers up to 30% of the cost of solar energy equipment and services as a credit on your federal taxes. That means if your solar energy system costs you $12,000, you would be eligible for a $3,600 tax credit. If your tax obligation to the IRS is $8,000 for the filing year, the RCEC would lower that obligation to $4,400. 

Who offers solar energy rebates?

There are several types of entities that offer solar energy rebates. These entities operate in both the private and public sectors.

Federal government

Anyone who owns a home in the U.S. is eligible for the RCEC, which is run through the IRS. Although not an actual rebate, we’re still including it here because we don’t want anyone to miss out on the opportunity. This 30% tax credit has broad eligibility for solar energy equipment, which has recently been expanded to include solar batteries and services like installation, consulting, and maintenance. 

The federal government currently has plans to gradually reduce the amount covered by the RCEC. Beginning in 2033, the RCEC will only cover 26% of solar-related costs, and that drops to 22% in 2034. 

State governments

While most state solar incentives come as tax credits, some states also offer valuable rebates for installing solar panels. Later in this article, you'll find some of the best and worst examples of state solar rebate programs, including those in places like California and New York. Since these incentives can change frequently, it's always smart to visit your state’s official government or energy department website for the latest information on available solar rebates.

Local governments

Many city and county governments also offer their own solar rebate programs, in addition to state-level incentives. These local rebates can change frequently, so it's important to visit your local government's official website for the most current information. You might also find updates on programs from your municipal utility company or county office. Always check these sources to see if there are any solar incentives available in your area.

Non-profit organizations

You'll also find that various non-governmental organizations (NGOs) across the United States offer rebates and incentives for solar energy investments. Many of these programs specifically target low-income households and underserved communities, making solar power more accessible. Groups like GRID Alternatives and the Solar Energy Industries Association (SEIA) are key players in providing these opportunities.

Utility providers

You might also find solar rebates offered by your local utility company, which can be a pleasant surprise. Major energy providers like PG&E, Con Edison, or Duke Energy often benefit when customers in their service area invest in solar power. When you install grid-tied solar panels on your home, you’re essentially upgrading the power grid’s infrastructure at your own expense. 

Plus, widespread solar adoption eases demand on the electrical grid, helping utilities avoid shortages and prevent blackouts during peak usage. So, it’s worth checking with your local energy provider for any available solar incentives or rebate programs.

Best states for solar energy rebates

Some states have made providing rebates for their residents to make the move to solar energy a real priority. The following five states offer the best rebate programs, based on our research.

1. California

The state of California is currently one of the leaders in incentivizing residents to invest in renewable energy. California homeowners have access to a wide range of rebates. Some are reserved specifically for low-income households, such as the DAC-SASH program, which provides up to $15,000 in solar rebates.

The generous rebates available at the state and local levels, combined with a robust net billing policy, make solar energy much more widely accessible in California than in most states. Therefore, it should be no surprise that California leads the nation in solar capacity.

2. New York

New York is another state that provides generous incentives to encourage its residents to adopt solar energy, including rebates. The NY-Sun Initiative gives cash rebates to homeowners based on the size of the system and provides additional incentives based on the performance of their system. Homeowners can also take advantage of a 25% New York state tax credit with a maximum credit of $5,000.

3. Massachusetts

Homeowners in Massachusetts also have a number of incentives available to help pay for solar energy. The state’s SMART program offers incentives based on system performance, meaning the more energy one’s solar equipment produces, the higher the rebate. 

Massachusetts also provides additional benefits for homeowners in low-income areas of the state, plus bonuses for integrating solar batteries. While not a rebate, solar adopters can also get property tax exemptions for their solar equipment, including supplemental equipment like solar charge controllers and solar inverters, in addition to the panels themselves. 

4. Connecticut

Connecticut provides direct rebates to homeowners who invest in solar technology through the Residential Solar Investment Program (RSIP). Rebates are determined by system capacity, paid on a per-kilowatt basis. The program also pays higher rates to moderate- and lower-income households.

5. Maryland

The Maryland Solar Access Program (MSAP) is one of the more generous incentive programs in the country for solar investment. Although the Maryland state government uses the term “grant” to describe the incentive, it effectively functions as a rebate that pays out $750 per kWh in system capacity up to $7,500. MSAP rebates have income restrictions for grant eligibility, but income limits start at just over $124,000 for a single-person household and scale based on household size.

Worst states for solar energy rebates

While many states have introduced programs to encourage more widespread renewable energy adoption, some states have been reluctant to do so. If you live in one of these states, you might want to avoid solar panels.

1. North Dakota

Currently, there are no major rebate programs at the state level for homeowners in North Dakota. In fact, the state doesn’t provide much in the way of tax credits or any other incentives either. This lack of support is probably why North Dakota has one of the lowest solar adoption rates of any state in the nation.

2. West Virginia

At this time, there are no state-level rebate programs in West Virginia for solar energy investments. We were unable to find any significant incentives from local governments or utility providers, either. As a result, less than 1% of the energy in West Virginia comes from solar equipment.

3. Arkansas

Arkansas doesn’t offer any state-backed rebates or other incentives for residential solar adoption. Recently, residents of the state have even less support for investing in solar technology. While the state had a net metering program in place for years, it recently transitioned to a net billing system, which typically is not as beneficial for homeowners.

4. Wyoming

Despite vast swaths of wide-open spaces that would be ideal for capturing sunlight, solar adoption has been slow in Wyoming. That is likely in part due to the lack of state-level rebates or other solar incentives to help make solar technology more affordable for residents of the state.

5. Nebraska

Nebraska does not offer any state-level rebate programs for solar energy investments. It doesn’t offer tax rebates either. The only support for Nebraska homeowners looking to add solar technology to their homes comes in the form of loan assistance programs. These programs help keep interest rates low and solar financing accessible, but they do not provide any direct financial support towards the cost of solar energy systems.

Other factors that make solar worth it (or not)

There’s more to consider when evaluating the value of investing in solar energy for your home than just the upfront cost and available rebates. Key factors include:

• Energy costs: A solar energy system can significantly reduce your monthly utility bills—or even eliminate them. Think of it as choosing between a one-time investment and spreading costs out through monthly financing instead of continuing to pay your utility company indefinitely.

• Solar availability: The amount of sunlight your property receives directly affects how much energy your panels can generate and how much you’ll save. Because solar exposure varies by region due to climate and seasonal light patterns, this factor is especially critical if you're aiming to build an off-grid solar energy system.

• Roof structure: The size, shape, and material of your roof influence what solar equipment you can install and how many panels it can support. These factors impact both your energy savings and payback period. In some cases, rebates may cover solar shingles—roof-integrated panels that resemble traditional materials—offering a more aesthetic or practical alternative.

• Net metering policy: Net metering allows you to send excess solar energy back to the grid in exchange for energy credits, increasing the return on your system. Where this policy is available, the financial benefits of solar are significantly greater.

• Payment options: Financing your solar system introduces loan interest, which adds to the total cost and may affect your overall return. However, many financing options feature low interest rates, making solar a strong long-term investment despite the added expense.

Bottom line on solar energy rebate opportunities

Rebates for solar energy purchases can meaningfully reduce your out-of-pocket cost to invest in a system for your home. Depending on where you live and sometimes, certain demographic factors, solar energy rebates may be available from government, non-profit, and commercial entities. 

In addition, many of these rebates can be combined with tax credits and other incentives to make a solar panel system far more affordable for many more people. Spend the time to research the rebates and other incentives available to you so that you don’t miss out on what is essentially free money for investing in clean, renewable energy.

FAQ about solar energy rebates

Below are a few frequently asked questions about solar rebates:

Is there still a federal rebate for solar?

There isn’t technically a federal rebate for solar investments, but there is a federal tax credit through the Residential Clean Energy Credit. This tax credit covers up to 30% of the cost of qualified solar energy purchases through a reduction in the taxes you owe to the IRS. It’s important to note that you can only use this credit if you purchase your solar equipment. It isn’t applicable if you lease solar equipment.

Do you actually get money back from the solar tax credit?

You don’t get money back from a solar tax credit like you do with a solar rebate. Tax credits work by reducing the taxes you owe. For example, if you owe $4,500 in income taxes and you get a tax credit of $1,500, that credit counts as a payment towards your tax obligation, reducing it to $3,000. However, if you already paid $4,500 in taxes through your employer that year, the credit can be included in your tax refund.

How many years can I claim the solar tax credit?

You can claim the solar tax credit as long as you have a partial credit to claim. For example, say your tax credit was $10,000, but you only owed $5,000 in taxes. You can claim $5,000 on your current tax bill and another $5,000 on next year’s.

Will the government pay for my solar?

Government incentives can help pay for your solar equipment and the services to install it through tax credits and rebates from federal, state, and local agencies. How much of your solar panel system these incentives pay for depends on the government programs available in your area.