What Incentives, Rebates, or Tax Credits Are Available for Solar in Texas (2026 Update)
Texas homeowners continue to explore solar as electricity costs rise and grid reliability remains a concern. But let’s be real: the main driver for most people isn't just "going green"; it’s stopping the financial bleeding from the utility company. The smart play involves the solar tax credit, specific tax exemptions, and understanding how local incentives actually work.
This guide explains what solar programs and incentives are available in Texas in 2026, how they work, and how homeowners can use them correctly when considering solar.
Overview of Solar Incentives Available in Texas for Homeowners
Texas solar incentives come from multiple sources rather than from a single statewide rebate program. You won't get a single check from the Governor, but you can stack benefits from the Feds, the State, and (sometimes) the utility to make the numbers work.
Texas does not offer a single, statewide solar rebate for residential systems. Incentives vary based on where you live, your utility provider, and how your solar system is structured.
Common solar incentives available to Texas homeowners include:
The federal solar tax credit (The big one)
Property tax exemptions for solar systems (The hidden gem)
Sales tax exemptions on solar equipment
Utility-based solar buyback plans (Crucial for CenterPoint customers)
Limited local solar rebates in select cities
Understanding how these incentives stack together is key to estimating real savings.
Federal Solar Tax Credit for Texas Homeowners in 2026
The federal solar tax credit remains the most valuable incentive available to Texas homeowners. It applies statewide and does not depend on your utility company.
What Is the Federal Solar Investment Tax Credit (ITC)
The federal Solar Investment Tax Credit allows homeowners to claim a portion of their solar installation costs as a tax credit on their federal income taxes.
Under current law, this incentive is officially called the Residential Clean Energy Credit. It applies to new solar systems installed on primary or secondary residences located in the United States. This isn't a deduction that lowers your taxable income; it's a credit that directly reduces the taxes you owe.
Solar Tax Credit Percentage and Eligibility in 2026
In 2026, the federal solar tax credit remains set at 30 percent of eligible project costs. This rate was extended under the Inflation Reduction Act, meaning the government effectively pays for nearly a third of your system.
To qualify:
You must own the solar system (Leasing usually disqualifies you from this specific credit)
The system must be installed in a home you own
The system must be placed in service during the tax year you claim
There is no maximum cap on the credit amount for residential systems.
What Solar Costs Qualify for the Federal Tax Credit
The solar tax credit applies to most major system components and installation costs.
Eligible costs include:
Solar panels and inverters
Racking and mounting equipment
Electrical work and wiring
Labor and permitting fees
Battery storage when paired with solar or installed later (3kWh+ capacity)
Routine maintenance, roof repairs unrelated to solar, and financing interest are not eligible.
Texas Property Tax Exemption for Solar Energy Systems
Texas offers a statewide property tax exemption for residential solar installations. This incentive prevents solar systems from increasing your taxable home value.
How the Texas Solar Property Tax Exemption Works
When solar panels are installed on a home, they typically increase its property value (a major selling point). In Texas, that added value is excluded from property tax calculations.
This means homeowners benefit from higher home value without paying higher property taxes because of solar. The tax man can’t penalize you for upgrading your power.
How to Apply for the Property Tax Exemption in Texas
Homeowners must apply through their local appraisal district using the Texas Comptroller solar exemption form (Form 50-123).
The exemption is not automatic. Filing early helps ensure the solar system is excluded from future tax assessments.
Sales Tax Exemption on Solar Equipment in Texas
Texas also exempts solar energy equipment from sales tax.
Solar panels, inverters, and related equipment are exempt from state sales tax. Installation labor is generally not taxed in Texas if it is correctly separated on the invoice.
This exemption lowers the upfront system cost and reduces the total amount subject to the federal solar tax credit calculation. It’s an immediate 8.25% savings on the hardware.
Local Solar Rebates and Utility Incentives in Texas
Local solar rebates in Texas are limited and vary widely by utility service area. This is where geography matters.
City and Utility Solar Rebates in Deregulated Areas
In deregulated markets such as the Houston area, you won't get a check in the mail from the utility, but incentives do exist.
CenterPoint Energy Solar Incentive (The "Hidden" Discount) CenterPoint Energy offers a specialized incentive for residential solar (Standard Offer Program).
How it works: They provide an incentive of approximately $135 per kW to approved service providers.
The Catch: You cannot claim this yourself. You must work with a registered installer (like Hello Solar) who applies for the funds and passes them to you as a discount on your final invoice.
Warning: If an installer doesn't mention this, they might be keeping the money for themselves. We ensure this credit is applied to your project.
Utility Incentives in Regulated Markets
Some regulated utilities offer structured incentive programs.
Examples include:
Austin Energy: Offers a specific residential rebate (currently ~$2,500) for customers who complete their solar education course and use approved installers.
CPS Energy (San Antonio): While they have offered robust rebates in the past, in 2026, their focus has shifted mainly to commercial incentives. Residential availability is limited or nonexistent, depending on funding cycles.
Note: These specific rebates are for Austin and San Antonio residents only. If you are in the Greater Houston area (CenterPoint territory), these particular programs don't apply to you, but the CenterPoint incentive mentioned above does.
These programs have funding limits, waitlists, and technical requirements that vary year to year.
Net Metering and Solar Buyback Plans in Texas
Texas does not have a statewide net metering policy.
Does Texas Have True Net Metering
Accurate net metering, where exported solar energy offsets consumption at full retail rates, is not mandated in Texas.
Instead, homeowners use solar buyback plans offered by retail electric providers. This is the "Texas Twist" on solar savings.
How Solar Buyback Plans Affect Your Savings
Buyback plans vary by provider and contract terms. Export credits may be lower than retail rates and can change over time.
Understanding buyback limits, rollover rules, and credit caps is essential when estimating long-term solar payback periods. This is why we audit your usage before recommending a plan—picking the wrong one can leave money on the table.
Battery Storage Incentives and Tax Credits in Texas
Battery storage has become more common as homeowners seek backup power during outages.
Federal Tax Credit for Solar Batteries in 2026
Battery systems qualify for the federal solar tax credit when installed with solar or added later.
Standalone batteries are also eligible under current rules, provided they meet capacity requirements (3 kilowatt-hours or greater).
Are There Texas State or Utility Battery Incentives
Texas does not offer a statewide battery rebate for residential systems. Some local pilot or virtual power plant (VPP) programs may exist in which the grid pays you to use your battery, but availability is limited.
Are Solar Incentives Taxable in Texas
Federal Solar Tax Credits are not considered taxable income; they are a credit against taxes owed.
Property tax exemptions and sales tax exemptions do not create taxable events. Utility bill credits from buyback plans may be treated differently depending on usage and billing structure, but, in general, they are considered a utility bill reduction, not income.
Homeowners should consult a tax professional for individual situations.
Common Mistakes Homeowners Make With Solar Tax Credits
Many solar savings issues stem from misunderstandings about how incentives work.
Common mistakes include:
Assuming the tax credit is a cash rebate (It’s not a check in the mail).
Overestimating buyback plan value (Not all plans pay 1:1).
Missing filing deadlines or forms.
Assuming every home qualifies for the same incentives.
Accurate planning prevents surprises during tax season.
Is Solar Worth It in Texas After Incentives in 2026
Solar can be worth it in Texas, but results depend on home-specific factors.
How Incentives Impact Payback Period in Texas
The federal solar tax credit significantly reduces the net system cost. Property and sales tax exemptions further improve long-term value.
Payback periods vary based on energy usage, system size, and utility pricing.
Factors That Affect Solar Savings in Houston Homes
Key factors include:
Roof orientation and shading
Electricity usage patterns
Utility rate structure
Buyback plan terms
Battery inclusion
A personalized analysis provides the most accurate answer.
How to Claim Solar Tax Credits and Incentives in Texas
Claiming incentives requires proper documentation and timing.
Documents You Need to Claim the Solar Tax Credit
Most homeowners need:
Final solar installation invoice
System completion certificate
IRS Form 5695
Proof of payment
When Homeowners Receive the Tax Credit Benefit
The solar tax credit is applied when filing federal taxes for the year the system is placed in service. Unused credit can be carried forward to future tax years.
How Hello Solar Helps Homeowners Maximize Solar Incentives
Hello Solar helps homeowners understand available programs without sales pressure. We aren't here to sell you a pipedream; we're here to fix your bill.
Services include:
Incentive eligibility review
Program comparison across ownership models
Utility and buyback plan analysis
Connection to 2026-verified installer networks
This approach helps homeowners make informed decisions based on real numbers.
Get a Custom Solar Incentive Review for Your Texas Home
Every Texas home is different. Incentives, utility rules, and savings potential vary by location and usage.
Hello Solar offers free consultations to review solar tax credits, exemptions, and buyback options for your home. Contact Hello Solar for a personalized assessment provides clear expectations before moving forward.
FAQs
1. How much is the solar tax credit in Texas in 2026, and who qualifies
In 2026, the federal solar tax credit allows eligible Texas homeowners to claim 30 percent of the cost of a qualified solar installation as a credit on their federal income taxes. Homeowners qualify if they own the solar system, install it on a home they own, and place the system in service during the tax year. The credit applies statewide and does not depend on your utility provider.
2. Does Texas offer any state solar rebates or incentives for homeowners
Texas does not offer a single statewide solar rebate for residential systems. Instead, homeowners rely on a combination of federal tax credits, property tax exemptions, sales tax exemptions, and limited local or utility-based programs. Availability of local solar rebates depends on your city and utility service area, and many places do not offer upfront cash incentives.
3. Are solar batteries eligible for the solar tax credit in Texas
Yes. Battery storage systems are eligible for the federal solar tax credit in Texas. Batteries qualify when installed with solar or added later, as long as they meet federal eligibility requirements. The credit applies to battery equipment and installation costs included in the project.
4. Is net metering required for solar utilities in Texas
No. Texas does not have a statewide net metering requirement. Instead, solar homeowners use solar buyback plans offered by retail electric providers. These plans vary by provider and contract terms, and exported energy may not be credited at full retail rates.
5. Do I get the solar tax credit as a refund or a rebate check
The solar tax credit is not a rebate or cash payment. It is a nonrefundable federal tax credit that reduces the amount of income tax you owe. If the full credit cannot be used in one year, the remaining amount can be carried forward to future tax years until it is fully applied.
