Texas Solar Incentives, Tax Credits And Rebates Of 2024

In addition to the major federal solar tax credit, Texans can take advantage of several Texas solar programs at the state and local level.

Federal Solar Tax Credit

While there is no Texas state solar tax credit, everyone in the Lone Star State—and throughout the United States—is eligible for a non-refundable tax credit when they install solar panels on their home. This federal tax credit, which is called the Investment Tax Credit (ITC), is worth 30% of the total cost of installation when you file your taxes.

For instance, if your total solar panel installation cost is $15,000, you’ll be able to claim a $4,500 tax credit when you file the following year. However, the tax credit is nonrefundable, so if you get your tax liability down to $0, you won’t be able to pocket the remaining cash. Instead, you can roll over whatever’s left from the credit to future tax filing years, until you’ve used it all.

The Investment Tax Credit won’t be here forever. Under current law, it’s set to reduce to a 26% tax credit for the 2033 tax year. For 2034, it decreases again to 22%. And, unless Congress acts to extend the tax credit, it will no longer be available to homeowners starting in 2035.

Local Texas Solar Rebates

Texas lacks statewide solar rebates, but instead, specific utility companies offer incentives that make the installation more worthwhile to certain residents of the Lone Star State. Below are some of the most popular solar incentives in Texas:

• American Electric Power SMART Source Solar PV Program: Customers of AEP can earn a hefty rebate whose size depends on the size of the system, up to $3,000. Learn more about the AEP rebate.
• Austin Energy Solar Photovoltaic Rebates & Incentives: Customers of Austin Energy can earn a $2,500 rebate for installing a solar panel system, but to be eligible, they must also participate in a solar education course. Learn more about the Austin Energy rebate.
• Oncor Residential Solar Program: Oncor, which is the state’s largest electrical utility provider, offers a solar rebate to customers who install a qualifying solar system, including battery. Rebate amounts are unique to your specific installation, so you’ll want to learn more about the Oncor Residential Solar Program to see if you qualify and how much you’ll earn back.
• SMTX Solar PV Rebate: Customers of the San Marcos utility provider need to get pre-approved for the solar rebate program. Those who qualify can earn a rebate up to $2,500. Learn more about the SMTX Solar PV Rebate.

In addition, customers of CPS Energy and Denton Municipal Electric can get rebates for solar water heater installations; customers of Denton are also eligible for solar screen rebates.

Texas Property Tax Exemption for Solar Panels

Texas may not have any state income taxes, but its effective property taxes (set by local taxing units, not the state) are among the highest in the country. And because property taxes are based on the value of your property, you might be worried that installing solar panels in the Lone Star State will increase your tax bill. After all, solar panels increase your home’s value by roughly 4%, according to Zillow.

But Texas homeowners get a tax break when it comes to solar installations. Although they’ll likely increase your home’s value, the solar panels are exempt from property taxation.

Net Metering in Texas

Technically speaking, the state of Texas does not have a net metering program—one that lets homeowners sell extra energy generated from solar panels to utility companies in exchange for bill credits or payments. Instead, Texas leaves this to local utility companies, most of which allow Texas homeowners to participate in such a program.

Research your specific utility company’s program to understand how much money you could save on utilities—or even make in a given year—by selling your excess solar power.

The typical cost of solar panels in Texas is lower than the national average. A 6-kW system costs an average of $16,320 before the 30% federal tax credit. Costs will vary depending on the size of your system, brand of solar panels, shape and slant of your roof and local labor rates, among other factors.

Choosing the right solar system for your home in Texas depends on many factors. Start by analyzing the best solar companies in Texas and finding options within your budget. From there, focus on your preferred brand, the right size installation for your home’s energy needs and a solar system that will work with the size, shape and type of roof on your home.

Going solar in Texas offers three key benefits, including:

Financial Savings

Converting your home to solar power is a big upfront cost. There’s the cost of the solar panels themselves—and the solar battery, if you want to store energy—and then you’ll also need to budget for ongoing solar panel maintenance.

But with the wealth of Texas solar incentives available, the cost is much more manageable. And with the number of sunny days in Texas and the ability to store excess solar energy, you’ll likely be able to significantly reduce, if not eliminate, what you owe each month on your electric bill. And by participating in net metering, you can even sell excess energy to the utility company for bill credits or payouts.

In the long run, solar panels save you money, especially if you plan to be in your home for a decade or more.

Environmental Impact

Solar is a green, renewable energy source, whereas electricity generated from sources such as coal and natural gas is bad for the environment. By switching to solar, you not only reduce your carbon footprint, but you also enable your neighbors to do so, too—by sharing your excess solar power with utility companies.

Energy Independence

Powering your home with solar allows you to go off the grid. During power outages, like the 2021 Texas power crisis, homes with solar power stored don’t need to worry about losing power. Just make sure your solar installation includes a solar battery for proper storage.

Installing solar panels in Texas is well worth the investment. Texas is one of the sunniest states in the U.S. and offers a number of local incentives for installing solar systems. While you won’t find free solar panels in Texas, the cost to install them is lower than the national average. Working with a solar installer near you also means you’re propping up the Texas economy.

On top of the low cost and financial incentives, homeowners can make money by selling excess power to utility companies through net metering. Given increasing power grid uncertainty, solar panels and batteries also allow Texans to become energy-independent during crises.

You aren’t starved for choice when it comes to purchasing the best solar panels in Texas. The state has several solar panel companies to choose from. That means you can spend your time reading customer reviews online and speaking with friends, family, coworkers and neighbors who have made the switch to solar to get their feedback.

Consider brand preference, the size and shape of your roof and your budget when selecting the best solar company for your home.

Bottom Line

Solar panels can be an expensive upfront cost, but they offer tremendous savings over the years, allow you to become energy-independent and reduce your carbon footprint. And given the abundance of Texas solar incentives, the cost can be much more approachable. We recommend making the switch soon, while the federal solar tax credit (30%) is still available to Texans.