If you’ve heard the federal solar tax credit is gone, you’ve heard correctly but that’s not the same as solar incentives disappearing entirely. The 30% Residential Clean Energy Credit expired for homeowner-purchased systems installed after December 31, 2025, and a lot of solar marketing hasn’t caught up to that fact yet.
What hasn’t gone away is a genuinely wide range of state solar incentives 2026 still offers, and in several states they’re substantial enough to keep solar’s financial case intact even without the old federal credit. Here’s what’s actually still on the table, state by state.
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Why State Programs Matter More Now
Before the federal credit expired, state incentives were often treated as a bonus on top of the guaranteed 30% federal discount. Now they’re doing a lot more of the heavy lifting on their own, and the difference between a state with strong programs and one without them has become a much bigger factor in whether solar pays off quickly or slowly.
It’s worth being clear about the two different types of incentives you’ll run into, since they work differently. Some reduce your upfront installation cost directly rebates and, in six states, a state-level tax credit similar to the old federal one. Others pay you over time based on how much clean energy your system produces. SREC sales and performance-based incentive programs. A state can be strong in one category and weak in the other, so it’s worth checking both rather than assuming one covers everything.
States With Their Own Solar Tax Credit
Six states currently offer a state-level tax credit functioning similarly to the expired federal credit: Arizona, Hawaii, Massachusetts, New Mexico, New York, and South Carolina.
South Carolina’s program stands out as one of the most generous in the country. It offers a 25% credit on total system cost, capped at $35,000, paid out at a maximum of $3,500 per year with any unused portion carried forward for up to 10 years. On top of that, South Carolina offers a 100% property tax exemption on the added home value from solar, applied automatically in most counties. Combined with a Santee Cooper utility rebate of $950 per kW installed (up to $5,700) and net metering available through Duke Energy Carolinas and other major providers, South Carolina’s typical payback period lands around 9-11 years even without the federal credit.
New York and Massachusetts both layer a state tax credit on top of genuinely strong performance-based programs (more on those below), making them two of the stronger overall states for solar economics in 2026 despite the federal change.
SREC Markets: Getting Paid for What You Produce
Separate from tax credits, six jurisdictions currently maintain active SREC (Solar Renewable Energy Certificate) markets: Washington D.C., Delaware, Maryland, Ohio, Pennsylvania, and Virginia.
The mechanism is straightforward: your system earns one SREC for every megawatt-hour of electricity it generates, and utilities purchase these certificates from homeowners to meet state renewable energy requirements. The price per SREC fluctuates with market demand, and homeowners typically register once with their state’s SREC administrator and then receive ongoing income tied to actual production, not a one-time payment.
Maryland’s program is a good example of how this stacks with other support: alongside its active SREC market, the state runs the Maryland Solar Access Program, which provides income-qualified households with incentives tied to system size, issued during defined application windows subject to funding limits.
Performance-Based Incentive Programs
A related but distinct category exists in Illinois, Massachusetts, Minnesota, and New Jersey, where “adder” or performance-based programs pay homeowners directly for production rather than through a certificate marketplace.
New Jersey’s SuSI (Successor Solar Incentive) program is widely considered one of the most generous ongoing incentives in the country, paying homeowners quarterly based on kWh produced for 15 years. This program is specifically credited with keeping New Jersey’s average solar payback period at roughly 7-8 years, essentially absorbing the loss of the federal credit almost entirely for many homeowners in the state.
Massachusetts runs a similar program called SMART, which adds a fixed per-kWh payment on top of standard electricity bill savings for 20 years. The 2026 base residential rate sits at $0.03/kWh, and this rate increases further for systems paired with battery storage, another example of a state actively encouraging the battery-plus-solar combination that’s become more financially important since California’s net metering changes made battery storage more valuable nationally.
Comparison Table: State Program Types at a Glance
| State/Jurisdiction | Program Type | What It Offers |
|---|---|---|
| South Carolina | State tax credit + property tax exemption | 25% credit (capped $35k), 100% property tax exemption on added value |
| New Jersey | Performance-based (SuSI) | Quarterly per-kWh payments for 15 years |
| Massachusetts | State tax credit + performance-based (SMART) | State credit plus $0.03/kWh adder for 20 years |
| New York | State tax credit | Additional state-level credit stacking with other incentives |
| Arizona, Hawaii, New Mexico | State tax credit | State-level credit similar in structure to the former federal credit |
| DC, Delaware, Maryland, Ohio, Pennsylvania, Virginia | SREC market | Ongoing income from selling renewable energy certificates |
| Illinois, Minnesota | Performance-based (Illinois Shines, Solar*Rewards) | Production-tied payments, structured similarly to rebate programs |
| California | Upfront rebate (SGIP) + net metering | Point-of-sale rebates for qualifying households, though NEM 3.0 has reduced export value |
This table reflects verified 2026 program structures; exact rates, caps, and eligibility windows change over time, so confirming current details through your state’s energy office or the DSIRE database (the national Database of State Incentives for Renewables & Efficiency) before installing is worth the time.
What About States With Weaker Programs?
Not every state has stepped up to fill the gap left by the federal credit’s expiration. Ohio’s situation is a useful example of a mixed picture: the state maintains an active SREC market and net metering through major utilities like AEP Ohio and Duke Energy Ohio, but without a state tax credit or strong performance incentive layered on top, typical payback periods run 12-15 years meaningfully longer than states with a fuller incentive stack.
If you’re in a state without a dedicated tax credit or strong performance program, it’s worth focusing specifically on two things: your utility’s net metering policy (full retail-rate net metering is significantly more valuable than avoided-cost or wholesale-rate compensation), and any utility-specific rebates, which exist independently of state-level programs and are easy to overlook.
How to Actually Check What Applies to You
The most reliable starting point is the DSIRE database, a federally-supported, continuously updated resource tracking incentive programs by state and utility. Since programs change, have funding caps, or operate during specific application windows (as with Maryland’s income-qualified program), checking current status directly rather than relying on a general list is genuinely worth doing before you sign a contract.
It’s also worth asking any installer to show you their assumptions broken out separately state credit, SREC or performance income, utility rebate, and net metering value rather than one bundled “savings” figure. That transparency makes it much easier to verify the numbers against what you find checking DSIRE or your state energy office directly.
Frequently Asked Questions
Six states currently offer a state-level solar tax credit: Arizona, Hawaii, Massachusetts, New Mexico, New York, and South Carolina. South Carolina’s is currently one of the most generous, at 25% of system cost up to a $35,000 cap.
For homeowner-purchased systems, yes it expired for systems placed in service after December 31, 2025. Third-party-owned systems (leases and PPAs) can still access a separate commercial credit through the end of 2027, which providers sometimes pass through as lower monthly rates.
A state tax credit reduces what you owe in state income tax, typically as a percentage of your system’s cost, claimed once. An SREC is an ongoing certificate earned per unit of electricity your system produces, which you sell to utilities for continuing income over many years.
New Jersey and South Carolina are frequently cited as among the strongest, though for different reasons. New Jersey through its generous 15-year SuSI performance payments, and South Carolina through its 25% state tax credit plus property tax exemption.
The DSIRE database (Database of State Incentives for Renewables & Efficiency) is the most comprehensive, regularly updated national resource for checking current state and utility-level programs by location.
Sometimes. Utility rebates typically reduce your system’s cost basis for tax purposes, while state tax credits generally don’t affect federal calculations directly but can slightly increase your federal taxable income by reducing your state tax deduction. It’s worth consulting a tax professional for your specific situation.
The Bottom Line
State solar incentives 2026 offers are genuinely substantial in a number of states, even with the federal 30% credit gone. South Carolina, New Jersey, Massachusetts, and New York currently stand out as the strongest combinations of tax credits, performance payments, and property tax protections, while states without a dedicated program still typically offer net metering and utility-specific rebates worth checking. Before assuming solar’s math has fallen apart without the federal credit, check your specific state and utility through DSIRE — the real picture varies far more by location in 2026 than it used to.
SOURCES
- Internal Revenue Service : “Residential Clean Energy Credit“
- SwapToSolar : “Has the Federal Solar Tax Credit Expired? 2026 ITC Status Update”
- SolarReviews : “Solar Incentives: How to Save Money on Solar Panels in 2026”
- Solar.com : “Trump and the Fate of the 30% Solar Tax Credit”
- EnergySage : “Federal Solar Tax Credit In 2026: How Does it Work?”
- Tesla : “Available Solar and Home Battery Incentives in 2026”
DISCLAIMER
PeakGuard Home provides general guidance on home and solar improvement topics based on research and publicly available information. This content is intended for informational purposes only and should not be treated as professional advice. Costs, products, and recommendations may vary based on your location, home, and local codes. Always consult a licensed contractor, electrician, or solar professional before making improvement decisions or starting any project.
