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Texas Solar Incentives, Tax Credits, & Rebates (2024 Guide)

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Default Author Icon Written by Tamara Jude + 1 other Reviewer Icon Reviewed by Roger Horowitz Updated 02/28/2024

Texas has increased its solar incentives over the last decade to help make renewable energy more accessible to residents. Two of the most lucrative solar incentives Texans can take advantage of are the federal solar tax credit and city-specific rebate, which can help lower your solar installation costs by thousands.

We’ve researched Texas solar incentives statewide. Our guide explains how each incentive works, how to apply for it, and how much money you could save.

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What Solar Tax Credits and Rebates Does Texas Offer?

The Solar Energy Industries Association’s latest data ranks Texas as the second most popular and worthwhile state to invest in solar panels. The state has seen more than 264,000 solar installations, and solar prices have fallen 42% and counting over the last decade.

Unfortunately, Texas doesn’t offer many state-level solar incentives, but residents can benefit from several local rebates and tax exemptions. Here’s a glance at what you may qualify for, depending on your location.

IncentiveTypeWhere It Comes FromWhat It Provides
City-specific solar rebatesRebateLocalUp to $2,500 for installing solar panels
Property tax exemptionTax exemptionStateIncreased home value without increased property tax
Net meteringBill creditLocalFree electricity from your utility company
Federal solar tax creditTax creditFederalPotentially thousands of dollars back on your system

We surveyed 1,000 homeowners who switched to solar energy and found that 76% took advantage of solar incentives. Of that, 65% applied for the federal solar tax credit, 32% used a net metering program, and 30% benefited from a local rebate program.

Do Texas Utility Companies Offer Solar Rebates?

Some Texas utility companies do offer their customers solar rebates. You can check with your provider, but a few Texas rebates include the following:

  • AEP Energy: AEP Texas residential customers can get up to $2,500 per solar panel system. 
  • Austin Energy: Austin residents can get a rebate of $2,500. You’re also eligible for Austin Energy’s Value of Solar Tariff. This pays $0.97 for every kilowatt-hour (kWh) your panels generate.
  • CPS Energy: CPS Energy customers who are small business owners, schools, or nonprofit organizations can get $0.60 per AC watt for the first 25 kilowatts (kW), $0.40 per AC watt for more than 25 kW, and $0.10 per AC watt for projects utilizing local modules. 
  • Oncor: Those in Oncor’s service territory can receive up to $9,000 per solar system.

Can You Qualify for the Federal Solar Tax Credit in Texas?

Yes. All United States homeowners qualify for the federal solar tax credit. The federal tax credit, also known as the Investment Tax Credit (ITC), essentially lets you reduce your federal taxes by up to 30% of your total solar panel installation cost. This policy was introduced in 2005 as part of the Energy Policy Act and has been in danger of expiring multiple times over the years. However, Congress passed the Inflation Reduction Act in 2022, which extended the 30% ITC until 2032. The credit will drop to 26% in 2033 and 22% in 2034 before being reevaluated in 2035. 

This tax credit is not a refund. It works by reducing your owed federal taxes by the percentage granted for that year. For example, if your solar panel system cost $20,000, the government will deduct $6,000 (30%) from what you owe on your federal taxes. If the taxes you owe that year are less than your tax credit, the deduction will roll over to the next tax year.

Note that you’re only eligible for the credit if you own your panels, meaning you paid for them up-front or via a solar loan. Those who lease or have a power purchase agreement do not qualify. This credit also applies to stand-alone solar batteries with a minimum of 3 kWh of capacity. The battery doesn’t have to be directly tied to a solar panel system to qualify.

Does Texas Offer Net Metering?

Texas doesn’t have a statewide net metering policy, though some Texas utility companies do offer net metering programs. If you’re unfamiliar with net metering, the program allows you to sell any excess energy your panels produce to your utility provider in exchange for bill credits. If your panels don’t produce enough energy to power your home, you can draw electricity from your provider and pay for it using your credits. 

El Paso Electric, CPS Energy, and Green Mountain Energy are three Texas energy companies that offer net metering programs. The Database of State Incentives for Renewables and Efficiency (DSIRE) database also has an extensive list of the state’s available net metering programs.

Texas has what’s called a deregulated electricity market. This means separate companies control each step of getting electricity from the power plant to your home. Renewable energy buyback programs allow customers in deregulated service areas to choose a retail electric provider to buy back their excess energy.

Selling this power back to the grid works differently in every city, town, and ZIP code. Check out the requirements for your service area.

More Resources:

  • Power To Choose helps you find buyback programs that you’re eligible for. Enter your ZIP code, and wait for the database to find the programs in your area.
  • Solar United Neighbors also offers a free analysis to customers in the Centerpoint or Oncor service areas to help find the best retail electric plan for your usage.

How Much Do Solar Panels Cost in Texas?

The average cost of solar panels in Texas is $23,800 before applying any solar incentives. Applying for the federal solar tax credit can save you more than $7,000. Here’s a look at what you could save by applying the federal tax credit.*

System SizeAverage Cost Cost After Federal Tax Credit
5 kW$11,891$8,324
6 kW$14,269$9,988
7 kW$16,647$11,653
8 kW$19,026$13,318
9 kW$21,404$14,983
10 kW$23,782$16,647
*Cost data via EnergySage.com

How Do I Apply for Solar Incentives in Texas?

Your solar installer can advise you on the Texas solar incentives you qualify for and get you started with applying. Here’s how to begin the process:

Utility providers handle their buyback programs differently, but in many cases, your solar installer will handle the application with the utility company for you. Each company should have a page on its website detailing how the program works and how to apply.
This exemption requires an application filed with the appraisal district in which your property is located. Typically, the deadline for filing is May 1. The Texas Comptroller of Public Accounts guide has additional information here.
You can apply for net metering through your utility provider by phone or online.
The IRS provides detailed instructions for completing the tax form on its website. Work with your tax preparer to complete and file IRS Form 5695 during the tax season after your panels are installed.

Texas Solar Companies We Recommend

If you’re ready to move forward with solar installation, these are the solar companies in Texas we most recommend:

  • SunPower: SunPower provides a 25-year warranty for its highly energy-efficient Maxeon panels. It also offers three payment options. SunPower was the second-most popular choice among our survey respondents, beaten only by ADT Solar, which is no longer in operation.
  • Sunrun: Sunrun allows customers to monitor their panels’ performance through a mobile app and also offers an additional insurance policy in case your panels are ever damaged or stolen.
  • Blue Raven Solar: Blue Raven Solar has multiple options for solar storage and provides a unique in-house financing option that includes 18 months of free solar energy.

Is Going Solar in Texas Worth It?

Yes, Texas is a worthwhile state to go solar. It has abundant sun exposure year-round and more power outages per year than any other state, making it beneficial to have a backup electricity source. 

Texas’ average electricity rate in 2023 was 14.6 cents per kWh, up from 2022 but slightly lower than the 16.2 cents national average. The best way to see if investing in a solar panel system is worth it for you is to look at your monthly energy bills. If you’re consistently paying more than 16.2 cents for your energy, switching to solar could be financially beneficial. Homeowners with a large property or many utilities will likely be good candidates.

The best way to save on solar panels in Texas is through statewide incentives, utility-specific solar rebates, and the federal solar tax credit. Your solar installer can advise you on which incentives you’re eligible for and how to get started, but pay close attention to the requirements and deadlines to avoid missing out. 

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FAQ About Texas Solar Incentives

Is Texas paying people to go solar?

Texas isn’t paying people to go solar, but there is a way to benefit from a solar panel system on your property without footing the full bill. The most common path is arranging a power purchase agreement (PPA) between you and a state-licensed solar company. Under a PPA, the company absorbs the solar equipment and installation costs for you. Be aware that this means you’ll never own your system, so you won’t qualify for any solar incentives.

How much is the solar exemption in Texas?

Texas’ property tax exemption covers 100% of the appraised value of your property after your solar panel system is installed, meaning your property taxes won’t increase. 

What solar incentives are available in Texas for residential homes?

There are several solar incentives available in Texas for qualifying homeowners. These include local utility solar rebate programs, net metering programs, the property tax exemption, and the federal solar investment tax credit.

Does Texas have a solar rights law?

Texas has a solar rights law that helps you avoid fees and penalties for installing solar if you have a homeowner association (HOA). The state’s solar rights law prohibits HOAs from banning or penalizing solar energy systems on their properties.

Our Rating Methodology

The This Old House Reviews Team is committed to providing comprehensive and unbiased reviews to our readers. After over a thousand hours of research on solar companies, interviews with experts, and common customer needs, we’ve created a detailed rating system for solar providers based on six factors:

  • Solar equipment, installation, and services (25%)
  • Warranty and performance guarantees (25%)
  • Brand reputation and certifications (15%)
  • Financing options (15%)
  • Experience (10%)
  • Availability (10%)

Total scores are divided by 20 for a final 5-point rating scale.

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