Texas has significantly stepped up its solar incentives over the past decade, making renewable energy more accessible and affordable for residents. Two of the most valuable incentives are the federal solar tax credit and city-specific rebates that can reduce your solar costs by thousands of dollars.
In this guide, we’ll break down Texas solar incentives and rebates to help you maximize your savings. We’ll explain how each program works, how to apply, and how much you can potentially save when using one of the best solar companies.
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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.
| Incentive | Type | Where It Comes From | What It Provides |
|---|---|---|---|
| City-specific solar rebates | Rebate | Local | Up to $2,500 for installing solar panels |
| Property tax exemption | Tax exemption | State | Increased home value without increased property tax |
| Net metering | Bill credit | Local | Free electricity from your utility company |
| Federal solar tax credit | Tax credit | Federal | Potentially 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?
Texas homeowners who purchase their solar panel systems, either upfront or through a solar loan, can qualify for the federal solar tax credit, also known as the Investment Tax Credit (ITC). This credit allows you to deduct 30% of your total solar installation costs from your federal tax liability. The ITC will decrease to 26% in 2033 and 22% in 2034 before it is set to expire unless extended by new legislation. Unlike solar rebates, which provide direct cash incentives, the ITC lowers the amount you owe in federal taxes, making it one of the most valuable solar incentives available. If the credit exceeds your tax liability for the year, the remaining amount can roll over to future tax years.
To qualify, you must own your solar energy system. Leased panels and power purchase agreements (PPAs) do not meet eligibility requirements. The credit also applies to stand-alone solar battery storage systems with at least 3 kilowatt-hours (kWh) of capacity, even if they are not directly connected to a solar panel system. There is no maximum credit limit, but the total amount claimed cannot exceed your taxable income. This federal incentive provides significant savings for homeowners investing in solar energy while promoting long-term energy independence.
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?
Switching to solar energy in Texas can be more affordable than you might think, especially when factoring in available incentives and flexible payment options. While the average cost of a solar panel system is around $13,958, the federal solar tax credit can reduce that cost by more than $4,187, making solar a more accessible investment.*
If you’re considering going solar, here are the most common solar financing methods:
- Upfront purchase: Paying for your system in full provides the highest long-term savings, as you avoid interest and maximize tax credits.
- Solar loan: A financing option that allows you to spread payments over time, often with low-interest rates and little to no upfront cost.
- Solar lease: You pay a fixed monthly fee to use a solar system installed on your property, but you won’t qualify for the federal tax credit.
- Power Purchase Agreement (PPA): Instead of paying for the panels, you pay for the electricity they generate at a set rate, typically lower than utility prices.
- Home equity loan or line of credit: Using home equity can provide lower interest rates compared to unsecured loans.
*Based on our 2025 survey of 1,000 home solar customers.
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-Specific Solar Rebates
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.
Property Tax Exemption
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.
Net Metering
You can apply for net metering through your utility provider by phone or online.
Federal Tax Credit
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:
- Freedom Solar: Freedom Solar provides highly efficient solar panels, and off-grid installation options.
- Momentum Solar: Momentum solar provides highly customizable solar systems and assists homeowners in applying for available solar incentives.
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.
The Process of Going Solar in Texas
Thinking about installing solar panels for your Texas home? Here’s a step-by-step breakdown of the solar installation process.
1. Consultation
Start with a consultation to assess your home’s solar potential. Solar companies evaluate factors like sunlight exposure, roof layout, and energy consumption. They use satellite imaging and other tools to estimate your system’s potential output and determine how many solar panels you need before scheduling an in-person site visit.
2. Design
After the evaluation, your installer will design a system tailored to your energy needs and budget. This step usually takes one to two weeks and may include options for solar battery storage, high-efficiency panels, or optimized layouts to maximize savings.
3. Permitting and Approvals
Your installer will handle the necessary permits and utility approvals, including compliance with local building codes, HOA regulations, and Texas utility interconnection agreements. This process can take one to three months, depending on your local municipality and utility provider.
4. Installation
Once permits are approved, solar panel installation typically takes just one to three days. Your installer will mount the panels, connect the inverter, and ensure the system is properly integrated with your electrical setup.
5. Final Inspection and Activation
After installation, your solar provider and local utility conduct final inspections to ensure the system meets safety and performance standards. Some installers offer monitoring apps to track your solar energy production, while others provide an in-person walkthrough to explain system operation, net metering credits, and maintenance.
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?
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 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.
