Solar Tax Incentives

Solar Tax Incentives for California Homeowners (2025 Edition)

If you’re considering solar energy for your home in California, you’re in luck. A variety of federal and state-level programs are available that can dramatically reduce your solar installation costs and improve your return on investment. Below is a current overview of the most valuable incentives and rebates available to California homeowners as of 2025.

Federal Residential Clean Energy Credit (30% Tax Credit)

What it is:
Homeowners can claim a 30% federal tax credit on the total cost of a solar panel system, including equipment, labor, permitting fees, and even battery storage. This credit applies to systems installed from 2022 through 2032. It drops to 26% in 2033, 22% in 2034, and is set to expire in 2035.

Eligibility:

• You must own the solar system (purchased, not leased).
• The system must be new and installed at a U.S. residence (not necessarily your primary home).
• The system must be placed in service during the tax year you claim the credit.
• You must have enough tax liability, but unused portions can carry forward to future years.

How to Claim:
File IRS Form 5695 with your federal tax return (Form 1040).
More info — IRS Residential Clean Energy Credit

California Property Tax Exclusion for Solar

Installing solar panels on your home will not increase your property tax assessment in California. This exclusion protects you from higher taxes due to the increased value of your home. It applies automatically when your county records your solar permit, and is available until at least January 1, 2027.

More info — California State Board of Equalization

Self-Generation Incentive Program (SGIP)

Thinking about adding battery storage to your solar setup? California’s SGIP provides cash rebates for homeowners who install solar batteries.

• Incentives are higher for low-income households or those in wildfire-prone areas.
• Rebates vary based on battery size and location.
• Applications must be made through an approved installer.

More info — SGIP Details on SolarReviews

Disadvantaged Communities – Single-Family Solar Homes (DAC-SASH)

If you’re a homeowner in a disadvantaged community (top 25% based on CalEnviroScreen) and a customer of PG&E, SCE, or SDG&E, you may qualify for no-cost solar installation through the DAC-SASH program.

• Incentives can be up to $3 per watt, covering most or all of a solar system’s cost.
• Administered by GRID Alternatives.

More info — GRID Alternatives DAC-SASH

Net Energy Metering (NEM)

Although not a direct rebate, California’s Net Energy Metering program lets you earn credits for excess energy your system sends back to the grid. This helps reduce your electricity bill year-round. NEM rates and policies vary by utility, so check with your provider (e.g., PG&E, SCE, SDG&E, SMUD).

Home Energy Rebates – Inflation Reduction Act

Under the Inflation Reduction Act, California is rolling out rebates for energy-efficient home upgrades, including solar integration:

• Up to $4,000 for households earning 80–150% of Area Median Income (AMI).
• Up to $8,000 for households under 80% AMI.

These rebates can be stacked with other incentives.

More info — California Home Energy Rebates

Local and Utility-Based Incentives

Some cities and municipal utilities offer additional incentives such as:

• Permit fee waivers
• Battery storage rebates
• Energy efficiency grants

Examples include the Rancho Mirage Energy Authority, San Diego’s Green Building Program, and Alameda Municipal Power. Check with your local utility provider or city government for availability.

Financing Options (PACE)

California’s Property Assessed Clean Energy (PACE) programs, such as the HERO Program, allow homeowners to finance solar through property tax assessments.

• Payments are made annually with your property taxes.
• The loan can transfer to the next homeowner if you sell your home.