Solar energy has been gaining momentum in Texas unlike any other state in the last decade. Incredibly, Texas has surpassed California in large-scale solar power generation, and the Lone Star State now ranks third nationally in home solar energy capacity installed.
If you'd like to join the hundreds of thousands of homeowners in Texas who have gone solar, there are many tax credits, incentives, and rebates available to make your project as cost-effective as possible for maximum long-term savings.
Texas solar tax credits, incentives, and rebates for homeowners
There are several financial incentives available nationally and state-wide to help homeowners in Texas install a solar energy system. As you may not qualify for every program, speaking with a certified solar installer and a tax professional or financial advisor is recommended before making your final purchasing decisions.
The federal solar investment tax credit (ITC)
The federal solar investment tax credit (ITC) is a great opportunity for homeowners in any state, including Texas, to save on total solar energy system investment costs. Renewed by the Inflation Reduction Act in 2022, the ITC for homeowners is now officially known as the Residential Clean Energy Credit (RCEC), which is available at its current value through 2032.
Redeemed as a tax credit against federal income taxes otherwise owed, the RCEC is worth up to 30% of your total installation costs including hardware, labor, and project overhead—with no limit on the maximum value. So if you were to install a solar and battery storage system for $25,000, you may be eligible for federal income tax credits worth up to $7,500.
To qualify for the RCEC, you must live on-location where your system is installed, and the credits may be applied for multiple years of federal income taxes owed.
Property tax exemption
Since 1978, home solar energy systems have been eligible for property tax exemptions in Texas. With a tax exemption, the increased home value from your solar installation can be 100% exempt from future valuations for tax purposes, so that your annual property tax liability will not increase because of your renewable energy upgrade. Although property taxes are assessed locally in Texas, you must apply for the exemption through the state Comptroller's office.
Texas utility rebates and incentives for solar
Many utility companies serving Texans offer rebates for homeowners to reduce the upfront costs of installing a solar energy system. Though programs are limited and subject to change, here are a few solar rebates currently available in Texas from local electricity providers:
AEP
The AEP (American Electric Power) SMART Source Solar PV Program features rebates of up to $3,000 for customers going solar. The incentive is tiered based on installation size, with lesser rebates worth $2,250, $1,500, and $500 per kWdc (kilowatt direct current) for small PV systems.
Austin Energy
Austin Energy customers who complete a solar education course and install a qualifying photovoltaic (PV) energy system may be eligible for a $2,500 rebate. Those living in the City of Sunset Valley can also qualify for an additional solar rebate of the same value.
NBU
New Braunfels Utilities (NBU) customers can earn rebates worth up to $3,000 after they install a PV system with a participating contractor and complete the educational solar course provided.
Oncor
Dallas-based Oncor provides participating solar contractors with financial incentives that can be passed onto customers who purchase a qualifying system.
SMTX
SMTX Utilities in San Marcos offers a PV Energy Rebate Program for home solar power systems that’s worth up to $2,500.
To maximize your savings, it’s important to explore any available solar rebates or incentive programs from your energy utility, including solar buyback plans. Like net metering in other states, buyback plans can help you earn utility bill credits for the excess solar electricity you share with the grid, such as with TXU Energy.
Local incentive programs for home solar in Texas
Wherever you live in Texas, there may be local financial incentives available from your city, municipality, or county government. For example, the City of Dallas and non-profit Solar United Neighbors collaborated to create Solar Switch Dallas, a program in which participating homeowners saved an average of over $6,000 while going solar in 2023. Although localized incentives vary greatly across the state, looking into solar programs in your part of Texas can be very much worth the effort when and where available.
See how much you can save with solar in Texas
To see how much you can save on long-term energy costs with solar, you can begin your journey by contacting a solar installer near you. While we also recommend consulting a financial professional to ensure your qualification for Texas solar tax credits, weighing contract options from multiple installers can help you find the best overall solution for your home.
Texas solar tax credits, incentives, and rebates FAQs
Does Texas offer a solar tax credit?
No, Texas does not offer a solar income tax credit (ITC), as there is no income tax collected by the state government. Instead, Texans can qualify for the federal solar ITC and a state-wide property tax exemption program.
Can I sell solar power back to the grid in Texas?
Although energy utilities are not required by law to offer net metering in Texas, many municipalities and utility companies offer "buyback” plans for customers with PV systems. While enrolled in these programs, you can sell your solar to the grid for energy credits that translate into long-term monthly utility bill savings.
Are solar panels exempt from sales tax in Texas?
No, home solar energy systems are not exempt from sales tax in Texas, as they are in about half of the United States.
LEGAL NOTICE: (c) 2025 Enphase Energy, Inc. All rights reserved. This information is based upon various rules and regulations currently in effect and information available as of 2025. Such rules and regulations are complex and often change, and results may be different based on particular facts and circumstances. The information herein is general in nature and may not apply to your circumstances, and Enphase is not in a position to assure any particular result. You should seek appropriate professional advice as to how these rules and regulations apply to your situation. Enphase assumes no obligation to update this article in light of new information or on future events.
