Home solar panels can save you money for decades. The upfront cost of a new system and installation can be a major consideration in your choice to go.
In Texas, the second-ranked state in solar capacity with installed solar capacity for nearing five million homes, there are federal, state, and local financial incentives for making the switch to residential solar power. Some may help with the initial expenses of a new system. Some may give you more savings over time. Here’s what you need to know about incentives available in Texas.
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Available Tax Incentives, Credits, and Rebates in Texas
In Texas, there is no statewide solar rebate program or state tax credit. However, federal and utility-level incentives can help you lower the cost of solar. While this isn’t an exhaustive list of incentives, we’ve featured the most common and well-known Texas solar incentives that might be available to you in 2025.
Federal solar tax credit
The Federal Solar Tax Credit — otherwise known as the Residential Clean Energy Credit — allows you to deduct 30% of the cost of installing an eligible residential solar power system from your federal taxes. So, what does that mean exactly?
For example, if your solar system and installation costs $20,000, you’d receive $6,000 in federal tax credits to reduce your federal income tax owed in the year you installed your solar panels. In other words, the Residential Clean Energy Credit can significantly reduce or eliminate the federal income tax you owe.
Everyone’s tax liability and financial situation is different. You should always consult a tax professional to confirm your eligibility for any tax credits you plan to claim.
Property tax exemption
Texans who install eligible clean energy devices or systems, such as home solar panels, for their residence or place of business get a property tax exemption for the increased property value from the new system. It’s a win-win. A home solar system typically increases the value of a home, and you don’t pay property taxes on that increase.
Local utility company solar rebates
As we mentioned above, Texas does not have a statewide solar rebate program. Instead, several utility companies offer rebate programs for going solar in their area. Solar photovoltaic (PV) systems and other small-scale electricity generators help offset the amount of electricity utilities need to produce, transmit, and purchase from elsewhere.
Austin Energy customers can use the Austin Energy Residential Solar Rebate to get a $2,500 rebate when installing a solar system and completing an online course.
Oncor Electric, in Dallas and covering much of north and central Texas, has a rebate available for customers who install a new solar system and battery storage.
Here are some examples of utilities and cities offering solar rebate or grant programs in Texas:
| Incentive | Type of incentive | Eligibility | Possible value |
|---|---|---|---|
| Austin Energy Residential Solar Rebate | Rebate | Austin Energy customers | $2,500 |
| Oncor Electric Residential Solar Program | Rebate | Oncor Electric customers | Based on battery size and other factors. Paid to installer to lower installation costs. |
| Sunset Valley Solar Energy Conservation Rebate | Rebate | Sunset Valley customers | $3,000 |
| SMTX (San Marcos) Utilities Solar PV Rebate | Rebate | SMTX customers | $2,500 |
| Net metering | Bill credits | Customers of utilities with net metering | Varies by plan |
| Federal tax credit | Tax credit | Federal income taxpayers with tax liability | 30% of purchase and installation of new system |
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Net metering programs
Unlike some states, Texas does not have a statewide net metering program. This unique billing mechanism credits solar homeowners for the extra electricity their solar power system generates and adds to the electric grid. With net energy metering, you are billed for the "net" energy used: The difference between the total energy your solar power system produced and the total energy consumed by your home.
Your electric meter keeps track of the excess power fed to the grid. It also measures the power drawn from the grid when your home needs more electricity than your solar panels can produce (like at night or on a cloudy day). Comparing these amounts gives you the net energy usage.
In deregulated areas of Texas, utility companies are referred to as Transmission Distribution Utilities, or TDUs. A TDU delivers the electricity to your home through the poles and wires, but generation and billing happen with competitive electric suppliers known as Retail Energy Providers, or REPs.
While many utility companies and retail electricity providers across the state offer net metering (also called solar buyback programs), not all of them do. Texas homeowners serviced by Transmission and Distribution utilities can look for a retail energy provider that offers solar buyback, including the Palmetto Energy Plan, which offers credits at the retail rate.
Is Solar a Good Fit for Your Texas Home?
Home solar panels are often a great way to save money in Texas and across the US. Its renewable energy can also provide greater energy independence from your utility company and, when paired with a battery, backup power during an outage. Every home is different, though. Working with a reputable solar company can help you get the best system for your home.
Get started today with Palmetto’s solar savings calculator or by contacting our team.
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Frequently Asked Questions
Does Texas have a solar tax credit?
Texas does not have a state solar tax credit. Texans can use the federal solar tax credit and local or utility incentives, including rebates, to increase their potential savings with solar energy.
Is solar worth it in Texas?
Texas is already one of the biggest states for solar power and home solar systems. In many instances, homeowners can save by switching to solar.
Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.
Andrew GiermakWriter and EditorAndrew joined Palmetto in Charlotte in August 2024. He’s been a writer in journalism, then in business, going back to almost the 20th century. He’s lived in Indiana, Virginia, Pennsylvania, Virginia again, and now North Carolina for the last 12 years. He likes golf. Is he good at it? Not so much.
