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28 Sep 2023

2023 Guide to Texas Solar Tax Credits, Incentives and Rebates

Up on the Roof | Texas Solar Energy Society

Photo: Texas Solar Energy Society 

The Lone Star State, Texas, has emerged as a frontrunner in the solar energy sector, boasting an installed capacity of 17,247 megawatts. This capacity is sufficient to power approximately 1.9 million homes with solar photovoltaic (PV) technology. Furthermore, Texas offers incentive programs through local utilities to encourage solar adoption and increase the state's clean energy production.

In this guide, US Solar Supplier will delve into the array of solar tax credits, incentives, and rebates that Texas offers. Continue reading to learn how these programs can significantly reduce your solar system expenses, making the transition to solar energy more cost-effective in Texas.

 

Texas Solar Tax Exemptions

While Texas doesn't provide a statewide solar rebate program for homeowners, it does grant a property tax exemption for both residential and commercial renewable energy systems.


Federal Solar Tax Credit

The federal solar tax credit, also referred to as the Investment Tax Credit (ITC), is a national incentive that allows individuals to obtain a tax credit for the costs associated with installing solar panels. This credit offers solar owners a 30% deduction on their total system expenses. For example, if you buy a 10 kilowatt (kW) system for $33,000, your tax credit would equal $9,900. 

Additional local incentives can be utilized, including exemptions from Texas’ sales and property taxes.

In 2020, the federal tax credit for solar decreased to 26% but was reinstated to its original rate of 30% in 2022 by the Inflation Reduction Act. This credit will remain accessible until 2034, with a gradual phase-out planned. Here is the schedule: 

  • The credit will decrease to 26% in 2033
  • The credit will decrease to 22% in 2034
  • Unless renewed by Congress, the credit will phase out entirely in 2035

 

Renewable Energy Systems Property Tax Exemption

The incentive value in Texas for installing a solar energy system is equivalent to 100% of your property tax value, which includes the assessed value of your solar power system. 

This is an annual tax exemption benefit. 

Essentially, if you install a solar energy system in Texas, any increase in your home's property value as a result will not be subject to taxes. 

For instance, if a property owner in San Antonio owns a home valued at $350,000 and installs a solar panel system worth $25,000, the city would base their property taxes on the original $350,000 value rather than the increased value of $375,000.


Texas Local Solar Exemptions

Depending on your specific location within Texas, you may be eligible for solar incentives from local government entities or your utility provider. 

The solar incentive schemes in Texas are overseen by various electric firms, each with its own set of eligibility criteria. Typically, these incentives can only be accessed through contractors that have been officially approved.

Despite the absence of a statewide program, Texas boasts numerous municipal utility firms and electric cooperatives that cater to distinct regions. If you're pondering the installation of rooftop solar panels and your power supply comes from a smaller energy company, it's advisable to conduct an online search to ensure that you're not overlooking any potential financial incentives.

Here are some of the most significant solar incentive programs available across the expansive state of Texas:


Texas Net Metering

Net metering is a program that allows solar panel owners to receive credits for any surplus energy generated by their panels and returned to the grid. These credits can then be applied to offset future electricity bills. While Texas does not enforce a statewide net metering policy, numerous retail electric providers offer solar buyback plans. Certain municipal utilities, including Austin Energy, also provide this benefit.

Notably, net metering programs in Texas are overseen by various electricity providers, each with distinct technical prerequisites and compensation rates. Thus, the specifics of these programs can vary widely across the state.

Texas Solar Resources

Solar Energy Industries Association (Texas)

Texas Solar Power Association

Texas Solar Energy Society


Let US Solar Supplier guide your solar energy project! Consult with us today to match the perfect system to your needs.