Texas Solar Incentives, Tax Credits And Rebates Of 2024 – Forbes

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In addition to the major federal solar tax credit, Texans can take advantage of several Texas solar programs at the state and local level.

Federal Solar Tax Credit

While there is no Texas state solar tax credit, everyone in the Lone Star State—and throughout the United States—is eligible for a non-refundable tax credit when they install solar panels on their home. This federal tax credit, which is called the Investment Tax Credit (ITC), is worth 30% of the total cost of installation when you file your taxes.

For instance, if your total solar panel installation cost is $15,000, you’ll be able to claim a $4,500 tax credit when you file the following year. However, the tax credit is nonrefundable, so if you get your tax liability down to $0, you won’t be able to pocket the remaining cash. Instead, you can roll over whatever’s left from the credit to future tax filing years, until you’ve used it all.

The Investment Tax Credit won’t be here forever. Under current law, it’s set to reduce to a 26% tax credit for the 2033 tax year. For 2034, it decreases again to 22%. And, unless Congress acts to extend the tax credit, it will no longer be available to homeowners starting in 2035.

Local Texas Solar Rebates

Texas lacks statewide solar rebates, but instead, specific utility companies offer incentives that make the installation more worthwhile to certain residents of the Lone Star State. Below are some of the most popular solar incentives in Texas:

  • American Electric Power SMART Source Solar PV Program: Customers of AEP can earn a hefty rebate whose size depends on the size of the system, up to $3,000. Learn more about the AEP rebate.
  • Austin Energy Solar Photovoltaic Rebates & Incentives: Customers of Austin Energy can earn a $2,500 rebate for installing a solar panel system, but to be eligible, they must also participate in a solar education course. Learn more about the Austin Energy rebate.
  • Oncor Residential Solar Program: Oncor, which is the state’s largest electrical utility provider, offers a solar rebate to customers who install a qualifying solar system, including battery. Rebate amounts are unique to your specific installation, so you’ll want to learn more about the Oncor Residential Solar Program to see if you qualify and how much you’ll earn back.
  • SMTX Solar PV Rebate: Customers of the San Marcos utility provider need to get pre-approved for the solar rebate program. Those who qualify can earn a rebate up to $2,500. Learn more about the SMTX Solar PV Rebate.

In addition, customers of CPS Energy and Denton Municipal Electric can get rebates for solar water heater installations; customers of Denton are also eligible for solar screen rebates.

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Texas Property Tax Exemption for Solar Panels

Texas may not have any state income taxes, but its effective property taxes (set by local taxing units, not the state) are among the highest in the country. And because property taxes are based on the value of your property, you might be worried that installing solar panels in the Lone Star State will increase your tax bill. After all, solar panels increase your home’s value by roughly 4%, according to Zillow.

But Texas homeowners get a tax break when it comes to solar installations. Although they’ll likely increase your home’s value, the solar panels are exempt from property taxation.

Net Metering in Texas

Technically speaking, the state of Texas does not have a net metering program—one that lets homeowners sell extra energy generated from solar panels to utility companies in exchange for bill credits or payments. Instead, Texas leaves this to local utility companies, most of which allow Texas homeowners to participate in such a program.

Research your specific utility company’s program to understand how much money you could save on utilities—or even make in a given year—by selling your excess solar power.

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