California solar incentives, updated for 2026.

The federal residential ITC has expired

The Investment Tax Credit for residential solar, the 30% federal tax credit that anchored most California solar economics for over a decade, expired at the end of 2025. For homeowners signing solar contracts in 2026, the personal 30% credit on Form 5695 is no longer available.

This is a real change worth taking seriously, and it's the reason a lot of solar quotes you might have seen in early 2025 no longer reflect current economics. If a salesperson is still quoting "30% federal tax credit" for residential cash purchase in 2026, they're wrong, the credit ended.

What is still available federally: the commercial Investment Tax Credit (still 30% through 2032 under current law), accelerated commercial depreciation through MACRS for business-owned systems, USDA REAP grants for rural and agricultural projects, and various state-level programs that don't depend on federal tax credits. The IRS Investment Credit page has the official commercial credit documentation.

Propel Financing: bridging residential and commercial incentives

The commercial Investment Tax Credit and accelerated depreciation can't be claimed by individual homeowners on their own. But they can be claimed by a commercial entity that owns the system, and the benefit can then be passed back to homeowners through a specific financing structure.

That structure is Propel Financing by Concert Finance. Concert commercially owns the solar system for the first 5 years after installation, claims the commercial ITC and 5-year MACRS depreciation, and passes most of that value back to homeowners as an upfront discount on system price. The discount is typically 30 to 40% of gross system cost depending on whether the property qualifies for the federal Energy Community designation.

Many Central Valley addresses qualify for the Energy Community bonus because of regional designations under the Inflation Reduction Act. We confirm Energy Community eligibility for your specific address during the assessment. Full Propel breakdown is on the Solar Advisors Propel overview, and our financing page compares Propel against cash, traditional loans, and PPA structures.

SGIP: California's storage rebate program

The Self-Generation Incentive Program (SGIP) is California's largest energy storage rebate program, administered by the California Public Utilities Commission. SGIP provides cash rebates for battery storage installations, with rebate amounts varying significantly by customer category.

The relevant SGIP tiers for residential homeowners:

• General Market, standard tier for most residential customers. Rebate typically $150 to $200 per kWh of storage capacity.
• Equity tier, for income-qualified households (CARE/FERA eligible). Rebate typically $850 to $1,000 per kWh.
• Equity Resiliency tier, for income-qualified households in high fire risk zones or that depend on electric medical devices. Rebate often covers most of the battery cost.
• High Fire Threat Districts, for any household in a designated high fire risk area (regardless of income). Increased rebate amount.

Many addresses across the Valley qualify for the High Fire Threat District designation because regional fire zoning extends well beyond what most people consider "wildfire zones." We check your specific address during the assessment and apply for the appropriate SGIP tier on your behalf. Rebates are paid after installation and inspection.

California solar property tax exclusion

Under California Revenue and Taxation Code section 73, adding solar panels to your home does not increase your property tax assessment. This is a state-level exclusion that's been in place for decades and has been repeatedly extended.

The practical implication: if you add a $25,000 solar system to a home assessed at $400,000, your property tax assessment stays at $400,000, not $425,000. Over 25 years, this exclusion is worth roughly $5,000 to $8,000 in avoided property tax for a typical Central Valley homeowner, depending on local mill rates.

The exclusion is automatic and requires no application or paperwork on your part. Just make sure your installer files the appropriate documentation with your county assessor. The California Board of Equalization maintains the official documentation.

California sales tax exemption on solar equipment

California provides a partial sales tax exemption on solar energy equipment purchased for installation in the state. The exemption applies to the equipment itself (panels, inverters, racking) but not to labor or services.

For a typical residential installation, the exemption saves roughly 4 to 5% of the equipment portion of system cost, usually $400 to $700 on a typical $20,000 installation. This is automatically applied during the procurement process by the installer; you don't need to file anything separately. The California Department of Tax and Fee Administration administers the exemption.

NEM 3.0 net billing tariff

The current California Net Energy Metering program is the Net Billing Tariff (NBT), commonly called NEM 3.0. It's administered by the California Public Utilities Commission and applies to all PG&E, SCE, and SDG&E customers.

NEM 3.0 isn't an incentive in the traditional sense, it's the rate structure that determines what your exported solar production is worth. Under NEM 3.0, exported solar earns the utility's "avoided cost" rate rather than retail rate, which is roughly 75% less than what NEM 2.0 paid. The practical effect: solar paired with battery storage now produces significantly better economics than solar alone for most homes.

SMUD (Sacramento Municipal Utility District) has its own net metering program that's currently more favorable than NEM 3.0. SMUD customers see better economics on solar alone, and storage is less critical to the math. Full breakdown on our NEM 3.0 page.

Utility-specific rebates and rate plans

Beyond the major statewide programs, individual utilities occasionally run their own solar-adjacent rebate programs. These are smaller in dollar value but worth checking:

• SMUD, occasional rebates for electrification (heat pump water heaters, induction cooktops) that pair with solar installations
• PG&E, energy efficiency rebates and EV charger rebates that can stack with solar
• SCE, rate plans for solar customers including EV-specific time-of-use schedules

The DSIRE database is the comprehensive source for current state and local incentives. Search by zip code to see what's currently active for your address. We check the database during every assessment to ensure no current incentives are missed.

Quick reference: 2026 incentive stack