The best states for solar panel incentives in the U.S. combine strong state-level policies, attractive tax credits, rebates, net metering programs, and high electricity rates that make solar a financially compelling investment for homeowners. While the federal solar Investment Tax Credit (ITC) provides a 30% credit on solar installation costs nationwide until 2032, state incentives vary widely and can greatly enhance savings.
Top States for Solar Panel Incentives
1. Massachusetts
Massachusetts ranks as the best state for home solar due to a comprehensive mix of incentives:
- A 15% state solar tax credit up to $1,000
- The SMART performance-based incentive program generating ongoing revenue for solar generation
- Virtual power plant programs offering savings for battery storage
- High electricity rates (~$0.30/kWh) yielding substantial bill savings
- 100% property and sales tax exemptions on solar equipment
- Strong renewable portfolio and solar carve-out standards
This combination delivers excellent payback and incentives, despite moderate solar exposure.
2. Maryland
Maryland offers:
- $1,000 capped state rebate for solar installation
- Retail rate net metering, letting homeowners sell excess power at full retail price
- Full exemption from property and sales taxes on solar systems
- Statewide low-income and community solar programs
- A significant solar carve-out in the energy portfolio mandates
Its incentives reduce upfront costs and maximize long-term savings.
3. New Jersey
New Jersey is known for its former strong SREC program, now replaced by the Solar Successor Incentive Program (SuSI), which continues to provide cash incentives alongside utility bill savings. Incentives here include:
- A robust buyback credit for solar generation
- Net metering policies supporting solar owners
- Supportive state policies aiming for 100% clean energy
While the program is evolving, it remains a top state for solar incentives and financial returns.
4. New York
New York offers generous incentives:
- A state tax credit of up to 25% of installation cost, capped at $5,000
- Property and sales tax exemptions
- Low-income rooftop solar and community solar programs
- State-governed net metering, although at less than full retail rate
Along with the federal credit, these incentives can cover over half the project costs in most cases.
5. Colorado
Colorado has embraced solar with:
- 100% sales and use tax exemption for solar and battery tech
- Full property tax exemption for value added by solar
- Low-cost long-term renewable energy loans
- Utilities offering limited net metering at a fraction of retail rate
Despite no state solar tax credit and a capped net metering rate, the state’s tax exemptions and financing options help reduce costs.
Other Notable States
- Minnesota: Strong renewable portfolio standards, net metering, utility incentive programs like Solar*Rewards, and adequate sunshine make it a good solar investment.
- Rhode Island: High electricity prices and supportive net metering with programs targeting low-income access boost solar appeal.
- Illinois: Illinois Solar for All program and the Adjustable Block Program provide incentives and cash credits for solar production, making solar affordable even with moderate electricity rates.
- New Mexico: Statewide solar tax credit (10% up to $6,000), property and sales tax exemptions, and supportive net metering policies help incentivize solar adoption.
Summary Table of Top States and Key Incentives
| State | State Solar Tax Credit | Property Tax Exemption | Sales Tax Exemption | Net Metering (Retail Rate) | Other Key Incentives |
|---|---|---|---|---|---|
| Massachusetts | 15% capped at $1,000 | Yes | Yes | Fractional retail rate | SMART program, VPP battery incentives |
| Maryland | $1,000 rebate | Yes | Yes | Full retail rate | Low-income and community solar programs |
| New Jersey | None (SuSI incentive) | Varies | Varies | Yes | Solar Successor Incentive Program (SuSI) |
| New York | 25% capped at $5,000 | Partial/local | Yes | Fractional retail rate | Low-income programs, community solar |
| Colorado | None | Yes | Yes (panels only) | Fractional retail rate | Low-interest renewable loans |
| Minnesota | None | Varies | Varies | Yes (retail) | Solar*Rewards program |
| Illinois | None | Special assessments | Varies | Full retail rate | Adjustable Block Program, Solar for All |
| Rhode Island | None | Varies | Varies | Strong net metering | Affordable Solar Access Pathways |
| New Mexico | 10% up to $6,000 | Yes | Yes | Wholesale/retail choice | Community solar for low-income |
Key Takeaways
- States in New England (Massachusetts, Rhode Island, Connecticut), Mid-Atlantic (Maryland, New Jersey, New York), and some Midwestern states (Minnesota, Illinois) provide the strongest mix of solar incentives.
- High electricity rates amplify solar savings, making solar financially appealing in many northeastern states despite less solar irradiance.
- Property and sales tax exemptions on solar equipment are common incentives that reduce effective costs.
- Net metering policies vary: full retail compensation is the most beneficial but fractional retail or wholesale rates reduce payback.
- Additional rebates, performance-based incentives (PBIs), and accessible financing programs further improve solar affordability in leading states.
These states offer the best current frameworks for solar incentives, cutting upfront costs and increasing the financial return of installing solar panel systems.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-best-states-for-solar-panel-incentives/
