California Solar Incentives, Tax Credits and Rebates

Residential solar panel incentives in California

Here are some of the top incentives available in California that can help lower the cost of installing solar.

No-cost rooftop solar installations for homeowners

Some lower-income homeowners in disadvantaged communities are eligible for no-cost rooftop solar installations in California. The Disadvantaged Communities - Single-family Solar Homes (DAC-SASH) program provides a $3-per-watt incentive on residential systems 1 kilowatt or larger for qualifying residents. It is scheduled to run through 2030.

Solar on Multifamily Affordable Housing (SOMAH)

The Solar on Multifamily Affordable Housing program helps property owners pay for solar energy systems on affordable apartment buildings. Qualifying properties must be deed-restricted, affordable housing with five or more rental units, and serve low-income or disadvantaged communities. This program helps reduce tenants’ utility bills and is available through 2032.

Property tax exclusion

Typically, an addition to your home increases the assessed value of your property, which in turn increases your property taxes. Thankfully, California’s property tax exclusion guarantees that your assessment — and tax bill — won’t go up because you added an active solar energy system to your home. This benefit is available for systems installed before January 1, 2027.

San Diego Green Building program

San Diego County has an expedited permitting process that incentivizes sustainable building practices. Projects that comply with resource conservation measures qualify for reduced building and permit fees by 7.5% and expedited plan checks. San Diego also has a Sustainable Buildings Expedite Program, which helps speed up the review process for new projects.

Local rebates

Many local power companies throughout California have solar rebates available:

• Alameda Municipal Power offers a $500 rebate for customers who install solar and have households with an annual income under $106,000.
• Rancho Mirage Energy Authority offers a rebate between $500 and $1,500 for customers who install solar battery systems.
• Sacramento Municipal Utility District offers up to $10,000 in financial incentives per household for installing solar battery storage.
• San Diego Community Power offers customers a rebate of $250 to $350 per kilowatt-hour of installed solar battery storage.

Residential solar energy storage incentives

California’s Self-Generation Incentive Program (SGIP) offered rebates to help lower the cost of solar storage. This program also had additional equity and resiliency rebates for communities in high fire-threat areas, low-income communities and medically vulnerable people.

A solar storage battery typically costs $7,000 to $18,000.

However, most SGIP programs in California expired at the end of 2025. Some programs are operating on a limited basis or accepting wait-list applications.

Installing solar energy storage can still make financial sense. California has adopted a net billing model, where sending excess power to the grid earns less than the retail rate. This makes solar storage especially valuable because you can store power generated during the day and use it during higher-cost periods. Batteries can also offer backup power during outages.

California tax incentives: what’s real vs. rumored

With frequently changing incentives and programs, it can be hard to keep track of what solar tax incentives are available. Simply put, California does not offer an income tax credit for solar panels, and the federal solar investment tax credit expired at the end of 2025. That said, the state does still offer tax incentives through property tax exclusion. Essentially, installing a solar energy system in your home will not cause your property taxes to increase.

What to know about net billing in California

If you have solar panels in California, you can earn credits on your energy bill for the excess energy your panels generate. This process is called net billing. Essentially, you pay for the electricity you use from the grid (import charges) and earn back money for energy your panels send to the grid (export credits). This helps lower your monthly energy bill.

It’s important to note that with net billing, you pay full retail price for the energy you consume, but earn export credits at a lower price. There is also an annual “true-up” settlement period. If you exported more energy than you imported, you’ll be compensated at a lower rate through net surplus compensation.

How to maximize value under net billing

Export credit values can also fluctuate based on demand. Exporting energy during peak hours earns a higher rate. To maximize your value, you can use a solar battery to store excess power and send it back to the grid during peak hours.

Some larger utility companies, including PG&E and SCE, also offer bonus credits to some customers for selling energy back to the grid. Your system’s connection date to the grid determines which incentive tier you’re eligible to receive. Smaller municipal utility companies also offer incentives, though their rates and rules vary.

Understanding utility territory for California solar incentives

The solar incentives you have access to in California largely depend on your utility provider.

Investor-owned utilities, such as PG&E, SCE and SDG&E, participate in state-administered incentive programs like net billing. They operate under statewide rules and regulations. On the other hand, municipal providers can set their own rates and payment structures.

Additionally, municipal providers such as Alameda Municipal Power and Sacramento Municipal Utility District offer solar rebates that aren’t available to customers of investor-owned utilities.

The type of utility company you have is typically determined by where you live. You can find your provider by checking your energy bill or your city’s website.

Business and nonprofit solar incentives

Many federal and state incentives for residential solar energy systems have recently been phased out. Thankfully, there are still several major solar incentives available to businesses and nonprofits that make going solar in California worth it. These include:

• The Federal Clean Electricity Investment Tax Credit: This credit covers up to 30% of commercial solar costs for projects started by July 4, 2026.
• Elective Pay for tax-exempt entities: Tax-exempt organizations, like nonprofits, can claim their solar tax credit as a cash payment from the IRS.
• The Modified Accelerated Cost Recovery System (MACRS): This system allows businesses that install solar panels to deduct the system’s cost in five years. Basically, this reduces the business’s taxable income and lowers its tax bill.
• Active Solar Energy System Property Tax Exclusion: Like residential solar, commercial solar projects will not increase the assessed value of a property. This prevents property tax increases.

How much are solar panels in California?

Before considering any incentives, solar panel costs in California typically range from $12,224 to $24,449. On the high end, Matthias in Westlake Village said they spent $52,000 on a system.

Average solar panel costs by system size in California

How can I pay for solar panels?

Paying upfront is the most obvious way to pay for solar panels, but many don’t have that kind of money saved up. If you’re one of those people, you can finance solar panels, lease or enter a PPA (power purchase agreement).

Solar loan terms are typically 8 to 20 years.

A solar loan works like any other type of home improvement loan — there’s an application and approval process, and you pay it back over time (with interest) each month. In an ideal financing scenario, your system generates enough extra power to offset your loan payment.

In California, property-assessed clean energy (PACE) financing lets you borrow money to pay for solar panels and then pay it back through your property tax bill over 15 to 25 years. It’s a way to make energy improvements without a high upfront cost, but it increases your tax bill until the loan is paid off.

Find solar companies in California

Read our guide to the top solar companies in California to compare more options.

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