Colorado Solar Incentives, Tax Credits and Rebates

Residential solar panel incentives in Colorado

Residents in Roaring Fork Valley, as well as those in Eagle, Gunnison, Lake and Summit counties, are eligible to receive green energy assistance, rebates and financing through the Energy Smart Colorado program. Under this initiative, homeowners can receive a rebate equivalent to 25% of the total cost incurred installing solar panels or solar water heating systems, up to a maximum rebate amount of $2,500.

The federal solar investment tax credit (ITC) is still the biggest incentive for many Colorado homeowners. If you install a residential solar panel system by the end of 2032, you can get a tax credit equal to 30% of the system's total cost — including equipment, labor and permits — on your federal taxes.

For example, if you spend $10,000 installing a solar panel system, the ITC is worth $3,000. If in the year your system becomes operational you owe $15,000 in taxes, the ITC reduces what you owe to $12,000.

The ITC is nonrefundable, meaning you can only claim a credit up to the amount of tax you owe for the year. However, the credit rolls over to the next tax year if you don’t use the full amount.

Federal solar tax credit expires at the end of 2025

The ITC is now set to expire at the end of the year, much earlier than previously scheduled. The credit was expected to drop gradually, then fully expire in 2035 — but those future step-downs have been eliminated under the “One Big Beautiful Bill,” signed in July of 2025. This means you have until Dec. 31, 2025, to install and pay for a system to qualify for the 30% credit.

More solar tax breaks in Colorado

Depending on where you live, you may score some extra tax incentives.

• Property tax exemptions: There is a statewide 100% property tax exemption for residential solar systems under two megawatts. Various municipalities have local property tax exemptions for renewable energy systems.
• Sales and use tax exemptions: Statewide sales and use tax exemption is 100% for qualifying systems. Local exemptions vary by municipality.
• Sales and use tax rebate: The City of Boulder has instituted an incentive program that provides a refund of 15% of the sales and use taxes levied on purchasing and installing solar panels or solar water heating systems. 

Solar rebates in Colorado

There’s no shortage of solar incentives in Colorado. Residents can also benefit from rebates, grants and low-cost loan programs.

• Holy Cross Energy customers are eligible to get a cash rebate after installing a solar panel system. There is a payment of $250 per kilowatt for the initial 6 kilowatts of installed capacity, followed by a payment of $100 per kilowatt for any additional capacity up to a maximum system size of 25 kilowatts. The total incentive amount is capped at $30,000 or 40% of the overall system cost, whichever is lower. This HCE program is currently in effect and not set to expire.
• San Miguel Power Association customers who have installed renewable energy systems, including solar panels, are eligible to receive a rebate incentive from the utility company. The rebate is calculated at a rate of 10 cents per watt of installed capacity, up to a maximum rebate amount of $300 for systems with a rated capacity not exceeding 3 kilowatts. This SMPA program is not set to expire.

Solar loan and grant programs in Colorado

If you can’t pay for your solar system out of pocket, there are many property-assessed clean energy (PACE) financing and solar loan programs across the state you can use to pay for your system:

• The Epic loan for Fort Collins Utilities customers is a low-interest loan that can cover the entire cost of residential solar projects, including solar panels and battery systems. You can get up to $50,000 and have up to 15 years to pay it back. This financing program is currently in effect with no expiration date.
• The Solar Grant Program for the City of Boulder gives income-qualified homes grants for installing PV and solar water heaters. The grant won't cover more than half the cost after you've used any rebates, tax credits or other perks. Disbursement is typically capped at a maximum of $8,000 or 50% of the total system cost, whichever is lower.
• The Elevations Energy program helps Denver and Boulder residents with low-cost solar financing options. Terms and conditions, including interest rates and repayment schedules, are subject to variability and are determined based on your creditworthiness and other factors.
• The Colorado RENU loan program offers residents low-interest, fixed-rate loans with no money down. The maximum loan amount available under this Residential Energy Upgrade program is $75,000.
• The Green Colorado Credit Reserve enables participating banks and credit unions to extend loan financing for residential energy efficiency and renewable energy projects at comparatively lower interest rates than would otherwise be available. The maximum loan amount that can be secured through GCCR is $100,000.

Additional solar incentives in Colorado

Check DSIRE for the most comprehensive source of information about solar incentives and policies in Colorado.

What to know about net metering in Colorado

Net metering is when you sell excess energy generated by your solar system to your local power company. Then, on days when your panels don’t generate enough energy, you can tap into the power grid and still turn your lights on.

In Colorado, excess electricity is compensated with a bill credit. Each kilowatt-hour (kWh) credit offsets 1 kWh of electricity consumption on a future bill. If you end up with credits you don’t use, at the end of the year, you can cash out the credits or donate them to the energy bills of low-income residents.

To get started, just reach out to your utility provider to find out how to sign up and what you need to qualify. This net metering policy has been around for a while, so it’s unlikely to change anytime soon. However, state regulators are considering reducing the rates at which homeowners are compensated for generating more electricity than their homes use.

Renewable Energy Credits

Xcel Energy customers with solar panels are eligible to participate in the Solar*Rewards Program. The utility company will purchase the Renewable Energy Credits (RECs) generated by the system at a rate of $1 per watt of installed capacity.

Eligibility for this program is contingent upon the system capacity not exceeding 7 kilowatts and the system's annual projected output not surpassing 120% of the home's average annual electricity consumption. This program has no expiration date.

How much are solar panels in Colorado?

After considering the federal solar tax credit, solar panel costs in Colorado typically range from $10,002 to $20,003. Your system size greatly affects how much you pay overall. The typical system size for solar systems in Colorado is 4.9 kW (kilowatts).

Often, leasing solar equipment or entering a power purchase agreement (PPA) is cheaper upfront, but you won’t be eligible for the same financial incentives to go solar.

Average solar cost by system size in Colorado

Solar resources in Colorado

Below are some additional resources that can guide you through transitioning to solar in Colorado.

• Colorado Clean Energy Fund
• REenergizeCO
• Xcel Energy net energy metering
• Colorado Department of Local Affairs resources and incentives guide

Find solar companies in Colorado

A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our picks for Colorado’s top solar companies to learn more.

FAQ

Bottom line

Not only is it more affordable to go solar in Colorado than elsewhere, but there are also plenty of incentives to make the switch even easier. The Centennial State has low-interest loans, grants, rebates and tax breaks. All these incentives can substantially lower the cost of installing solar panels.

The ConsumerAffairs Research Team conducted an in-depth analysis to determine the average costs of going solar and incentives in other states. Turns out, it’s worth it for many homeowners, particularly for Coloradans.

Solar costs vs. savings: Colorado and nearby states