Colorado Solar Incentives, Tax Credits and Rebates (2026)

Solar incentives in Colorado

Utility rebates for energy-saving upgrades generally aren’t counted as federal taxable income. Payments for electricity or renewable energy credits may be treated differently, though, so check with a tax professional if you’re unsure.

Residential solar property tax exemption

Qualifying residential solar systems producing less than 100 kW are exempt from Colorado property tax. Most home systems fall well below that limit.

This means the value your solar panels add to your home generally will not increase your property tax bill.

Solar sales and use tax exemption

Eligible solar equipment — including panels, inverters, wiring and mounting structures — is exempt from Colorado state sales and use tax.

The exemption also applies to taxes charged by certain state-administered special districts. However, city and county sales taxes may still apply unless the local government has adopted its own exemption.

Labor and remote monitoring equipment are not covered by this particular exemption. Energy storage devices are also excluded from the renewable energy components exemption, but qualifying residential battery systems are covered by a separate Colorado state sales and use tax exemption.

Boulder solar and battery tax rebate

Boulder residents and businesses may receive a rebate equal to approximately 15% of the city sales and use taxes paid on eligible solar materials and permits. As of April 2026, permanently installed battery systems may also qualify.

You must apply within 12 months of the city’s final inspection, and rebates are subject to available funding.

Residential energy storage tax credit

Colorado offers an income tax credit equal to 10% of the qualifying purchase price of a residential battery or other eligible energy storage system. The credit is currently available through Dec. 31, 2029.

Homeowners can claim the credit on their Colorado tax return or assign it to the system’s seller, which may provide an upfront discount. If you claim it yourself, the credit is nonrefundable and cannot be carried forward to a later tax year.

Pro tip

Ask the installer whether the advertised price assumes that you will assign the battery credit to the company.

Solar rebates in Colorado

Solar rebates are generally offered by local utilities rather than the state. Eligibility depends on your electricity provider, system specifications and available funding.

San Miguel Power Association solar rebate

San Miguel Power Association offers residential customers a rebate of 10 cents per watt, up to $300 for a 3-kW system.

The contractor must submit the rebate application on the customer’s behalf, and application deadlines apply.

What to know about net metering in Colorado

Net metering gives you credit when your solar panels send extra electricity to the grid. You can then use those credits to offset electricity you draw from the grid when your panels are not producing enough power.

Net-metering policies vary among Colorado utilities, electric cooperatives and municipal providers.

How it works for Xcel Energy customers

Xcel Energy places excess solar production in a virtual solar bank. Customers generally have two options:

• Continuous rollover: Excess power is converted into a bill credit using the prevailing energy rate. Unused credits roll over from month to month, but they cannot be cashed out or transferred if you move.
• Year-end payout: Excess production remains in the Solar Bank until the end of the year. Xcel then pays for the remaining electricity using its average hourly incremental cost, which is typically lower than the retail rate.

Customers may also have the option to donate year-end credits to help income-qualified households.

Other utilities and electric cooperatives set their own rates, rollover policies and system limits. Before estimating your savings, ask your utility:

• What rate will I receive for excess electricity?
• Do credits expire or roll over?
• Can unused credits be cashed out?
• Are there monthly fees or system-size limits?

Renewable energy credits

Renewable energy credits, or RECs, represent the environmental benefits of the electricity your solar panels produce. One REC generally represents one megawatt-hour of renewable electricity.

Xcel Energy Solar*Rewards

Xcel Energy’s current residential Solar*Rewards offering provides an upfront incentive to customers who meet income requirements or live in a qualifying disproportionately impacted community. In exchange, Xcel receives the system’s renewable energy credits.

Eligible customers may receive an upfront incentive of $3 or 50 cents per watt for systems up to 10 kW, subject to program funding and requirements, with a $30,000 cap. Because incentive amounts, contract terms and available funding can change, confirm the current Solar*Rewards offer before signing an installation agreement.

Did you know?

Qualifying utility subsidies for energy-conservation improvements generally aren’t included in federal taxable income. Payments for electricity or renewable energy credits may be taxable, though, so consider consulting a tax professional.

How much do solar panels cost in Colorado?

Solar panel costs in Colorado typically range from $13,941 to $27,882 before incentives. Your system size greatly affects how much you pay overall. The typical solar system size in Colorado is 4.9 kW.

Average solar cost by system size in Colorado

How can I pay for solar panels in Colorado?

You can pay cash, but most people finance solar panels with a solar loan. It works a lot like any other type of loan — there’s an application and approval process, and you pay it back over time (with interest). You also have the option of getting a lease or power purchase agreement.

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.

» SOLAR PANELS: Lease vs. buy

Solar loan and grant programs in Colorado

If you can’t pay for your solar system out of pocket, there are several solar incentive programs across the state that may help.

• 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 receive 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 homeowners 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.
• Elevations Credit Union offers home energy loans to homeowners across Colorado for solar panels and other qualifying improvements. Rates and repayment terms depend on the borrower and loan.
• The Colorado RENU Loan offers fixed-rate financing with no money down for solar and other qualifying home energy improvements. Homeowners can borrow up to $75,000 with repayment terms of up to 20 years.

Federal solar loan programs

The 30% residential federal solar tax credit is gone, but a handful of standing federal programs can still help Colorado homeowners offset the cost of solar and other home energy upgrades:

• Energy Efficient Mortgages: FHA-backed Energy Efficient Mortgages let eligible homebuyers and homeowners roll the cost of solar panels and other energy upgrades into their home loan instead of paying for them separately.
• Fannie Mae Green Financing: Fannie Mae offers green financing to help owners of apartment buildings and cooperatives cut utility costs through solar and other efficiency upgrades. This is less relevant to single-family Colorado homeowners but may apply to larger residential properties, such as condo or co-op buildings.

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

Whether solar is worth it depends on your installation cost, electricity use, financing terms and utility’s net-metering policy. Colorado’s tax exemptions, battery credit, local rebates and financing programs can make the investment more affordable for qualifying homeowners.

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 in Colorado.

Solar costs vs. savings: Colorado and nearby states