Texas Solar Incentives, Tax Credits and Rebates

Residential solar panel incentives in Texas

In addition to several local incentives, a statewide solar property tax exemption means that your property taxes won’t increase if solar panels add value to your house. Check DSIRE for the most comprehensive source on solar incentives and policies in Texas.

Solar panel rebates in Texas

• Austin Energy offers a $2,500 rebate for installing a qualifying solar panel system and completing a solar education course.
• CPS Energy customers can take advantage of the Residential Energy Efficiency Rebate Program when installing solar panels.
• Oncor has a residential solar program that offers financial incentives to customers who install solar panels with an energy storage backup system.
• New Braunfels Utilities has solar rebates of up to $3,000.
• AEP Texas North and AEP Texas Central both offer rebate programs for residential and commercial customers who install solar systems. Maximum rebate amounts vary by system size.
• The City of Sunset Valley offers a solar panel rebate program for residents of $1 per watt, up to $3,000.
• SMTX Utilities in San Marcos offers solar panel rebates of up to $2,500 for residential customers and $5,000 for commercial customers.

Federal solar tax credit

The federal solar investment tax credit (ITC) is still the best way for most residents to save money going solar. The ITC reduces your federal tax liability by 30% of the cost of installing solar panels. This is different from a deduction, which lowers your taxable income. ITC is a credit, meaning it directly decreases the amount of taxes you owe.

For example, if you spend $10,000 installing a solar energy 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.

Tax credits offset your tax liability, so it’s only useful if you owe federal income taxes in the first place. However, the credit rolls over to the next tax year if you don’t use the full amount. You don’t get these benefits automatically, though. You must claim it using Form 5695.

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.

Nonresidential solar incentives in Texas

Net metering in Texas

Net metering is essentially a give-and-take system between you and your utility company. It allows you to pull power from the grid when your solar panels aren’t producing enough electricity (at night or on cloudy days) and it lets you earn credits for any excess solar energy you send back. These credits can offset your electricity bill during periods of higher usage.

However, Texas has no mandatory statewide net metering policy. The Public Utility Commission of Texas regulates electric utilities, but net metering programs are offered at the discretion of local utilities and Retail Electricity Providers (REPs), which can vary significantly in terms of eligibility, credit rates and rollover policies.

“Because the grid is deregulated, homeowners sign up with a retail provider for energy. That’s different from other states where a utility might be required to offer a consistent net metering rate. In Texas, those rates vary not just by provider, but often within the same provider based on the plan,” Bramlett explained.

Net metering vs. solar buyback plans

It’s important to distinguish between net metering and solar buyback plans, especially in Texas's deregulated energy market:

• Net metering, typically offered by municipal utilities and cooperatives, credits you at a fixed rate (often the retail or avoided cost rate) for every kilowatt-hour of excess energy your system exports. These credits can offset future electricity use and may roll over from month to month.
• Solar buyback plans, common in deregulated areas, are offered by REPs and often use market-based pricing for exported electricity. In many cases, you’ll pay a higher rate to consume power than you receive for sending energy back to the grid. For example, you might pay 21 cents per kWh and receive only 10 cents per kWh for exported solar.

Time-of-use rates vs. buyback variability Texas

Your rate might change over time. For example, Jerry in La Porta used to have a net metering plan that credited him the same rate for solar sent to the grid as he paid to use electricity. “If I generated 200 and consumed 200, my net usage was zero, and my bill was essentially zero,” he said.

But when he renewed his contract, the terms changed. “Now, I'm paying 21 cents a kilowatt-hour for usage, and I'm only getting back 10 cents a kilowatt-hour for anything I push back to the grid. There's another $40 a month service fee from the utility company as well,” he said. “So, the incentive isn't quite what it was a year ago. Still, it's a good value.”

Jerry’s experience highlights the reality in Texas: solar buyback rates vary by provider and plan. They can also shift significantly at renewal. Unlike traditional 1:1 net metering, many Retail Electricity Providers (REPs) in Texas use market-based pricing for excess energy. While some utilities offer time-of-use (TOU) billing, it’s still relatively rare statewide.

How much are solar panels in Texas?

After considering the federal solar tax credit, solar panel costs in Texas typically range from $7,491 to $14,983. On the high end, Michael in Humble, Texas, told us he spent $75,000 going solar.

Not surprisingly, a larger system is more expensive. The typical system size for solar systems in Texas is 7.1 kW (kilowatts). Depending on your current energy usage, you might need a bigger or smaller system.

Average solar panel cost by system size in Texas

How much Texans can save with solar panels

On average, Texas homeowners with solar panels avoid $80,284 in utility costs over 25 years. Many solar customers in Texas see significantly lower utility bills. For example, Don in San Antonio, Texas, said their monthly electric bill went down from around $250 to $80.

Your current electric bill is the starting point for assessing the financial benefits of transitioning to solar energy. Knowing your average energy consumption helps determine the size and capacity of the solar system you need. Once you know this, you can figure out potential savings and how long it should take for your solar installation to pay for itself.

Solar resources in Texas

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

• Texas Solar Energy Society
• LoanSTAR Revolving Loan Program
• Texas Solar United Neighbors
• TDLR Solar Panel Consumer Information

Find solar companies in Texas

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

FAQ

Bottom line

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 in Texas.

Solar costs vs. savings: Texas and nearby states