Solar Incentives in California
California homeowners who installed solar in 2026 have access to several active state-level incentives. The state's property tax exclusion for active solar energy systems means a qualifying installation does not trigger a new-construction reassessment, so the homeowner's property tax bill is unaffected by the added value of the system. Customers of the three large investor-owned utilities — PG&E, SCE, and SDG&E — export surplus generation under the Net Billing Tariff adopted in CPUC Decision D.22-12-056; export credits are based on an avoided-cost value-to-grid rate that varies by utility, hour, and month, so actual compensation differs across utilities and time. The Self-Generation Incentive Program (SGIP) offers upfront rebates — including $1,100 per kWh for storage and $3,100 per kW for solar under its Residential Solar and Storage Equity budget — for qualifying paired solar-plus-storage systems. Income-qualified homeowners in disadvantaged communities may be eligible for no-cost installations through DAC-SASH, while the SOMAH program similarly supports multifamily affordable housing. PACE financing, community solar options under the GTSR program, and a partial sales-and-use-tax exemption for qualifying businesses round out the active incentive landscape.
On the federal side, the residential Clean Energy Credit under Internal Revenue Code §25D — commonly called the 30% solar tax credit — expired for systems placed in service after December 31, 2025, under the One Big Beautiful Budget Act (Pub. L. 119-21). A homeowner whose system is installed and placed in service in 2026 does not qualify for that credit. The absence of this incentive, which had substantially reduced out-of-pocket costs for many installations in prior years, lengthens the payback period compared with what buyers in 2024 or 2025 experienced.
No currently active California residential solar program has been repealed as of the verified date. California's residential electricity rate averaged approximately 33.35 cents per kilowatt-hour as of March 2026 — up about 0.87 cents year-over-year — meaning each kilowatt-hour of solar generation that offsets grid purchases carries meaningful bill value, even as the loss of the federal credit increases the time needed to recover system costs.
These figures are verified as of June 2026 against official sources; programs, tariff structures, and incentive budgets change with each legislative session and CPUC rate case. The California Public Utilities Commission (cpuc.ca.gov), the California State Board of Equalization, and the CDTFA are the authoritative sources for current program rules and eligibility
Federal credit update. The federal residential Clean Energy Credit (the 30% “solar tax credit” under §25D) expired for systems placed in service after December 31, 2025. New 2026 residential installs do not qualify; a 2025 install can still be claimed on a 2025 return (IRS Form 5695). What this means for 2026 →
Current solar incentives in California
Active Solar Energy System New Construction Exclusion
California excludes qualifying active solar energy systems from property tax reassessment as new construction, so installing a system does not increase the property's assessed value. Qualifying systems use solar devices for electricity production, water heating, space conditioning, process heat, or solar mechanical energy; solar pool and hot tub heaters are excluded. The exclusion is scheduled to sunset on January 1, 2027 (it applies through the 2025-26 fiscal year), but systems that qualify before that date keep the exclusion until the property changes ownership.
| Amount | Full exclusion of the qualifying system's value from new-construction property tax assessment; not a reduction of existing assessment. |
|---|---|
| Who qualifies | Owners of properties where a qualifying active solar energy system is newly constructed or added; applies statewide through the 2025-26 fiscal year (sunset January 1, 2027). |
| Administered by | California State Board of Equalization (assessed by county assessors) |
Source: Cal. Rev. & Tax. Code § 73 (as amended by SB 710, Stats. 2025, Ch. 328) Official source →
Net Billing Tariff (NBT) / Net Energy Metering
Customers of California's three large investor-owned utilities (PG&E, SCE, SDG&E) who install solar or other renewable generation are compensated under the Net Billing Tariff, adopted in CPUC Decision D.22-12-056. Since April 15, 2023, onsite generation first offsets the customer's own load, and exports to the grid are credited at a rate reflecting the value of that generation to the grid rather than the full retail rate. Legacy NEM 1.0 and NEM 2.0 tariffs, which credited exports at retail rates, are closed to new enrollments. Virtual net billing, aggregation subtariffs, and related options exist for multi-tenant and multi-meter properties.
| Amount | Export credits at an avoided-cost-based value-to-grid rate that varies by utility, hour, and month; legacy NEM customers retain retail-rate crediting. |
|---|---|
| Who qualifies | Customers of PG&E, SCE, and SDG&E interconnecting renewable generation (primarily rooftop solar) on the customer side of the meter; municipal utilities such as LADWP and SMUD set their own tariffs. |
| Administered by | California Public Utilities Commission |
Source: CPUC Decision D.22-12-056 (Net Billing Tariff); Cal. Pub. Util. Code net energy metering provisions Official source →
Self-Generation Incentive Program (SGIP)
SGIP provides upfront incentives for distributed energy resources installed on the customer side of the meter, most prominently battery storage and combined solar-plus-storage. The Residential Solar and Storage Equity budget, established by Decision D.24-03-071 under AB 209 and opened for reservations on June 2, 2025, funds paired solar and storage at low-income residential properties with a $280 million authorized budget. Applications go through utility program administrators (PG&E, SCE, SoCalGas, Center for Sustainable Energy, and LADWP); the 2026 SGIP Handbook governs current rules.
| Amount | Residential Solar and Storage Equity budget: $1,100 per kWh for storage and $3,100 per kW for solar (per CPUC SGIP page); other budget categories (Equity Resiliency $1,000/kWh, Small Residential Storage $150/kWh) were listed as available through 2025. |
|---|---|
| Who qualifies | Low-income residential electric and/or gas customers in California for the Residential Solar and Storage Equity budget; other budgets serve IOU residential and non-residential customers with category-specific criteria in the SGIP Handbook. |
| Administered by | California Public Utilities Commission via utility program administrators |
Source: CPUC Decisions D.20-01-021 (SB 700) and D.24-03-071 (AB 209); program portal selfgenca.com Official source →
Partial Sales and Use Tax Exemption for Manufacturing, R&D, and Electric Power Equipment
Businesses primarily engaged in electric power generation or production, storage, or distribution (NAICS 22111-221118 and 221122), as well as manufacturers and certain R&D firms, may claim a partial exemption from California sales and use tax on qualified machinery and equipment, including solar power equipment and special-purpose buildings integral to power generation or storage. The electric-power expansion took effect January 1, 2018 under AB 398, and the exemption runs through June 30, 2030. This is a business incentive; it does not apply to a typical homeowner's rooftop solar purchase.
| Amount | Partial exemption from the state portion of sales and use tax on qualified tangible personal property; CDTFA guide governs qualifying property and claim procedures. |
|---|---|
| Who qualifies | Qualified persons primarily engaged in manufacturing, specified R&D, or electric power generation/production, storage, or distribution; property must be qualified tangible personal property used in a qualified manner. |
| Administered by | California Department of Tax and Fee Administration |
Source: Cal. Rev. & Tax. Code § 6377.1 (as amended by AB 398, Stats. 2017, Ch. 135) Official source →
Property Assessed Clean Energy (PACE) Financing
California authorizes local public agencies to offer voluntary contractual assessments that let property owners finance distributed-generation renewable energy (including solar) and energy or water efficiency improvements that are permanently fixed to real property, repaid through the property tax bill. The legislative body designates a program area by resolution and the assessment attaches to the property. Residential PACE program administrators are licensed and regulated by the California Department of Financial Protection and Innovation.
| Amount | Financing amounts and terms vary by local program and program administrator; repaid as a contractual assessment on the property tax bill. |
|---|---|
| Who qualifies | Property owners within a public agency's designated contractual assessment area; improvements must be permanently fixed to the property. Consumer protections apply to residential PACE. |
| Administered by | Local public agencies; residential PACE administrators regulated by the California Department of Financial Protection and Innovation |
Source: Cal. Streets & Highways Code § 5898.20 (Contractual Assessments, AB 811 framework) Official source →
Solar on Multifamily Affordable Housing (SOMAH)
SOMAH, created by AB 693 (2015) and designed in CPUC Decision D.17-12-022, provides upfront incentives for installing solar PV on existing multifamily affordable housing, with a goal of at least 300 MW installed by December 31, 2032. Tenants must receive direct bill savings through the SOMAH virtual net energy metering tariff. The program is funded at up to $100 million annually from IOU greenhouse-gas auction proceeds, collected through June 2026.
| Amount | Up to $3.50 per AC watt for capacity serving tenant load and $1.19 per AC watt for common-area load (as of March 16, 2023); levels depend on tax credit usage and expected system performance. |
|---|---|
| Who qualifies | Existing multifamily affordable housing properties in IOU service territories meeting deed-restriction/affordability criteria, with priority for disadvantaged communities defined via CalEnviroScreen. |
| Administered by | California Public Utilities Commission; statewide program administrator at calsomah.org |
Source: AB 693 (Stats. 2015, Ch. 582); CPUC Decision D.17-12-022 Official source →
Disadvantaged Communities - Single-family Solar Homes (DAC-SASH)
DAC-SASH provides no-cost rooftop solar installations for income-qualified single-family homeowners in disadvantaged communities, using $3-per-watt incentives plus energy efficiency training. Eligible customers must qualify for the CARE or FERA low-income rate programs and live in a CalEnviroScreen-defined disadvantaged community (or San Joaquin Valley pilot community); the program also funds solar job training. GRID Alternatives administers the program statewide under CPUC Resolution E-5020 (2019).
| Amount | $3.00 per watt incentive, structured so participating income-qualified homeowners receive solar at no cost. |
|---|---|
| Who qualifies | Income-qualified single-family homeowners (CARE or FERA eligible) in top-25% CalEnviroScreen disadvantaged communities, certain high-pollution-burden tracts, California Indian Country, or San Joaquin Valley pilot communities; IOU service territories. |
| Administered by | GRID Alternatives (statewide administrator) under the California Public Utilities Commission |
Source: CPUC Resolution E-5020 (Sept. 12, 2019); R.14-07-002 Official source →
Green Tariff Shared Renewables Program (GTSR) / Enhanced Community Renewables
Enacted by SB 43 (2013), GTSR lets IOU customers who cannot install onsite solar buy renewable energy through two paths: a Green Tariff under which the customer pays to source 50-100% renewable generation, and Enhanced Community Renewables, under which the customer purchases a share of a community solar project from a developer and receives utility bill credits for avoided generation procurement. The program is capped at 600 MW across the IOUs, and program costs may not be shifted to non-participants. Related Disadvantaged Communities Green Tariff and Community Solar Green Tariff options give DAC residents a 20% bill discount; California's community solar framework is being reworked under AB 2316 in a consolidated CPUC proceeding.
| Amount | Green Tariff: customer pays the difference between standard generation charges and renewable procurement cost; ECR: bill credit for avoided generation procurement; DAC-GT/CSGT: 20% bill discount for eligible DAC customers. |
|---|---|
| Who qualifies | PG&E, SCE, and SDG&E customers (SDG&E's green tariff component was suspended in 2022; its ECR and DAC programs continue); DAC-GT/CSGT limited to disadvantaged-community residents. |
| Administered by | California Public Utilities Commission with the investor-owned utilities |
Source: SB 43 (2013); CPUC D.15-01-051; AB 2316 community solar proceeding Official source →
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Programs verified as of June 2026 against official state and federal sources (each cited above); refreshed quarterly as legislatures and utility rate cases change the rules. How we verify this data. This page is informational only — not tax or legal advice.