Solar Incentives in Massachusetts
In 2026, Massachusetts homeowners have access to several active state-level incentives for solar installations. The state income tax offers a credit equal to 15% of net expenditure on qualifying renewable energy property, capped at $1,000, with a three-year carryforward for any unused amount. Solar equipment is fully exempt from the Massachusetts 6.25% sales tax at the point of sale, and a qualifying system is exempt from local property taxes for 20 years. Investor-owned utilities — Eversource, National Grid, and Unitil — are required to offer net metering; credit rates vary by utility and by facility class, so homeowners should confirm the applicable rate with their specific utility. The SMART 3.0 program, operating under 225 CMR 28.00 and approved by the Department of Public Utilities in May 2026, provides a flat per-kilowatt-hour performance incentive for systems 25 kW AC or smaller, locked in at qualification, with an additional adder for low-income participants.
The federal picture has changed materially for new installations in 2026. The federal residential Clean Energy Credit under §25D — commonly called the 30% credit — expired for systems placed in service after December 31, 2025, under the One Big Beautiful Budget Act (Pub. L. 119-21). Homeowners installing solar in 2026 do not qualify for that federal credit, which meaningfully lengthens the payback period compared to prior years.
Massachusetts residential electricity averaged 30.21 cents per kilowatt-hour as of March 2026, one of the higher rates nationally. That elevated rate improves the value of each kilowatt-hour a system produces or offsets, which partially compensates for the loss of the federal credit when estimating payback.
Figures here are verified as of June 2026 against official sources; programs, rates, and eligibility rules change with each legislative session and rate case, and the Massachusetts Department of Energy Resources, Department of Revenue, and Department of Public Utilities are the authoritative sources for current program details.
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 Massachusetts
Residential Renewable Energy Income Tax Credit (Schedule EC)
Massachusetts allows an owner or tenant of residential property in the commonwealth, who is not a dependent of another taxpayer and who occupies the property as a principal residence, a personal income tax credit equal to 15% of the net expenditure for renewable energy source property (including solar) or $1,000, whichever is less. Net expenditure is the purchase price plus installation cost, reduced by federal credits received under the Internal Revenue Code and certain federal grants or rebates. Unused credit may be carried forward for up to the next three taxable years, and joint owners share the credit in proportion to their ownership interest. The credit is claimed on Massachusetts Schedule EC (Solar and Wind Energy Credit).
| Amount | 15% of net expenditure, capped at $1,000; 3-year carryforward of any excess. |
|---|---|
| Who qualifies | Owners or tenants of Massachusetts residential property occupied as the taxpayer's principal residence; for newly constructed homes, the credit goes to the original owner/occupant; property must be expected to remain in operation at least five years. |
| Administered by | Massachusetts Department of Revenue |
Source: M.G.L. c. 62, § 6(d); 830 CMR 62.6.1 (Residential Energy Credit); DOR Schedule EC Official source →
Solar and Wind Powered Systems Property Tax Exemption
Massachusetts exempts from local property tax an owned or leased solar powered system, wind powered system, or a solar or wind system co-located with energy storage, if the system (i) is capable of producing not more than 125% of the annual electricity needs of the real property on which it is located (including commonly owned contiguous or non-contiguous parcels in the same municipality), (ii) is 25 kW or less in capacity as verified by DOER incentive program or utility permission-to-operate documentation, or (iii) has a payment-in-lieu-of-taxes (PILOT) agreement with the host municipality. The exemption runs for 20 years, and a longer period may be allowed by written agreement with the municipality. Systems owned by electric distribution companies are excluded.
| Amount | 100% local property tax exemption for 20 years (longer by agreement with the municipality). |
|---|---|
| Who qualifies | Owners or lessees of solar or wind powered systems (optionally co-located with energy storage) meeting the 125%-of-annual-needs test, the 25 kW small-system test, or holding a PILOT agreement; not available for utility-owned systems. |
| Administered by | Local boards of assessors / Massachusetts Department of Revenue, Division of Local Services |
Source: M.G.L. c. 59, § 5, Clause Forty-fifth Official source →
Solar Equipment Sales Tax Exemption
Massachusetts exempts from sales tax sales of equipment directly relating to any solar, wind-powered, or heat pump system that is used as a primary or auxiliary power system for heating or otherwise supplying the energy needs of an individual's principal residence in the commonwealth. The exemption applies at the point of sale to qualifying equipment purchases.
| Amount | 100% exemption from the Massachusetts sales tax (6.25%) on qualifying equipment. |
|---|---|
| Who qualifies | Equipment for solar, wind, or heat pump systems serving an individual's principal residence in Massachusetts; commercial installations are not covered by this clause. |
| Administered by | Massachusetts Department of Revenue |
Source: M.G.L. c. 64H, § 6(dd) Official source →
Corporate Excise Deduction for Solar or Wind Powered Units
A Massachusetts business corporation may elect to deduct from net income subject to the corporate excise the expenditures paid or incurred during the taxable year to install any solar or wind powered climatic control unit or solar or wind powered water heating unit (or other unit or system powered thereby), including attendant labor costs, and the cost of converting existing units to solar or wind power. The unit must be located in Massachusetts and used exclusively in the corporation's trade or business, and the deduction is in lieu of other deductions or depreciation for the same expenditures. If within ten years the unit is used other than exclusively in the corporation's trade or business, the deduction is subject to recapture.
| Amount | Deduction of 100% of qualifying installation/conversion expenditures (including labor) in the year paid or incurred. |
|---|---|
| Who qualifies | Business corporations subject to the Massachusetts corporate excise installing solar or wind powered climatic control or water heating units with a situs in Massachusetts, used exclusively in the corporation's trade or business; units must meet applicable certification requirements. |
| Administered by | Massachusetts Department of Revenue |
Source: M.G.L. c. 63, § 38H Official source →
Massachusetts Net Metering
Massachusetts law requires investor-owned distribution companies (Eversource, National Grid, Unitil) to offer net metering to customers with on-site generation, organized into classes by size: Class I facilities up to 60 kW, Class II solar/wind/agricultural/anaerobic-digestion facilities over 60 kW up to 1 MW, and Class III facilities over 1 MW up to 2 MW (with higher per-unit allowances for municipal and governmental facilities). When a facility generates more than the customer uses in a billing period, the customer is billed for zero kWh and receives net metering credits that carry forward month to month; credit values are formula-based combinations of the distribution company's default service, distribution, transmission, and transition kWh charges, varying by class. Facilities may allocate credits to other customers of the same distribution company within the same ISO-NE load zone, and aggregate net metering capacity is subject to statutory caps administered by the Department of Public Utilities. Municipal light plant customers are not covered by the statewide rules.
| Amount | Class I/II credits approximate the sum of default service, distribution, transmission, and transition kWh charges; Class III credits exclude the distribution charge (except for municipal/governmental facilities); credits carry forward indefinitely month to month; values vary by utility tariff. |
|---|---|
| Who qualifies | Customers of Massachusetts investor-owned distribution companies with qualifying Class I, II, or III net metering facilities, subject to aggregate capacity caps; municipal utility customers must check their own provider's policy. |
| Administered by | Massachusetts Department of Public Utilities |
Source: M.G.L. c. 164, §§ 138-140; DPU net metering regulations (220 CMR 18.00) Official source →
Solar Massachusetts Renewable Target (SMART) 3.0 Program
SMART is the statewide performance-based solar incentive administered by the Department of Energy Resources; the redesigned SMART 3.0 program was promulgated under 225 CMR 28.00 (final regulations filed August 28, 2025), and the DPU approved the revised SMART 3.0 tariff on May 19, 2026. Small solar tariff generating units (25 kW AC or less) and low-income units receive a flat incentive rate per kWh of energy generated, locked in at the time of qualification and guaranteed for the tariff term, with an adder on the flat rate for low-income customers; larger projects compete for capacity, with enhanced offerings for canopy, landfill, and brownfield projects. Program Year 2026 makes 600 MW AC of capacity available for units subject to the capacity cap, and the program includes consumer-protection requirements for installers; community solar projects must enroll a minimum of 40% low-income customers. Incentives are paid by the investor-owned distribution companies under DPU-approved tariffs.
| Amount | Flat per-kWh incentive rate for systems 25 kW AC or less, locked at qualification, with a low-income adder; current rate values are published by DOER in the SMART 3.0 program documents and company tariffs (direct rate tables could not be fetched; see source). |
|---|---|
| Who qualifies | Solar tariff generating units interconnected with Massachusetts investor-owned distribution companies (Eversource, National Grid, Unitil); residential, low-income, community solar, and larger behind-the-meter and standalone projects each have defined qualification paths; municipal light plant territories are not eligible. |
| Administered by | Massachusetts Department of Energy Resources (DOER); incentives paid via investor-owned utility tariffs |
Source: 225 CMR 28.00 (SMART Program 3.0); St. 2016, c. 75, § 11; DPU tariff approval May 19, 2026 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.