Solar Incentives in Minnesota
Minnesota homeowners installing solar in 2026 can draw on several active state-level incentives. The state exempts qualifying solar energy systems from Minnesota sales and use tax under Minn. Stat. 216C.06, meaning the purchase price of a residential system is not subject to state sales tax. Solar energy generating systems are also exempt from property tax as personal property, and residential real property is classified without regard to the solar installation, so a rooftop system does not increase a homeowner's property tax bill. Minnesota law requires all electric utilities — including cooperatives and municipal utilities — to interconnect customer generators and compensate net input for systems under 40 kW, though compensation rates vary by utility and should be confirmed with the serving utility directly. Xcel Energy customers may also access the Solar*Rewards production incentive, which pays a per-kWh amount over ten years for systems up to 40 kW AC, with rates set under Commerce-approved program plans. Minnesota Power customers in lower-income households (below 150% of area median income) may be eligible for the SolarSense rebate, calculated at $0.27 per estimated annual kWh of production, capped at the lesser of $5,000 or 60% of installed cost.
The federal picture has changed materially for 2026 installations. The residential Clean Energy Credit under Internal Revenue Code §25D — commonly called the 30% federal tax credit — expired for systems placed in service after December 31, 2025, under the One Big Beautiful Budget Act (Pub. L. 119-21). Homeowners installing a new residential solar system in 2026 do not qualify for that credit. The loss of this previously significant offset lengthens payback periods compared to prior years, making the remaining state exemptions and utility incentives relatively more important to the overall economics.
No major Minnesota solar incentive program appears to have been repealed as of June 2026. Minnesota's residential electricity rate averaged approximately 15.08 cents per kWh as of March 2026, a modest decrease from the prior year, which affects how quickly self-generated solar energy offsets utility bills and influences payback calculations alongside the available exemptions and incentives.
Figures here are verified as of June 2026 against official sources; programs and rates change with each legislative session and utility rate case, and the Minnesota Department of Commerce, Minnesota Public Utilities Commission, and Minnesota Department of Revenue 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 Minnesota
Solar Energy Sales Tax Exemption
Minnesota exempts solar energy systems from state sales and use tax. The exemption applies to solar energy systems as defined in Minn. Stat. 216C.06, which covers equipment that collects, stores, or distributes solar energy, so a residential solar purchase avoids Minnesota's state sales tax on the system.
| Amount | 100% exemption from Minnesota sales and use tax on qualifying solar energy systems. |
|---|---|
| Who qualifies | Purchases of solar energy systems as defined in Minn. Stat. 216C.06, subd. 17. |
| Administered by | Minnesota Department of Revenue |
Source: Minn. Stat. § 297A.67, subd. 29 Official source →
Solar Energy Generating Systems Property Tax Exemption
Personal property consisting of solar energy generating systems is exempt from Minnesota property tax. For property that is not used primarily for solar energy production (such as a home with rooftop panels), the real property is classified without regard to the solar system, so installing solar does not increase the homeowner's property tax assessment. Larger systems used primarily for energy production are instead subject to a per-MWh production tax under Minn. Stat. 272.0295.
| Amount | 100% exemption of the solar energy generating system (personal property) from property tax; residential real property is assessed as if the system were not present. |
|---|---|
| Who qualifies | Solar energy generating systems as defined in Minn. Stat. 272.0295; statewide. |
| Administered by | County assessors / Minnesota Department of Revenue |
Source: Minn. Stat. § 272.02, subd. 24 Official source →
Minnesota Net Metering
Minnesota's cogeneration and small power production statute requires all electric utilities, including cooperatives and municipal utilities, to interconnect and compensate customer generators. Customers with systems under 40 kW may elect to be compensated for net input at the average retail utility energy rate; customers of investor-owned utilities with systems from 40 kW up to 1 MW may elect a kWh credit carried forward on later bills. For co-op and municipal customers under 40 kW who elect kWh credits, unused credits cancel at the end of the calendar year, and these utilities may charge a reasonable cost-based fixed fee.
| Amount | Systems under 40 kW: net input compensated at the average retail energy rate (or kWh bill credits at the customer's election). Public utility customers 40 kW to under 1,000 kW: kWh credits carried forward to subsequent bills. Xcel customers may instead take a value-of-solar rate where applicable. |
|---|---|
| Who qualifies | Customers of any Minnesota electric utility; retail-rate election limited to qualifying facilities under 40 kW capacity; net metered facilities up to 1,000 kW at public (investor-owned) utilities. |
| Administered by | Minnesota Public Utilities Commission |
Source: Minn. Stat. § 216B.164, subds. 3 and 3a Official source →
Community Solar Garden Program
Minnesota law requires Xcel Energy (the utility subject to Minn. Stat. 116C.779) to operate a community solar garden program in which subscribers receive bill credits for electricity generated in proportion to the size of their subscription. The legacy program required at least five subscribers per garden with no subscriber holding more than 40%, subscriptions of at least 200 watts, and sizing of no more than 120% of the subscriber's average annual consumption. For gardens approved beginning January 1, 2024, a restructured program administered by the Department of Commerce applies, with dedicated categories for low- to moderate-income and public-interest subscribers; the statute was further amended in 2023 and 2026.
| Amount | Bill credits for subscribed energy in proportion to subscription size; credit rates set under commission/department-approved program terms. |
|---|---|
| Who qualifies | Retail customers of Xcel Energy; legacy program required subscribers in the same or a contiguous county as the garden; new program includes LMI subscriber provisions (income at or below 150% of area median income). |
| Administered by | Minnesota Department of Commerce (program approved since 2024); Minnesota Public Utilities Commission (legacy program); operated in Xcel Energy territory |
Source: Minn. Stat. § 216B.1641 Official source →
Solar Energy Production Incentive Program (Xcel Energy Solar*Rewards)
Minnesota statute requires Xcel Energy to operate a production incentive program for customer solar systems with aggregate capacity of no more than 40 kW AC per premise, funded from the state's renewable development account. Incentives are paid per kWh of production for ten years from commissioning, and systems must be sized below 120% of the customer's on-site annual consumption. The statute allocates $5 million per year to the program from 2026 through 2035, with half of each year's funds reserved for installations meeting low-income eligibility standards.
| Amount | Per-kWh production payments for 10 years; incentive rates set in the Commerce-approved program plan and vary by year and income category. Statutory funding: $5,000,000 per year, 2026-2035, half reserved for low-income-eligible systems. |
|---|---|
| Who qualifies | Xcel Energy customers with solar systems up to 40 kW AC aggregate per premise, sized under 120% of on-site annual consumption (including other DG and community solar subscriptions). |
| Administered by | Xcel Energy, under Minnesota Department of Commerce oversight |
Source: Minn. Stat. § 116C.7792 Official source →
Minnesota Power SolarSense Rebate Program
Minnesota Power's SolarSense program pays rebates that reduce the upfront cost of customer solar PV systems, with eligibility limited to households earning less than 150% of area median income. The rebate is performance-based: the system's PVWatts-estimated annual production is multiplied by $0.27/kWh, capped at $5,000 or 60% of installed cost, whichever is less. The 2026 application window ran March 1-5 with funds awarded by lottery (waitlist if oversubscribed), and annual budgets are approved through 2027.
| Amount | $0.27 per estimated annual kWh of production (PVWatts estimate), up to the lesser of $5,000 or 60% of installed cost. |
|---|---|
| Who qualifies | Minnesota Power residential customers installing solar PV with household income below 150% of area median income; installation must be completed within six months of rebate reservation. |
| Administered by | Minnesota Power (ALLETE) |
Source: Utility program page Official source →
Compare solar incentives across all states → · Check what applies to you →
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.