Solar Incentives in North Dakota
North Dakota homeowners installing solar in 2026 can access three active state-level incentives. First, a property-tax exemption shields the full value of qualifying solar equipment from property taxation for five years following installation, administered through the North Dakota Office of State Tax Commissioner and local assessors. Second, a sales and use tax exemption applies to building materials and tangible personal property used to construct or expand a solar electrical generating facility, with no stated dollar cap. Third, under Public Service Commission rules implementing PURPA, systems with a design capacity of 100 kilowatts or less are eligible for net energy billing, in which the system's output reverses the customer's retail meter. Because this program operates through individual utilities, credit rates and any additional purchases from qualifying facilities vary by utility — homeowners should confirm terms directly with their provider.
The federal landscape shifted significantly for 2026 installations. The residential Clean Energy Credit under Internal Revenue Code §25D — commonly known as the 30% federal solar 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 system in 2026 do not qualify for that credit, which meaningfully extends expected payback periods compared to prior years.
North Dakota's residential electricity rate averaged approximately 11.95 cents per kilowatt-hour as of March 2026, up about 0.84 cents year-on-year. At that relatively modest rate, solar savings accumulate more slowly than in higher-rate states, and the loss of the federal credit makes careful financial modeling especially important before committing to an installation.
Figures here are verified as of June 2026 against official sources; programs change with each legislative session and utility rate case, and the North Dakota Office of State Tax Commissioner and the North Dakota Public Service Commission 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 North Dakota
Solar, Wind or Geothermal Device Property Tax Exemption
North Dakota exempts from property tax the installations, machinery, and equipment of systems in new or existing buildings or structures that are designed to provide heating, cooling, electrical or mechanical power (or storage of any of these) using solar, wind, or geothermal energy. The exemption runs for a five-year period after installation. For systems that combine energy sources, only the portion using solar, wind, or geothermal qualifies. Owners must file an application annually with the local assessor.
| Amount | Full exemption of the qualifying device's value from property tax for 5 years after installation. |
|---|---|
| Who qualifies | Owners of new or existing buildings or structures in North Dakota with solar, wind, or geothermal systems for heating, cooling, or electrical/mechanical power; annual application to the local assessor required. |
| Administered by | North Dakota Office of State Tax Commissioner / local assessors |
Source: N.D.C.C. § 57-02-08(27); Office of State Tax Commissioner program page Official source →
Sales and Use Tax Exemption for Electrical Generating Facilities (non-coal, non-wind)
North Dakota provides a sales and use tax exemption for building materials, qualified production equipment, environmental upgrade equipment, and other tangible personal property used to construct or expand an electrical generating facility other than a coal- or wind-powered facility, which includes solar generation. The facility must produce electricity for resale or for consumption in a business activity and have at least one generation unit of 100 kilowatts or more. Buyers apply through the Office of State Tax Commissioner's sales tax exemption application process. This is a commercial-scale incentive; typical residential rooftop systems fall below the 100 kW unit threshold.
| Amount | Sales and use tax exemption on qualifying construction/expansion purchases; no stated dollar cap. |
|---|---|
| Who qualifies | Electrical generating facilities (other than coal or wind powered), including solar, with at least one single generation unit of 100 kW or more, producing electricity for resale or for consumption in a business activity; application and approval required. |
| Administered by | North Dakota Office of State Tax Commissioner |
Source: N.D.C.C. §§ 57-39.2-04.2 and 57-40.2-04.2 Official source →
Net Energy Billing for Qualifying Facilities (Net Metering)
Under North Dakota Public Service Commission administrative rules implementing PURPA, qualifying small power production facilities with a design capacity of 100 kilowatts or less are entitled to net energy billing, in which the facility's output reverses the electric meter that measures the utility's sales to the customer. The purchasing utility must file an annual report of monthly energy produced and may recover metering costs associated with production monitoring from the qualifying facility. Purchases from qualifying facilities beyond the net-billing arrangement are priced at the utility's avoided cost. The rule applies to electric utilities under PSC rate jurisdiction; rural electric cooperatives set their own distributed-generation policies.
| Amount | Kilowatt-hour offset at the retail meter (meter reversal) for systems up to 100 kW; other purchases from qualifying facilities compensated at the utility's avoided cost; utility may charge metering costs. |
|---|---|
| Who qualifies | Customers of PSC-regulated electric utilities operating qualifying cogeneration or small power production facilities (such as solar) with a design capacity of 100 kW or less. |
| Administered by | North Dakota Public Service Commission |
Source: N.D. Admin. Code § 69-09-07-09(3)(a) 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.