Solar Incentives in Texas
Texas homeowners installing solar in 2026 have access to several active state-level programs. The most broadly applicable is the Solar and Wind-Powered Energy Device Property Tax Exemption, which exempts from property taxation the full appraised value added to real property by a qualifying solar device used primarily for on-site energy production or distribution; a separate provision can exempt the device's appraised value even when the device owner does not own the underlying property. These exemptions are administered by county appraisal districts under guidelines published by the Texas Comptroller of Public Accounts. For homeowners served by Austin Energy, a $2,500 rebate is available for eligible rooftop installations completed through a participating contractor after completing the utility's required solar education course. Austin Energy customers also receive monthly bill credits for solar generation at a fixed Value of Solar rate of 9.91 cents per kilowatt-hour as of June 2026. Export compensation and net-metering policies vary by utility across Texas; homeowners served by other utilities should confirm their specific credit or export rate directly with their provider.
On the federal side, the residential Clean Energy Credit under Internal Revenue Code §25D — commonly called the 30% federal solar tax credit — expired for systems placed in service after December 31, 2025, following enactment of the One Big Beautiful Budget Act (Pub. L. 119-21). Homeowners installing a new system in 2026 do not qualify for that credit. Its absence meaningfully lengthens the payback period compared to prior years, making state and utility-level incentives relatively more important to the financial case for a new installation.
With residential electricity in Texas averaging approximately 16.39 cents per kilowatt-hour as of March 2026 — an increase of about 1.11 cents year-over-year — the value of solar self-consumption depends on that prevailing retail rate. The two franchise tax provisions (a full exemption for qualifying solar device businesses and a 10% deduction on amortized device costs for taxable entities) apply at the business level rather than to individual homeowners directly.
These figures are verified as of June 2026 against official sources; programs and rates change with each legislative session and utility rate case, and the Texas Comptroller of Public Accounts and individual utility tariff filings 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 Texas
Solar and Wind-Powered Energy Device Property Tax Exemption
Texas exempts from property taxation the amount of appraised value that arises from installing a solar or wind-powered energy device on real property, when the device primarily produces and distributes energy for on-site use. A separate provision exempts the appraised value of the device itself even if the device owner does not own the underlying real property. Property owners apply with their county appraisal district using Comptroller Form 50-123.
| Amount | 100% of the appraised value added by the qualifying device (or of the device itself under subsection (a-1)) is exempt from property taxation. |
|---|---|
| Who qualifies | Owners of real property with an installed solar or wind-powered energy device primarily for on-site energy production and distribution; device owners who do not own the underlying real property qualify under Tax Code sec. 11.27(a-1). |
| Administered by | County appraisal districts; Texas Comptroller of Public Accounts publishes administration guidelines |
Source: Texas Tax Code sec. 11.27; Comptroller Form 50-123 Official source →
Franchise Tax Exemption for Solar Energy Device Businesses
A corporation engaged solely in the business of manufacturing, selling, or installing solar energy devices is exempt from the Texas franchise tax. The statute uses the solar energy device definition in Tax Code sec. 171.107, which covers systems that provide heating, cooling, or electrical or mechanical power from solar-generated energy, including storage.
| Amount | Full exemption from the Texas franchise tax for qualifying corporations. |
|---|---|
| Who qualifies | Corporations engaged solely in manufacturing, selling, or installing solar energy devices as defined by Tax Code sec. 171.107. |
| Administered by | Texas Comptroller of Public Accounts |
Source: Texas Tax Code sec. 171.056 Official source →
Franchise Tax Deduction for Solar Energy Devices
A taxable entity may deduct from its apportioned franchise-tax margin 10 percent of the amortized cost of a solar energy device that it acquires for heating, cooling, or power production and uses in Texas. The cost must be amortized over at least 60 months in equal monthly amounts or per federal depreciation schedules, beginning the month the device is placed in service, and an amortization schedule must be filed with the Comptroller.
| Amount | Deduction of 10% of the amortized cost of the solar energy device from apportioned margin; amortization period of at least 60 months. |
|---|---|
| Who qualifies | Taxable entities subject to the Texas franchise tax that acquire a solar energy device for heating, cooling, or production of power and use it in Texas. |
| Administered by | Texas Comptroller of Public Accounts |
Source: Texas Tax Code sec. 171.107 Official source →
Austin Energy Residential Solar Rebate
Austin Energy, the municipal utility for Austin, offers a $2,500 rebate for eligible home rooftop solar installations. Customers must complete the utility's solar education course and use a participating contractor from Austin Energy's list; non-participating installers cannot offer the rebate.
| Amount | $2,500 per eligible home solar project. |
|---|---|
| Who qualifies | Austin Energy residential customers who complete the utility's solar education course and install a qualifying system through a participating contractor. |
| Administered by | Austin Energy |
Source: program page Official source →
Austin Energy Value of Solar Bill Credits
Austin Energy residential solar customers continue paying standard residential rates for the electricity their home uses and receive a monthly bill credit for all the energy their solar system generates. The credit is paid at a fixed Value of Solar rate of 9.91 cents per kilowatt-hour as of June 2026.
| Amount | 9.91 cents/kWh bill credit for solar generation (fixed Value of Solar rate). |
|---|---|
| Who qualifies | Austin Energy residential customers with interconnected solar systems. |
| Administered by | Austin Energy |
Source: program page (Value of Solar rate) 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.