Solar Incentives in Vermont
Vermont homeowners installing solar in 2026 have access to several active state-level incentives. A state investment tax credit equals 24% of whatever federal investment tax credit is attributable to the Vermont-based portion of the project — but only applies if the system actually receives the federal credit first. Solar installations under 50 kW that are net-metered or off-grid are fully exempt from both the statewide education property tax and municipal property tax, and owe no Uniform Capacity Tax; larger systems pay $4.00 per kW of AC nameplate capacity. Components incorporated into qualifying renewable energy systems up to 500 kW are exempt from Vermont sales and use tax. Vermont also maintains a statewide net-metering program under Public Utility Commission Rule 5.100, through which customers receive bill credits for electricity fed back to the grid; credit rates are set under PUC-approved tariffs and vary by system size and utility, so homeowners should consult their specific utility's tariff. A group net-metering option allows community solar participation within the same utility territory.
The federal residential Clean Energy Credit (§25D), which previously offered a 30% credit for qualifying solar installations, expired for systems placed in service after December 31, 2025, under the One Big Beautiful Budget Act (Pub. L. 119-21). Homeowners whose systems are installed and energized in 2026 do not qualify for that federal credit, which meaningfully extends payback timelines compared to prior years.
Vermont's residential electricity rate averaged approximately 24.11 cents per kilowatt-hour as of March 2026 — up roughly 1.73 cents year-on-year — which affects how quickly solar generation offsets bills and influences overall payback calculations alongside the remaining state incentives.
Figures here are verified as of June 2026 against official sources; programs and rates change with each legislative session and PUC rate case, and the Vermont Public Utility Commission, Vermont Department of Taxes, and VEDA 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 Vermont
Vermont Investment Tax Credit
Vermont offers an investment tax credit equal to 24% of the federal investment tax credit attributable to the Vermont-property portion of an investment, including energy property such as solar. The project must be eligible for and actually receive the federal investment tax credit to claim the Vermont credit. The credit is claimed through Vermont business income taxes and administered by the Vermont Department of Taxes.
| Amount | 24% of the federal investment tax credit attributable to the Vermont-property portion of the investment. |
|---|---|
| Who qualifies | Vermont taxpayers with investments (including energy/solar property) that are eligible for and receive the corresponding federal investment tax credit; primarily relevant to business installations. |
| Administered by | Vermont Department of Taxes |
Source: Vermont Department of Taxes tax credits page (Investment Tax Credit) Official source →
Property Tax Exemption for Small Solar Plants (Uniform Capacity Tax framework)
Vermont solar plants under 50 kW that are net-metered (or off-grid serving only the host property) are exempt from both the statewide education property tax and municipal property tax, and owe no Uniform Capacity Tax; the underlying land remains taxable. Plants of 50 kW or more pay a Uniform Capacity Tax of $4.00 per kW of AC nameplate capacity and are exempt from the education property tax. Municipalities may additionally vote to exempt or stabilize solar plants for municipal property tax purposes; municipalities that do tax solar plants must use the statutory discounted-cash-flow valuation method.
| Amount | Full education and municipal property tax exemption for net-metered or off-grid solar under 50 kW; $4.00/kW Uniform Capacity Tax plus education-tax exemption for plants 50 kW and larger; municipal local-option exemption available by town vote. |
|---|---|
| Who qualifies | Owners of solar plants in Vermont; the under-50 kW full exemption requires the system to be net-metered or off-grid and serving only the property where it is located. |
| Administered by | Vermont Department of Taxes (UCT filed on Form SCT-603); municipal assessors |
Source: 32 V.S.A. § 3481(1)(D) (valuation); Vermont Department of Taxes Uniform Capacity Tax and Solar Plants page Official source →
Sales Tax Exemption for Net-Metering, Home or Business Energy Systems, and Solar Hot Water
Vermont exempts from sales and use tax tangible personal property incorporated into qualifying renewable energy systems. Qualifying home or business systems must be no more than 500 kW, intended primarily to offset the customer's own electricity use, and use a renewable energy source (off-grid systems can qualify without a Certificate of Public Good). Exempt items include modules, inverters, racking and mounting, cables, monitors, and battery banks that are part of the system; roof preparation materials like flashing are taxable. Solar hot water systems are also exempt for the property directly used to capture, convert, or store solar energy. Buyers use exemption certificate Form S-3E.
| Amount | 100% sales and use tax exemption on qualifying system components (Vermont general sales tax is otherwise due). |
|---|---|
| Who qualifies | Purchasers of components incorporated into net-metered or qualifying home/business renewable energy systems up to 500 kW, off-grid systems meeting net-metering requirements, and solar hot water systems; separate manufacturing exemptions exist for facilities producing electricity for sale. |
| Administered by | Vermont Department of Taxes |
Source: 32 V.S.A. §§ 9741(12) and 9741(46); Vermont Dept. of Taxes Fact Sheet FS-1182 (rev. Jan 2025); Form S-3E Official source →
Net-Metering
Vermont's statewide net-metering program credits customers for the difference between electricity supplied by their utility and electricity their generation system (such as solar) feeds back during the billing period. The Public Utility Commission regulates construction and operation of net-metering systems under Commission Rule 5.100 (current version effective March 1, 2024), issues Certificates of Public Good, and approves utility net-metering tariffs. Compensation rate adjustors are updated by the Commission in biennial proceedings, most recently the 2026 biennial update.
| Amount | Bill credits at rates set under PUC-approved tariffs with biennially updated rate adjustors; values vary by system size, siting, and REC treatment per Rule 5.100. |
|---|---|
| Who qualifies | Electric customers of Vermont utilities installing renewable generation systems that obtain a Certificate of Public Good under Rule 5.100 (statutory net-metering systems are up to 500 kW). |
| Administered by | Vermont Public Utility Commission |
Source: Vermont net-metering statute (30 V.S.A. § 8010); PUC Rule 5.100 Official source →
Group Net-Metering (Community Solar)
Vermont allows customers in the same utility service territory to form groups that share the output of a single net-metering system, which is how community solar operates in the state. Group systems are regulated by the Public Utility Commission under the same net-metering statute and Rule 5.100, including registration/Certificate of Public Good requirements and PUC-approved tariffs governing how output credits are allocated among group members.
| Amount | Group members receive shares of the system's net-metering bill credits under PUC-approved tariffs. |
|---|---|
| Who qualifies | Customers in the same utility service territory as the shared net-metering system. |
| Administered by | Vermont Public Utility Commission |
Source: 30 V.S.A. § 8010; PUC Rule 5.100 Official source →
VEDA Commercial Energy Loan Program
The Vermont Economic Development Authority, the state's economic development finance authority, lends to projects directly related to renewable energy generation, energy efficiency improvements, or energy technology. Proceeds can fund land and buildings, construction or renovation, machinery and equipment, and design/engineering/permit fees; existing assets and refinancing are excluded. VEDA generally finances up to 60% of project cost (up to 90% for projects up to $500,000), with a maximum of $6 million at variable rates or $500,000 at a five-year fixed rate.
| Amount | Up to $6 million (variable rate) or $500,000 (fixed rate); generally up to 60% of project cost, up to 90% for projects of $500,000 or less. |
|---|---|
| Who qualifies | Vermont commercial borrowers with renewable energy generation, energy efficiency, or energy technology projects; community and utility-scale solar projects have been financed under the program. |
| Administered by | Vermont Economic Development Authority (VEDA) |
Source: VEDA Commercial Energy Loan Program page Official source →
VACC Agricultural Energy Loan Program
The Vermont Agricultural Credit Corporation, part of VEDA, finances qualifying renewable energy generation and energy efficiency projects for Vermont farm and forest-products businesses, including technologies that support renewable energy or efficiency. Rates can be variable or fixed, with loan term and amortization set case-by-case based on cash flow, asset life, and project viability; the financed share of project cost is negotiable with the loan officer.
| Amount | Loan size and financed share negotiable; variable and fixed rate options per VEDA's published rates. |
|---|---|
| Who qualifies | Owners/operators of agricultural or forest-based products businesses, and current or prospective owners or lessees of Vermont agricultural land or depreciable machinery, equipment, or livestock. |
| Administered by | Vermont Agricultural Credit Corporation (VACC) / VEDA |
Source: VEDA/VACC Agricultural Energy Loan 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.