Solar incentives in 2026: what's left and where

By the Simple.solar editorial team. Reviewed October 2026. 7-minute read. How we research.

Solar incentives changed a lot in 2026. The biggest US credit for homeowners is gone, some programs are tied up in court and others are shrinking each year. This guide covers what is left, as of October 2026, in the US, Canada, the UK, Australia and India.

Rules change often. Before you sign anything, check the current details with the program itself, your utility and, in the US, DSIRE (dsireusa.org), a database of state and local incentives.

What happened to the 30% federal solar tax credit?

The residential clean energy credit, known as 25D, gave homeowners 30% of their solar cost back at tax time. Per the IRS, the credit is not allowed for expenditures made after Dec 31, 2025.

The timing rule trips many people up. The IRS says an expenditure is "made" when the installation is completed, not when you pay. So if you paid a deposit or even the full price in 2025, but your system was finished in 2026, it does not qualify.

The loss is big. On an $18,000 system, the credit was worth 30% × $18,000 = $5,400. Without it, payback takes longer. Our is solar worth it guide reruns the math without the credit, and our solar cost guide shows 2026 prices.

The change is hitting the industry. SEIA forecasts the US residential solar market will shrink by about 23% in 2026.

Why are installers pushing leases and PPAs in 2026?

With a lease or power purchase agreement (PPA), a solar company owns the panels on your roof. You pay a monthly fee (lease) or a price per kWh (PPA). Because the company owns the system, it can still claim a federal business credit called 48E, even though you cannot claim 25D.

That credit has limits. Solar projects that begin construction after July 4, 2026 must be placed in service by Dec 31, 2027 to qualify. Rules on equipment from certain foreign entities also apply. So companies have a short window, and they are selling hard.

Pros of a lease or PPA

• Little or no money up front.
• The company handles repairs and monitoring.
• Some of the company's tax credit can show up as a lower monthly price.

Cons of a lease or PPA

• You save less over 20 to 25 years than if you bought the system.
• You do not own the panels, and you cannot claim state credits meant for owners.
• Selling your home can be harder, since the buyer must take over the contract. See our selling a home with solar guide.
• Most contracts include an escalator, a yearly price increase.

How escalators add up

Say your PPA starts at 14¢ per kWh with a 2.9% yearly escalator. After 10 years, the price is 14 × 1.029¹⁰ = about 18.6¢. After 20 years, it is about 24.8¢. If utility rates rise more slowly than that, you could end up paying more than the grid. Ask for a 0% escalator, or one no higher than about 1% to 2%.

Which US states still offer solar tax credits?

Several states have their own credits, which you claim on your state tax return. These amounts are as of April 2026. Check DSIRE and your state tax agency for current terms.

Here is how one works. In New York, a $20,000 system earns 25% × $20,000 = $5,000, which hits the cap exactly. In South Carolina, the same system earns 25% × $20,000 = $5,000, well under that state's $35,000 cap. In California, a 13.5 kWh battery at $150 to $200 per kWh would earn about $2,025 to $2,700 through SGIP.

State credits only help if you owe enough state income tax to use them. Ask a tax professional how they apply to you.

What other US incentives might you get?

• Property tax exemptions. Many states do not count solar when they assess your home's value, so your property tax does not rise.
• Sales tax exemptions. Many states skip sales tax on solar equipment.
• Utility rebates. Some utilities pay per watt of solar or per kWh of battery. Call yours or check its website.
• Export credits. How your utility pays for extra power can matter more than any rebate. See our net metering guide.

Then there is EPA's Solar for All, a $7 billion program meant to bring solar to lower-income homes. It was cancelled in 2025. On Sep 18, 2026, a federal judge ruled the termination illegal. As of October 2026, it is not clear when or how the funds will reach homeowners. If you qualify for low-income programs, ask your state energy office.

What incentives exist outside the US?

United Kingdom

You pay no VAT on residential solar installs until March 31, 2027. From April 1, 2027, the rate rises to 5%. Batteries have been zero-rated since Feb 1, 2024. On a £7,000 job, 5% VAT would add £350, so finishing before April 2027 saves that. Under the Smart Export Guarantee, your energy supplier must pay you for power you export. Each supplier sets its own rate, but it must be above zero, so shop around.

Australia

Small-scale technology certificates (STCs) lower the upfront price of rooftop solar. Your installer usually claims them and takes the value off your bill. The number of STCs depends on a "deeming period," which is 5 years for 2026 and falls each year until 2030. So the discount shrinks every year.

The Cheaper Home Batteries program also uses STCs. The factor is 8.4 STCs per kWh from January to April 2026 and 6.8 from May to December 2026, falling to 2.1 by late 2030. It is tiered: the first 14 kWh gets the full rate, 14 to 28 kWh gets 60%, and 28 to 50 kWh gets 15%. For a 10 kWh battery installed in late 2026: 10 × 6.8 = 68 STCs. What each STC is worth in dollars varies with the market.

India

PM Surya Ghar gives a central subsidy for rooftop solar: ₹30,000 for 1 kW, ₹60,000 for 2 kW and a cap of ₹78,000 for 3 kW or more. A 5 kW system still gets ₹78,000. Some states add their own support.

How do you make sure you get every incentive?

• Search DSIRE (dsireusa.org) for your state and ZIP code if you are in the US.
• Call your utility and ask about rebates and export rates.
• Ask each installer which incentives they included in the price, and get it in writing.
• Check deadlines. Many programs depend on the install completion date, not the contract date.
• Keep every invoice and permit for your tax return.

To see how incentives change your payback, plug the net cost into our savings calculator.

Frequently asked questions

Watch: a short explainer

Keep reading

• How much do solar panels cost in 2026?See 2026 solar prices per watt, total costs for 4 to 12 kW systems, where your money goes, battery prices and what pushes a quote up or down.5 min
• Buy, loan, lease or PPA: how to pay for solarCompare paying cash, taking a loan, leasing or signing a PPA for home solar, with a worked 25-year example and the fine print that changes the math.7 min
• Net metering explained: how you get paid for extra solarSee how net metering, net billing and buy-all/sell-all work, how time-of-use rates and true-ups change your bill, and when a battery pays off.6 min