What States Get the Most Out of Solar Panels?

For many years solar power was an unattainable luxury, only available to the wealthy or those in locations with early climate change and green energy initiatives. Thankfully, in recent years, solar panels have become much cheaper, dropping in price by as much as 70% since 2014. With these more attainable prices and an overall increase in statewide incentive programs, solar investments have become an affordable prospect for most homeowners.

While not all states have created impressive solar programs, many have gone out of their way to incentivize and finance solar energy. In this article, we’ll go over all the states where homeowners can get the most out of their solar panels and discuss the kinds of incentives those states offer.

What Factors Should You Consider When Moving to a State for Solar Power?

Solar energy is a complex topic, with many variables contributing to each state’s solar growth. Environmental factors like yearly sunlight and weather play a part, as well as various, more complex elements like political leanings and pushback from local energy companies. To simplify this, we recommend looking at two major factors, states with the most solar panels per capita and states with the best incentive programs.

States that already have high numbers of panels are leaders in solar generation, possessing robust grids and effective solar programs. These states typically also have powerful environmental factors allowing them to have a higher solar capacity. As a result, states with high amounts of existing solar panels are a safe bet for homeowners, as the basis for investment is already in place.

Some states have been slower to adopt solar initiatives but possess great potential. These states try to kick-start solar energy grids by creating powerful incentive programs and attracting eco-minded homebuyers. These incentives include tax cuts, state funds, loan programs, and other financial boons that allow homeowners to get in on the solar industry with lower upfront costs.

What States Have the Most Solar Panels?

For our list, we used information gathered from the Solar Energy Industries Association. Keep in mind that this article is for informational purposes and is not intended for, nor should it be relied on for any legal, tax, or accounting advice.

California

California has been one of the leaders of the solar industry since its inception, and that carries true to today, as the state houses more solar companies than any other. While it frequently competes for the No. 1 spot with Texas (dropping to No. 2 in 2021), it has bumped itself back up to the top spot this year. Over 25% of the state’s electricity comes from solar, powering over 9,153,089 homes — we should mention this insanely high number comes mostly from utility-scale solar farms. The Golden State’s total investment in the solar industry sits at just under $80 billion, making it one of the country’s largest solar power investors. It also has a wide range of incentive programs to help homeowners utilize solar panels, such as:

• Disadvantaged Communities – Single-Family Solar Homes (DAC-SASH): This program offers no-cost solar installations for households in the top 25% of disadvantaged communities. Applicants must meet certain income requirements, and their homes must receive electricity from Pacific Gas & Electric (PG&E), Southern California Edison (SCE), or San Diego Gas & Electric (SDG&E).
• Self Generation Incentive Program (SGIP): This program provides rebates for homes and businesses that install energy storage systems. It is a tiered-block system, meaning that the more storage devices installed in the state, the lower the rebates. Rates will also vary depending on the size of the battery you install.

Texas

Texas is the runner-up for most homes utilizing solar power at 1,682,330. It’s also a leading solar technology investor, putting $16.6 billion into the field. However, Texas is a key user of fossil fuels (not a surprise being a major oil state), with only about 4% of its total electricity coming from solar power. Unfortunately, its statewide incentive, leasing, and rebate programs are nearly nonexistent, relying on local utility companies to incentivize solar growth. Many utility companies offer these programs, but their value and rates vary from region to region. This extreme locality also applies to net metering programs, making gauging the overall incentives on a statewide basis extremely difficult.

Florida

Florida has one of the strangest paths to solar growth out there. From an extremely rocky start in the industry, the Sunshine State has only recently experienced a boom in solar growth starting in 2016 and has been growing steadily ever since. Today Florida has just over a million homes powered by solar electricity, and it has invested over $12 billion into the industry. However, like Texas, Florida still relies heavily on fossil fuels, with solar accounting for only 4.6% of its total electricity. Florida does have several statewide incentive programs available to homeowners:

• No Sales Tax on Solar Systems: In Florida, photovoltaic systems are exempt from sales and use tax. Furthermore, there is a statewide property tax abatement on homes with solar collector systems installed.
• Statewide Net Metering Program: Florida is one of the few states with a statewide net metering program regulating rates regardless of the municipality. Net metering programs are one of the main ways that homeowners can benefit from solar power. When a solar system produces more energy than the homeowner needs, it’s sold back to the utility company for credits. These credits are then applied to the homeowner’s electric bill to cover situations when their systems are not pulling in enough energy, reducing the cost of their bill.

We want to note that recently, Florida’s future in solar power came into question with Florida House Bill 741. This bill would have functionally stripped away net metering rights to its citizens and gave solar energy advocates and Floridian homeowners a scare last year. Thankfully the bill was vetoed, but it has cast a considerable shadow on Florida’s solar future.

North Carolina

Another up-and-coming state in the renewable energy game is North Carolina, possessing 942,492 homes powered by solar electricity. Impressively, it beats out both Texas and Florida for the total electricity coming from solar, sitting at 8.2%. North Carolina also has some of the most robust and generous incentive and rebate programs on this list, including:

• Net Metering Policy: North Carolina has a statewide net metering policy like Florida, but one that offers even better rates. North Carolina’s policy states that the electricity bought by the utility companies from your home system is set at retail price. This system is particularly generous because many states use a wholesale or “Avoided Cost” price model, which makes earning money off of solar systems extremely difficult.
• Property Tax Abatement: North Carolina does not increase your property tax for the value increase created by installing solar panels. This law has been in place since 2008.

Arizona

As one of the sunniest, and hottest states in the U.S., it should be no surprise that Arizona has a robust solar system. Just under 10% of Arizona’s electricity comes from solar power, dwarfed only by California. Currently, 789,206 homes are powered by solar electricity, with the state investing $13.4 billion into solar energy. Arizona has an array of incentive programs to help its homeowners invest in solar:

• Arizona State Tax Credit: Arizona offers a 25% tax credit on solar panel installations, or $1,000, whichever is cheaper. What’s great about this incentive is that it stacks with the 26% federal tax credit, adding up to over a 50% credit for your solar panel installation cost.
• Tax Exemptions: Arizona has two tax exemptions for solar power, sales, and property tax. Like many other entries on this list, Arizona does not increase your property tax based upon the added value of your solar panels, and it charges no sales tax on solar panel systems.

What Are the Best States for Solar Power Incentives?

The following states have some of the most impressive incentives we could find. Many of these states also have even more programs and incentives offered by specific utility companies and municipalities.

New York

While New York is only 11th in the national ranking for the number of solar panels, it has incentive programs that rival those of California and Texas. If installing solar panels in New York, homeowners can take advantage of the following incentives:

• NY-Sun Megawatt Block incentive: Homeowners can use this system to claim a dollars-per-watt rebate. The size of the subsidy will vary depending on the size of your system.
• Solar Energy System Equipment Credit: This state tax credit allows homeowners to get 25% or $5,000 (whichever is cheaper) of their solar panel installation costs deducted from their taxes. This incentive can be applied on top of the 26% federal investment tax credit, allowing you to save over 50% on your solar panels.
• Sales Tax Exemption: Like many other states, New York does not charge sales tax on solar panel systems, saving homeowners 4%.
• Net Metering: New York has statewide net metering regulations, allowing homeowners to save on their electrical bills by selling electricity back to their utility companies.

Rhode Island

Rhode Island has some of the most generous and varying financing programs on this list. Here are what homeowners can use to finance their solar panel installation:

• Sales Tax Exemption: Like many other states, Rhode Island offers no sales tax on solar panels. However, Rhode Island’s sales tax is 7%, much higher than most states, resulting in higher savings on solar panels.
• Property Tax Exemption: In Rhode Island, your property taxes won’t increase after installing solar panels.
• Net Metering and The Rhode Island Renewable Energy Growth Program (REG): Rhode Island has standard net metering regulations like some states, but it also has a more lucrative program called The Rhode Island Renewable Energy Growth Program. This system works like net metering but with higher payout rates, offering homeowners 24 to 29 cents for each kilowatt-hour your system products for the first 15 years.

Iowa

Iowa has an impressive list of solar incentives that, when compared to federal incentives, make installing solar panels a financial breeze. Here are the main programs homeowners can take advantage of:

• State Tax Credit: Like many other states on this list, Iowa offers a state tax credit that can be applied in conjunction with the federal tax credit. Iowa offers homeowners 15% of solar panel installation costs, capped at $5,000. Unfortunately, this credit just ended in late 2021. However, state lawmakers are looking to extend the credit, so there is a strong chance it will return.
• Solar Easement Laws: Iowa recognizes every citizen’s right to solar power, enacting solar easement laws. These laws state that no one is allowed to restrict homeowner access to sunlight, including neighbors or HOAs.
• Property and Sales Tax Exemption: Iowa does not charge any solar panel unit sales tax, and it does not increase your property tax for the value solar panels add to your home.
• State Wide Net Metering: Iowa has passed statewide net metering regulations, ensuring solar users can sell their electricity to utility companies. Iowa’s rates for net metering are standard compared to that of other states.

Connecticut

Connecticut offers the widest variety of financial programs on this list, including loan and rebate programs alongside another standard incentive. Here is a quick overview of Connecticut’s best incentives:

• Sales and Property Tax Exemption: Homeowners do not have to pay sales tax on Connecticut’s solar or geothermal energy systems. It also does not increase your home’s property tax for the increased value these systems add.
• Generous Financing Programs: Connecticut has various state-funded solar financing options, mostly in the form of loans. These loans have low rates, many with no money down, and provide valuable funds to help homeowners install solar panels. Some loans homeowners can apply for include:
  • PACE Financing Loans
  • The Home Energy Solutions Loan Program
  • Energy Conservation Loan 
• Net Metering: Connecticut guarantees all solar panel users access to the net metering program. However, the rates and details of the program are dictated by the utility provider, so to get rates and net metering information, you’ll need to check with them.

Maryland

Maryland offers the same incentives as most solar-minded states, combined with several additional incentives in the form of a third-party SREC marketplace. It also offers an impressive rebate program, allowing homeowners to get a lump sum after installing a solar panel system.

Here is a list of all Maine’s solar financing incentives:

• Residential Clean Energy Rebate Program: Through this program, if homeowners install a solar panel system of one kilowatt-hour or more, they are eligible for a rebate of $1,000.
• Sales and Property Tax Exemptions: Like many other states on this list, Maryland does not charge sales tax on solar systems and does not increase your home’s property tax for the value the solar panels add.
• Energy Storage Income Tax Credit: If homeowners install a solar battery, they may be eligible for a tax credit equal to 30% of the device’s total cost.
• State Net Metering Program: Maryland has one of the more impressive net metering programs. While some states allow utility companies to set solar electricity buy back rates, Maryland regulates theirs, forcing utility companies to purchase solar electricity at retail prices.

Honorable Mentions

While we only listed the most impressive states, there are plenty of others with commendable and fast-growing solar programs. Here are some runner-ups that you should consider:

• Nevada
• New Jersey
• Georgia
• Virginia
• Massachusetts
• Utah
• Hawaii
• New Mexico
• Colorado
• Pennsylvania

Closing Thoughts

While some states are still resistant to solar technology, others fully embrace it. Many have gone so far as to create powerful financing and incentive programs to attract new homebuyers, solar energy advocates, and businesses promoting solar jobs. If you’re thinking about moving to a new state and are interested in solar power, consider checking out some of the options presented in this article.