Home > Solar > Texas Solar Incentives: Tax Credits & Rebates Guide (2023)

Texas Solar Incentives: Tax Credits & Rebates Guide (2023)

Updated Jan 10, 2023

Solar panels from above

Updated Jan 10, 2023

Home > Solar > Texas Solar Incentives: Tax Credits & Rebates Guide (2023)

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Are you a Texas property owner worried about your state’s rising electrical costs? You’re not alone. One of the best ways to save money in 2023 is by purchasing a renewable energy production system for your home. Solar power, in particular, can produce tons of electricity in a state as sunny as Texas, helping to minimize how much you spend on utility bills.

In fact, after the initial installation costs, a solar energy system can save you thousands of dollars per year. With the help of federal, state, and local financial incentives, your new solar photovoltaic (PV) system will be cheaper than ever.

For these reasons and more, it is a great time to buy solar panels in Texas. Keep reading to learn how your purchase and installation of solar panels in the Lone Star state can be made more financially accessible.

Why Go Solar in Texas?

They say that everything is bigger in Texas, and the size of residential electric bills is no exception. With residential energy bills that are 20% higher than the national average, Texans are desperate for some relief. That’s why it is a great time to buy a solar (PV) system in Texas.

Solar is the perfect energy source for a state that gets a lot of sun. Texas averages over 300 sunny days per year, which is leaps and bounds higher than the American average of 205 days per year. Indeed, Texas is well-positioned to produce massive amounts of solar power, so it is no surprise that it is ranked second in the country for solar energy system installations.

Instead of searching for the one solar provider in a town hours away, as may be the case in some states, most large towns in Texas will have businesses ready to sell and install solar photovoltaic systems. Also, with many statewide financial and tax incentives available for purchasers of PV systems, it is no wonder Texans love solar.


Finally, solar panels can dramatically increase your home’s value. According to Zillow, the average home experiences a 4.1% increase in value after adding a solar power system. In the United States, the average home will see its value increase from solar panels by close to $9,274.

Are you sold on solar for your home? Get a free quote from local solar installers.

Texas Solar Cost

The average total cost of solar installations in Texas is $13,450 for a 5-kilowatt (kW) system.

On a cost-per-watt basis, solar panel installation in Texas is $2.69. These costs have come down significantly in recent years and are well below the American average of $3.03 per watt.

Now, if you want to purchase a larger system (more watts), your system costs will increase in addition to the energy the system produces. But it is worthwhile to keep in mind that with energy bills increasing amid high oil and gas prices, the relative cost of solar is bound to decline further.

How Much Can You Save on Solar in Texas?

Although purchasing and installing solar panels comes with a steep up-front cost, you will save lots of money annually, thanks to your system’s electricity. Texas homeowners can save between $65 and $100 per month on electricity costs after paying back the cost of purchasing and installing a solar panel system that meets 50% or more of their energy needs. Consequently, you can amass over a thousand dollars per year in savings.

People who have invested in a solar energy system in Texas save as much as $16,803 on their energy bills over 20 years. With a payback period of just over 12 years, you can save thousands of dollars annually in almost half a decade. Over the 20 to 25-year lifetime of your solar photovoltaic equipment, you will experience loads of savings.

The Best Solar Incentives, Tax Credits, and Rebates in Texas

There are several public and private incentives in Texas that help you save on your purchase of solar panels:

IncentiveSummaryEnd Date
  Federal Solar Tax Credit (ITC)    Texas residents can take advantage of the Federal Solar Tax Credit and get a discount of 30% applied to their tax returns.  2032
  Texas Solar Property Tax Exemption    Texas will exempt property taxes on the added value to your home that comes with installing a solar energy system.None
  Net Metering  Net metering allows Texas homeowners that create excess energy to use it as a credit on their next electric bill. All energy providers are required to offer this option to homeowners.None
  TXU Energy Home Solar Buyback Pan    Customers can get paid for the excess energy their solar installation creates. You can earn credits to offset up to 100% of your energy changes on your monthly utility bills. This program is similar to net metering in other states.      None
  American Electric Power  (AEP) Solar Rebate Texans that get energy from AEP are eligible for a cash incentive between $2,500 to $8,500 for the kW of solar power installed in their home.  None
  CPS Energy Solar Rebate    Customers are eligible for a cash incentive that ranges from $2,500 to $8,500 for the kW of solar power installed in their homes. The cash incentive varies according to your electric provider, solar PV system size, location, and income.    None
  Austin Energy Solar Rebate  If you live in Austin, you may qualify for a solar rebate program that ranges from $2,500 to $8,500 for the kW of solar power installed in your homes. This incentive varies according to your electric provider, solar PV system size, location, and income.  None
  Oncor Solar Rebate    Oncor customers can access a solar rebate program that ranges from $2,500 to $8,500 for the kW of solar power installed in their homes. The cash incentive varies according to your electric provider, solar PV system size, location, and income.None
USDA REAP GrantREAP assists agricultural producers and rural small businesses to reduce their energy costs and consumption by providing loan financing and grant funding to purchase and install renewable energy systems. Eligibility for the REAP program depends on you being an agricultural producer, with at least 50 percent of your gross income coming from agricultural operations and small businesses in eligible rural areas.None
Property Assessed Clean Energy (PACE)Texas offers access to financing for energy-efficient power systems and upgrades through the PACE financing program. This program allows property owners to finance their purchase of solar energy systems and to pay back the money owed through a voluntary property tax assessment. While it may not lower the cost of going solar, it can be a great means of financing for homeowners that can’t take out traditional loans.None
Solar Energy Devices Franchise Tax ExemptionThe state of Texas allows businesses to deduct the cost of a solar energy device from franchise taxes. 

Federal Solar Investment Tax Credit (ITC)

The Federal Solar Investment Tax Credit (ITC) is a 30% federal tax credit available for home solar systems purchased and installed by the end of 2032. This is a significant chunk of money taken off their income taxes. The ITC has also expanded the country’s solar industry. It has helped create hundreds of thousands of jobs while bringing billions of dollars into the economy since it was enacted in 2006.

Texas Solar Property Tax Exemption

Texas will exempt property taxes on the added value to your home that comes with installing a solar energy system.

Texas Net Metering

Electricity companies in Texas have all adopted net energy metering, a policy that ensures your solar panels will be connected to the public-utility power grid and that surplus power created by your panels will be transferred to the grid. You can offset the cost of power drawn from the electricity grid due to net metering.

The minimum compensation you’ll receive is the avoided-cost rate, which is below the retail rate. While the policy specifics of net metering programs will vary among providers, it remains hugely beneficial for owners of solar energy systems.

TXU Energy Home Solar Buyback Plan

Customers can get paid for the excess energy their solar installation creates. You can earn credits to offset up to 100% of your energy changes on your monthly utility bills. This program is similar to net metering in other states.

American Electric Power (AEP) Solar Rebate

Texans that get energy from AEP are eligible for a cash incentive between $2,500 to $8,500 for the kW of solar power installed in their home.

CPS Energy Solar Rebate

Customers are eligible for a cash incentive that ranges from $2,500 to $8,500 for the kW of solar power installed in their homes. The cash incentive varies according to your electric provider, solar PV system size, location, and income.

Austin Energy Solar Rebate

If you live in Austin, you may qualify for a solar rebate program that ranges from $2,500 to $8,500 for the kW of solar power installed in your home. This incentive varies according to your electric provider, solar PV system size, location, and income.

Oncor Solar Rebate

Oncor customers can access a solar rebate program that ranges from $2,500 to $8,500 for the kW of solar power installed in their homes. The cash incentive varies according to your electric provider, solar PV system size, location, and income.

Commercial Texas Solar Incentives

Solar Incentives for Nonprofits and Businesses in Texas

Unfortunately, very few incentives are available specifically for nonprofits and businesses in Texas. However, the Solar Energy Devices Franchise Tax Exemption enables businesses to deduct the cost of a solar energy device from franchise taxes.

USDA REAP Grant

The United States Department of Agriculture (USDA) has launched a program designed to increase investments in clean energy called the Rural Energy for America Program (REAP). REAP helps agricultural producers and rural small businesses lower their energy costs and consumption by financing loans and grant funding to purchase and install renewable energy systems.

You are eligible to participate in the REAP program if you are an agricultural producer with at least 50 percent of your gross income coming from agricultural operations or a small business in eligible rural areas.

Property Assessed Clean Energy (PACE)

Texas offers access to financing for energy-efficient power systems and upgrades through the PACE financing program. This program allows property owners to finance their purchase of solar energy systems and to pay back the money owed through a voluntary property tax assessment. While it may not lower the cost of going solar, it can be a great means of financing for homeowners that can’t take out traditional loans.

Final Thoughts: The Best Texas Solar Incentives

Texas is by far one of the best states in the country to invest in residential, commercial, or industrial solar energy systems. With lots of sunny weather to power your systems, what more could you ask for? Additionally, the range of financial and tax incentives available means purchasing solar panels has never been more cost-effective. You have plenty of reasons to buy a solar energy system today, especially with variable energy prices worldwide and climbing utility bills at home. If you are interested in purchasing, many great companies will help set you up.

Texas Solar Incentives FAQs

Is solar worth it in Texas?

Yes, you should invest in solar energy in Texas. Solar will save you a load of money on your utility bills and help reduce your production of emissions and your carbon footprint. Plus, various federal, state, and local financial incentives are available in Texas to make purchasing solar panels accessible to anyone.

How much will my electricity bill go down with solar in Texas?

Texas homeowners can save between $65 and $100 per month on electricity costs after paying back the cost of purchasing and installing a solar panel system that meets 50% or more of their energy needs. People who have invested in a solar energy system in Texas save as much as $16,803 on their energy bills over 20 years.

With a payback period of just over 12 years, you can save thousands of dollars per year in almost half a decade. Over the 20 to 25-year lifetime of your solar photovoltaic equipment, you will experience loads of savings.

How much does it cost for solar panels in Texas?

The average total cost of solar installations in Texas is $13,450 for a 5-kilowatt (kW) system. On a cost-per-watt basis, solar panel installation in Texas is $2.69. These costs have come down significantly in recent years, and they are well below the American average of $3.03 per watt.

Can you get solar panels for free in Texas?

While it is not likely that you’ll find solar panels for free, Texans are fortunate to have the support of numerous federal, state, and local financial incentives that will help to lower the cost of purchasing a new solar energy system.

What solar rebates are available in Texas?

There are many federal, state, and local financial incentives for purchasers of solar energy systems in Texas. These include the federal government’s Solar Investment Tax Credit (ITC), the Texas Property Tax Exemption, and many local and private incentives.

How many homes in Texas have solar panels?

There is enough solar installed in Texas to power over 1.6 million homes, which accounts for 3.75% of the state’s electricity production.

Do solar panels increase property taxes in Texas?

Texas will exempt property taxes on the added value to your home that comes with installing a solar energy system. This is another excellent reason to invest in solar.

How much can you write off for solar panels on taxes in Texas?

Texas taxpayers are eligible for a rebate of up 30% of the total cost of their solar power system. This rebate extends to both homeowners and business owners.

House Method’s Solar Ranking and Review Methodology

At House Method, transparency and trust are our most important values for the reader. That’s why we took the time to create an objective rating system and score each solar energy company/service according to our methodology.

Our research team dug deep into the fine print of contracts, combed through more than one hundred customer reviews, and thoroughly investigated each solar energy company’s services, costs, and products. We’ve done the homework for you by researching nearly all the solar energy companies on the market so you can have the information you need to make the best choice for your home.

We developed a formula to objectively determine the best solar energy companies and give each a score out of 10 based on the following criteria:

  • Services Offered (2.0): What does each solar provider offer as a basic service with any solar installation plan? In-house labor led to companies being ranked higher than those that contracted their labor out to third parties. Similarly, battery installation and panel monitoring were key factors that we looked for in each provider.
  • Warranty Period (2.0): Solar warranties can cover labor, components, or both. The length of these warranty plans is of chief importance. Companies that offer 25-year warranty coverage got our highest score in this category.
  • Other Offerings (2.0): Solar companies that provide secondary services are rated highly. These include obtaining permits to operate (PTO), providing financing and price matching options, and mobile performance tracking options.
  • Company Reputation (1.5): Our main metrics for rating company reputation were BBB accreditation and rating and complaint response rate. These are reliable indicators of quality. Many of our best providers have a 100% complaint response rate.
  • Customer Service (1.5): Availability via phone and online is key for modern home service providers in any niche. Those that offer both, along with clearly posted business hours and in-person estimates, are rated highly.
  • Availability (1.0): Companies with availability in more than 40 states received our highest score in this category. We rated providers with a more limited presence progressively lower, depending on exact reach.

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