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The federal residential ITC is dead. But PA still has 6 layers of incentives worth $12,000-$20,000+ for a typical 12.81 kW system. Here is every dollar you can claim, utility by utility.
Incentive Layers
6
active programs
Total Value
$12K-$20K+
stackable
PECO Max
$1,950
Act 129 + EAP
Federal ITC
$0
25D expired
Section 25D expired December 31, 2025 under the OBBBA. PA homeowners buying solar with cash or a loan receive $0 in federal tax credits. The incentives below are what remain, and stacking them correctly is critical to making PA solar work financially in 2026.
Each layer is independently available. Stack all six for maximum savings. Layer 6 (Section 48E) is only available through PPA/lease financing.
PA AEPS requires utilities to source 0.5% from solar. Your system generates SAECs (1 SAEC = 1 MWh) tradeable on PJM-GATS at $22-$35/SAEC. A 12.81 kW system in eastern PA earns approximately $448/year.
How to Claim
Register with PJM-GATS or use a SREC aggregator (SRECTrade, Flett Exchange). Your installer should handle initial registration.
PA provides 1:1 full retail rate net metering credits for systems up to 50 kW. Excess generation credits roll month to month. Annual true-up pays remaining excess at the lower PTC (Price-to-Compare) rate.
How to Claim
Automatic through your utility after interconnection approval. No separate application needed.
PA exempts solar equipment from the 6% state sales tax. On a $39K system, this saves approximately $2,344. This exemption applies to equipment only, not labor.
How to Claim
Your installer should not charge sales tax on solar equipment. Verify on your contract that PA solar sales tax exemption is applied.
Most PA jurisdictions exempt solar from property tax increases. Without exemption, solar adds ~$450/yr to property tax. Check with your municipal assessor. Some boroughs and townships have explicit ordinances; others have informal practices.
How to Claim
Check with your local tax assessor before installation. Some jurisdictions require you to file for the exemption after installation.
Act 129 Phase IV mandates utility energy efficiency spending through May 31, 2026. PECO, PPL, FirstEnergy, and Duquesne offer solar rebates. PECO is the most generous with base $300-$450 plus EAP bonus up to $1,400.
How to Claim
Apply through your utility's Act 129 program BEFORE installation. Your installer typically handles the application.
If you choose a PPA or lease, the third-party system owner claims the 30% Section 48/48E commercial ITC (for projects beginning construction before July 4, 2026) and passes the savings through as a below-retail electricity rate. This is NOT available for cash or loan purchases.
How to Claim
Choose a PPA or lease financing option. The financing company handles the ITC claim. Your benefit is a lower per-kWh rate.
$0
Previously 30%. Expired under OBBBA. PA homeowners purchasing with cash or loan receive $0 in federal tax credits.
$0
Heat pump credit ($2,000/yr) expired. No longer stackable with solar.
$0
PA has never offered a statewide solar rebate. Do not confuse Act 129 utility rebates with a state program.
PA's four major utilities each have different Act 129 rebate amounts. PECO offers the most. Phase IV ends May 31, 2026. Phase V amounts are TBD.
Philadelphia & SE PA
Base Rebate
$300 - $450
EAP Bonus
$500 - $1,400
Total Max
$1,950
EAP (Energy Assistance Program) bonus for income-eligible households. Base rebate available to all PECO customers. Phase IV ends May 31, 2026.
Avg. rate: $0.21/kWh
Lehigh Valley, Harrisburg, Scranton
Base Rebate
$350 - $450
EAP Bonus
$200 - $400
Total Max
$850
PPL Act 129 rebates. Apply before installation. Net metering at risk from July 2026 tariff change.
Avg. rate: $0.21/kWh
Reading, Lancaster, Erie, NW PA
Base Rebate
$200 - $350
EAP Bonus
$300 - $500
Total Max
$850
FirstEnergy subsidiaries each have slightly different Act 129 programs. Check your specific utility.
Avg. rate: $0.19/kWh
Pittsburgh & Allegheny County
Base Rebate
$200
EAP Bonus
$300 - $500
Total Max
$700
Smaller rebate but stable net metering. No proposed tariff changes.
Avg. rate: $0.20/kWh
Act 129 Phase IV Deadline: May 31, 2026
Current rebate amounts expire with Phase IV. Phase V starts June 1, 2026 but rebate levels are determined by the PA PUC and may change. Apply for current rebates before May 31, 2026 to lock in guaranteed amounts.
Here is the full incentive stack for a 12.81 kW system in PECO territory (Philadelphia metro), the best-case scenario in PA.
| Incentive | Type | Value |
|---|---|---|
| SAECs (15-year estimate) | Ongoing | $4,000 - $6,000 |
| Sales Tax Exemption (6%) | One-time | $2,344 |
| PECO Act 129 (base) | One-time | $300 - $450 |
| PECO EAP Bonus (income-eligible) | One-time | Up to $1,400 |
| Property Tax Exemption (annual) | Ongoing | $450+/yr |
| Net Metering Savings (annual) | Ongoing | $2,800 - $3,200/yr |
| Total Direct Incentives (Year 1-15) | $12,000 - $20,000+ | |
SAEC and property tax values estimated over 15 years. Net metering savings are ongoing bill reductions, not direct payments. EAP bonus requires income eligibility. Actual values vary by system size, production, and SREC market prices.
While homeowners get $0 in federal credits on cash/loan purchases, the Section 48/48E commercial ITC is still alive. Here is how PA homeowners can access it indirectly.
Section 48/48E deadline: Projects must begin construction before July 4, 2026.
The PRESS Act (PA Renewable Energy Standard Strengthening) would raise the solar carve-out from 0.5% to 5.5%. If passed, this would dramatically increase demand for SAECs and likely boost prices from the current $22-$35 range to $50-$100+ per SAEC.
Status: Pending in PA legislature. Do not count on it for current financial projections, but systems installed now would benefit if it passes.
PA offers SAECs/SREC-II ($22-$35/MWh tradeable credits), 1:1 net metering, 6% sales tax exemption on equipment, property tax exemption (most jurisdictions), and Act 129 utility rebates ($200-$1,950 depending on utility). The federal residential ITC (25D) expired December 31, 2025, so cash/loan buyers receive $0 in federal credits. PPA/lease customers benefit from the financing company claiming the 30% Section 48/48E commercial ITC.
PA SAECs (Solar Alternative Energy Credits) trade at $22-$35 per credit (1 SAEC = 1 MWh) on PJM-GATS. A typical 12.81 kW system in eastern PA produces approximately 16 SRECs/year, earning $448/year. Over 25 years, this totals approximately $11K. PA SREC values are the lowest in the region due to the weak 0.5% solar carve-out.
PECO offers Act 129 solar rebates with a base amount of $300-$450 for all customers. Income-eligible households enrolled in the Energy Assistance Program (EAP) can receive an additional $500-$1,400 bonus, for a total of up to $1,950. This is the most generous utility solar rebate in PA. Phase IV ends May 31, 2026 -- apply before then.
No. Section 25D (the residential solar ITC) expired December 31, 2025 under the OBBBA. PA homeowners who purchase solar with cash or a loan receive $0 in federal tax credits. The only federal benefit available is through PPA/lease, where the third-party system owner claims the 30% Section 48/48E commercial ITC and passes savings as a lower electricity rate.
PA offers 1:1 full retail rate net metering credits for residential systems up to 50 kW. Excess generation credits at full retail rate roll month to month. At the annual 12-month true-up, any remaining excess is paid at the PTC (Price-to-Compare) rate, which is the supply-only portion and much lower than full retail. PPL customers should be aware of proposed tariff changes that could shift to LMP-based credits around July 2026.
Yes. PA exempts solar equipment from the 6% state sales tax. On a $39K system, this saves approximately $2,344. The exemption applies to solar equipment (panels, inverters, racking) but not to labor costs. Your installer should not charge sales tax on the equipment portion of your contract.
Stacking all available PA incentives for a 12.81 kW system: SAECs ($4,000-$6,000 over 15 years), sales tax exemption ($2,344), Act 129 utility rebate ($200-$1,950), and property tax exemption ($450+/yr) totals approximately $12,000-$20,000+ in direct incentives. Net metering adds $2,400-$3,200/year in ongoing bill savings. No federal ITC for cash/loan purchases.
Act 129 Phase IV runs through May 31, 2026. Phase V is expected to start June 1, 2026, but rebate amounts and program details are TBD and determined by the PA PUC. There may be a gap between Phase IV and Phase V where rebates are unavailable. Apply for current rebates before May 31, 2026 to guarantee the current incentive levels.
Get a free quote that shows exactly which incentives you qualify for in your utility territory. We handle SAEC registration, Act 129 rebate applications, and interconnection paperwork.