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The federal residential solar tax credit (Section 25D) died on December 31, 2025. Pennsylvania never had great state-level incentives to begin with -- no property tax exemption, no sales tax exemption, no state credit. But SRECs, net metering, and Section 48E lease/PPA are still active and can make solar work in your favor. Here is the honest guide to every program that still exists.
The federal residential solar tax credit (Section 25D) expired December 31, 2025. Pennsylvania homeowners who buy solar with cash or a loan receive $0 in federal tax credits. PA also has no sales tax exemption, no property tax exemption, and no state credit. However, 3 active programs still provide value:
Bottom line: A 10 kW system at $3.00/W costs $31,800 (including 6% sales tax). Net metering saves $1,800-2,250/year depending on your utility, and SRECs add ~$350/year. Payback: 9-12 years. After payback, 13-16 years of essentially free electricity.
Before we cover what still works, here is the honest reality about PA's solar incentive landscape. Other solar websites still reference these. They are either wrong or misleading.
Homeowners who purchase solar with cash or a loan receive $0 in federal tax credits. This was 30% in 2025 (~$9,000 on a 10 kW system). Now it is zero.
Pennsylvania has NO property tax exemption for solar. Your solar panels INCREASE your assessed property value and your property taxes go up (~$444/yr). This is a major disadvantage vs NJ, MA, CT, RI, and NH.
Pennsylvania charges 6% state sales tax on solar equipment. On a $30,000 system, that adds $1,800. NJ, CT, MA, RI all exempt solar from sales tax. PA does not.
Pennsylvania has never offered a state-level solar tax credit. There is no state credit to replace the expired federal 25D credit.
The $2,000 heat pump tax credit and $1,200 insulation/efficiency credit are both dead. These were separate from the solar ITC and also expired.
HB 1155 was signed on April 7, 2025, but the PUC must finalize rules by April 2026. First projects are not expected until late 2026 or 2027. You cannot subscribe yet.
The federal credit was the only real loss. PA's state-level landscape was already weak -- it stayed exactly the same. Here is the full comparison.
| Incentive Program | 2025 | 2026 | Status |
|---|---|---|---|
| Federal Tax Credit (25D) | 30% of system cost (~$9,000) | $0 -- Expired Dec 31, 2025 | Dead/Missing |
| PA SRECs (AEPS) | $22-35/MWh via PJM-GATS | $22-35/MWh via PJM-GATS | Active |
| Net Metering | 1:1 full retail credit | 1:1 full retail credit | Active |
| Sales Tax Exemption | NONE (6% charged) | NONE (6% charged) | Dead/Missing |
| Property Tax Exemption | NONE (taxes increase) | NONE (taxes increase) | Dead/Missing |
| Section 48E (Lease/PPA) | 30%+ for third-party owner | 30%+ through July 4, 2026 | Pending |
| State Solar Tax Credit | $0 -- PA has none | $0 -- PA has none | Dead/Missing |
| Community Solar (HB 1155) | Signed into law Apr 2025 | PUC rules pending | Pending |
| 25C Energy Efficiency | $2,000 heat pump credit | $0 -- Expired Dec 31, 2025 | Dead/Missing |
The federal 25D credit was worth about $9,000 on a typical 10 kW system. That is a real loss. But PA never had strong state incentives to begin with -- the landscape is essentially unchanged. The 3 remaining programs (SRECs + net metering + 48E lease) generate $40,000-52,000 in lifetime value for a 10 kW system. Solar still pays off in 9-12 years.
Pennsylvania's Alternative Energy Portfolio Standard (AEPS) requires utilities to source 0.5% of electricity from solar -- the weakest solar carve-out in the region. This creates a market for Solar Renewable Energy Credits (SRECs), which are traded on PJM-GATS. You earn 1 SREC for every MWh (1,000 kWh) your system produces.
For a typical 10 kW system in eastern PA producing ~12,500 kWh/year (12.5 MWh), SRECs earn approximately $275-438/year at current market prices. Over 25 years (accounting for 0.5% annual degradation), that is $6,200-9,900 in total SREC income.
The PRESS Act (PA Renewable Energy Standard Strengthening) would raise the solar carve-out from 0.5% to 5.5%. This would dramatically increase demand for PA SRECs, potentially pushing prices above $100/MWh. As of March 2026, PRESS has not passed. If it does, existing systems would benefit from the higher prices. Systems installed now are positioned to capture this upside.
Based on PA region-specific kWh/kW production. SREC price: $28/MWh midpoint. Includes 0.5%/yr degradation. 25-year totals. Market prices may vary.
Net metering is the single largest value driver for Pennsylvania solar. When your panels produce more than you use, excess electricity flows to the grid and you receive credits on your electric bill at the full retail rate. PA systems are capped at 50 kW for residential (110% of prior 12-month usage) with annual PTC true-up.
The federal residential ITC (25D) is dead, but the commercial ITC (Section 48/48E) is still available for projects that begin construction before July 4, 2026. In Pennsylvania specifically, lease/PPA is more compelling than in other states because PA homeowners get zero federal benefit on cash/loan purchases AND face property tax and sales tax penalties that lease/PPA companies absorb.
| Factor | Cash Purchase | Lease/PPA |
|---|---|---|
| Upfront cost | $31,800 (incl. 6% tax) | $0 |
| Monthly payment | $0 (paid upfront) | ~$90-$130/mo |
| Federal credit | None (25D expired) | 48E to owner (until July 2026) |
| SRECs | You keep (~$350/yr) | Company keeps |
| Property tax impact | YOUR taxes increase | Company handles |
| Sales tax | 6% ($1,800 on 10 kW) | Embedded in monthly rate |
| 25-year savings | $25K-$52K | $8K-$18K |
| Maintenance | Your responsibility | Company handles |
Read our PA solar lease vs. PPA guide | Section 48 homeowner guide
Even without a federal credit, PA solar systems generate significant long-term value. Here is the incentive stack for a 10 kW system at $3.00/W.
Based on 10 kW at $3.00/W ($31,800 with 6% sales tax). Includes net metering savings, SREC income ($28/MWh midpoint), 2% annual rate escalation, 0.5% panel degradation, minus ~$444/yr property tax increase. PA-specific: no sales tax exemption, no property tax exemption.
PA has the weakest incentive stack in the Northeast. But lower solar costs and an active SREC market partially offset the disadvantages.
| State | Avg Rate | Sales Tax | Property Tax | SREC/Performance | Payback |
|---|---|---|---|---|---|
| Pennsylvania | $0.15-0.18 | 6% TAXED | TAXED | $22-35/MWh SREC | 9-12 yrs |
| New Jersey | $0.26 | 100% exempt | 100% exempt | $85.00/MWh ADI | 8-11 yrs |
| Massachusetts | $0.28-0.32 | 100% exempt | 100% exempt | SMART $0.03/kWh | 12-14 yrs |
| Connecticut | $0.27-0.28 | 100% exempt | 100% exempt | None | 8-10 yrs |
| New Hampshire | $0.27 | No sales tax | Local option | None | 9-10 yrs |
While PA has the weakest incentives, it also has among the lowest solar installation costs in the Northeast ($2.95-3.15/W vs $3.40+ in MA/CT). This partially compensates for the missing tax exemptions. PA solar works on fundamentals: affordable installation + solid net metering + modest SREC income.
Governor Shapiro signed HB 1155 on April 7, 2025, authorizing community solar in Pennsylvania. This is good news for renters, condo owners, and homeowners with shaded roofs. But there is a catch: you cannot subscribe yet.
Here is the honest breakdown for a cash purchase in 2026. PA-specific: includes 6% sales tax and annual property tax increase. No federal credit.
Philadelphia Metro
Lehigh Valley / Central
Pittsburgh / Allegheny
These are representative scenarios. Your actual numbers depend on your roof orientation, shading, usage patterns, and specific utility rate. Use our calculator for a personalized estimate.
Open PA Solar Cost CalculatorPPL Electric has proposed shifting from 1:1 retail net metering to hourly LMP (Locational Marginal Pricing) credits around July 2026. LMP-based credits vary by hour and are typically significantly lower than full retail rates, especially during midday solar peak hours when supply is abundant and prices drop.
Bottom line: If you are a PPL customer in the Lehigh Valley, Harrisburg, or central PA, installing solar before July 2026 locks in current 1:1 net metering and protects your investment from the proposed tariff changes.
Pennsylvania has 3 active solar incentive programs in 2026: SRECs through the PA AEPS solar carve-out ($22-35/MWh via PJM-GATS), 1:1 net metering for systems up to 50 kW (full retail credit monthly), and Section 48E commercial ITC for lease/PPA systems (30%+ through July 4, 2026). PA does NOT have a sales tax exemption, property tax exemption, or state solar tax credit. The federal residential 25D credit is $0.
No. The federal residential solar tax credit (Section 25D) expired December 31, 2025. Homeowners who buy solar with cash or a loan receive $0 in federal tax credits. However, lease/PPA companies that own the system can still claim Section 48E (30%+) on projects beginning construction before July 4, 2026, passing savings to you via lower monthly payments.
PA SRECs trade at $22-35 per MWh (1 SREC = 1 MWh of solar production) via PJM-GATS. A typical 10 kW system producing 11-12.5 MWh/year earns approximately $250-385/year in SREC income. PA SREC values are lower than NJ ($85.00/MWh ADI) because PA has only a 0.5% solar carve-out, the weakest in the region. The PRESS legislation could boost this to 5.5% if passed.
PA net metering provides 1:1 full retail rate credits for excess solar on a monthly basis. Credits roll over month to month. At the annual true-up (typically June), remaining excess is paid at the Price-to-Compare (PTC) rate, which is the supply-only rate (much lower than full retail). Systems are limited to 50 kW residential. PPL Electric may shift to hourly LMP-based credits around July 2026.
No. Pennsylvania is one of the few major solar markets with NO property tax exemption. Solar installations ADD to your assessed property value and INCREASE your property taxes. At the PA average effective rate of ~1.2%, a $37,000 system adds roughly $444/year in property taxes. This is a significant disadvantage compared to NJ, MA, CT, and NH, which all exempt solar from property tax.
No. Pennsylvania charges 6% state sales tax on solar equipment. On a 10 kW system at $3.00/W ($30,000), you pay approximately $1,800 in sales tax. Unlike NJ, CT, MA, and RI, which all exempt solar from sales tax, PA offers no exemption. This adds to your total cost and extends the payback period.
Most Pennsylvania homeowners see payback in 9-12 years without the federal ITC. PECO customers ($0.18/kWh) typically see faster payback (9-10 years) than Penelec customers ($0.16/kWh, 11-12 years). Payback is driven by net metering savings ($1,500-2,200/yr depending on utility), SREC income ($250-385/yr), minus the property tax increase (~$444/yr). After payback, you get 13-16 years of essentially free electricity.
In PA specifically, leasing has an unusual advantage: the third-party owner handles property tax implications (since PA has no exemption), claims Section 48E credits through July 2026, and passes savings through as lower payments. Cash purchase maximizes long-term savings ($25K-$35K over 25 years vs $8K-$18K for lease) but requires absorbing the 6% sales tax, property tax increase, and full upfront cost.
The PRESS Act would raise the PA solar carve-out from 0.5% to 5.5%, dramatically increasing demand for PA SRECs and potentially pushing prices above $100/MWh. As of March 2026, PRESS has not passed. If it does pass, existing SREC-generating systems would benefit from the higher prices. Its fate remains uncertain in the current legislative session.
Yes, for most homeowners with good sun exposure. PA solar works on the strength of net metering ($1,500-2,200/yr) and SREC income ($250-385/yr). At $3.00/W with a 10 kW system, payback is ~10 years. Solar panels last 25+ years, so you get 15+ years of essentially free electricity. Lease/PPA is especially compelling in PA since the financing company absorbs the tax disadvantages.
PA has the weakest solar incentive stack in the Northeast. NJ has $85.00/MWh ADI + dual tax exemptions. MA has SMART 3.0 + dual tax exemptions. CT has dual tax exemptions. PA has none of these. PA advantages: competitive solar costs ($2.95-3.15/W), active SREC market (though weak), stable 1:1 net metering, and community solar coming (HB 1155). The gap narrowed slightly when 25D expired since federal credits helped other states more.
Governor Shapiro signed HB 1155 on April 7, 2025, authorizing community solar in PA. The PUC has until April 2026 to finalize implementation rules. First projects are unlikely to be operational before late 2026 or 2027. When available, community solar will let renters, condo owners, and shaded-roof homeowners subscribe to local solar farms for bill credits.
Even without a federal tax credit, PA solar pays off in 9-12 years with SRECs + net metering. See what your home qualifies for with today's local pricing.
Free, no obligation. Includes SREC income projections and utility-specific savings.