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Texas has no statewide solar program and no federal tax credit. But the Lone Star State still offers property tax exemptions, local utility rebates, and a deregulated market that lets you choose your solar buyback plan. Here is every incentive, exemption, and program available to TX homeowners right now.
100% Exempt
Property Tax
1,500+ kWh/kW
Solar Production
$2.50-$2.90/W
Avg Cost
12-20 yrs
Avg Payback
Texas homeowners no longer receive a federal solar tax credit (Section 25D expired Dec 31, 2025). Texas has no statewide solar rebate, no sales tax exemption (6.25% applies), and no mandatory net metering. What TX does offer: 100% property tax exemption under Tax Code Section 11.27, Austin Energy $2,500 rebate (Austin only), solar buyback plans from REPs at $0.04-$0.12/kWh, and Oncor battery incentives. For a typical 10 kW system at $2.70/W ($27,000), the property tax exemption saves ~$450-$650/year permanently.
A quick visual overview of every Texas solar incentive — what is active, what has a deadline, and what is gone.
100% exempt
Solar value excluded from property tax under TX Tax Code Section 11.27. Automatic — no application needed.
~$450-$650/yr permanently
$2,500
Austin Energy offers $2,500 for residential solar. Must use a qualified contractor. Austin Energy territory only.
Upfront rebate
$0.04-$0.12/kWh
In deregulated ERCOT areas, Retail Electric Providers offer solar buyback plans. Rates vary widely by plan.
Depends on REP & plan
Varies
Oncor offers battery storage incentives for customers who pair solar with battery backup. Requires battery installation.
Battery incentive
30%+ ITC
Third-party system owners (lease/PPA companies) claim 30% commercial ITC. Passed to you as lower pricing.
Lower PPA/lease rate
$0
Expired December 31, 2025. No federal credit for homeowner cash or loan purchases.
$0
CPS Energy (San Antonio) solar rebate program has been exhausted. No new residential applications accepted.
Texas solar economics are fundamentally different from every other major solar state. There is no statewide solar program, no mandatory net metering, and the federal residential ITC (Section 25D) expired December 31, 2025. On a $27,000 system, that is $8,100 in federal credits gone.
But here is what most solar guides get wrong about Texas: the deregulated ERCOT market creates both the biggest challenge and the biggest opportunity. In 85% of the state, you choose your Retail Electric Provider (REP) and your electricity plan. That means your solar buyback rate — the price you get paid for excess solar energy — is not set by regulators. It is set by the market and your REP contract.
The result: self-consumption is king in Texas. Every kWh you use directly from your solar panels offsets electricity you would have bought at $0.12-$0.16/kWh. But excess kWh you export to the grid may only earn $0.04-$0.12/kWh. The economics favor right-sizing your system and adding battery storage to maximize the value of every kWh.
Any solar company telling you the "30% federal tax credit is still available" for homeowner-owned systems is either uninformed or deliberately misleading you. Section 25D expired on December 31, 2025. If a solar salesperson claims otherwise, walk away.
Exception: Section 48/48E commercial credits are still available for third-party system owners (solar lease and PPA companies) on projects beginning construction before July 4, 2026. The homeowner does not claim this credit directly — the financing company does, and passes savings through as a lower rate.
Texas averages 1,450-1,600 kWh/kW/year — 20-30% more than the Northeast. Higher production means more electricity offset per panel, partially compensating for lower rates.
TX solar averages $2.50-$2.90/W, significantly cheaper than NE states at $2.90-$3.50/W. Lower labor costs, simpler permitting, and flat roofs keep prices down.
With low buyback rates ($0.04-$0.12/kWh vs $0.12-$0.16/kWh retail), using solar power directly saves 2-3x more than exporting. Battery storage maximizes self-use.
Under Texas Tax Code Section 11.27, the added value of a solar energy system is 100% exempt from property tax. This is the single strongest solar incentive available statewide in Texas and it is permanent — no expiration date.
National research shows solar panels add approximately $15,000-$25,000 to home resale value. In Texas, that added value is 100% exempt from property tax. Without the exemption at TX average rates (~1.8-2.2%), you would pay $360-$550 more per year in property taxes. Section 11.27 eliminates that permanently.
Texas has some of the highest property tax rates in the nation. At a 2.0% effective rate, a $22,000 solar value increase would cost $440/year in additional property taxes. Over 25 years, you save approximately $11,000+.
Calculation: $22,000 assessed value x 2.0% rate = $440/yr x 25 years = ~$11,000
Unlike most Northeast states, Texas does NOT exempt residential solar from sales tax. The standard 6.25% state sales tax applies to solar panel purchases, plus any applicable local sales taxes (which can push the total to 8.25% in some areas).
10 kW system at $2.70/W = $27,000 equipment cost:
$27,000 x 6.25% = $1,687 in state sales tax
With local taxes (up to 8.25%): $2,227
This is one of the biggest gaps in TX solar policy. Factor it into your total cost.
Texas does not have mandatory net metering. Instead, in the deregulated ERCOT market (85% of the state), Retail Electric Providers (REPs) offer voluntary solar buyback plans. These plans determine what you get paid when your solar panels produce more electricity than you use.
Key Difference: Buyback Rate vs Retail Rate
In states with net metering (like CT or NJ), you get full retail credit for excess solar — $0.26-$0.28/kWh. In Texas, buyback rates are typically $0.04-$0.12/kWh, while you pay $0.12-$0.16/kWh for electricity. This gap is why self-consumption matters most in TX. Every kWh you use directly saves 2-3x more than every kWh you export.
| REP | Plan | Buyback Rate | Term | Notes |
|---|---|---|---|---|
| TXU Energy | Solar Buyback 12 | $0.097/kWh | 12 months | Established REP, decent buyback |
| Green Mountain | Pollution Free | $0.08-$0.10/kWh | 12-24 months | 100% renewable plan |
| Chariot Energy | Solar Buyback | $0.05-$0.08/kWh | 12-36 months | Solar-focused REP |
| Rhythm Energy | Solar Buyback | $0.04-$0.07/kWh | 12 months | Variable rates; read terms carefully |
| MP2 Energy | Solar Buyback | $0.06-$0.09/kWh | 12-24 months | Shell subsidiary |
Austin Energy is a municipal utility (not part of deregulated ERCOT) and offers the most favorable solar program in Texas. If you live in Austin Energy's service territory, your solar economics are significantly better than the rest of the state.
$2,500
Solar rebate
~$0.10
VOS rate per kWh
12-15 yr
Avg payback
$0.12
Avg retail rate
CPS Energy was once the most generous municipal utility solar program in Texas, offering rebates of $1.00+/W that made San Antonio a top solar market. However, the residential rebate program has been fully exhausted and is no longer accepting new applications.
Oncor, the largest transmission and distribution utility in Texas (serving the DFW metroplex and surrounding areas), offers a battery storage incentive program. This program makes pairing solar with battery storage more financially attractive.
While homeowners can no longer claim a federal tax credit on purchased solar systems, there is a narrow window where leases and PPAs retain a federal advantage.
Deadline: July 4, 2026 — Projects must begin construction before this date
After July 4, 2026, the Section 48/48E commercial ITC will no longer be available for new residential solar projects. Lease/PPA prices will likely increase.
In Texas, PPAs are particularly interesting because of the deregulated market:
Lower TX rates mean narrower PPA savings margins vs NE states. Compare carefully.
Adjust system size, region, and battery to see exactly how much Texas solar incentives are worth for your home. All calculations use verified 2026 program data.
See how Texas solar savings stack even without state rebates
First-Year Savings
$2,595
electricity + exports + property tax
25-Year Lifetime
$64,875
on a $28,000 system
Payback Period
10.8 years
then pure savings
Why TX solar works despite fewer incentives:
Estimates based on TX averages. Actual values depend on system design, shading, REP buyback terms, and your county's property tax rate. Federal residential ITC (Section 25D) expired Dec 31, 2025. No state solar rebate or tax credit exists in Texas.
Transparency matters. Here are the solar programs and incentives that Texas does not currently offer. If a solar company tells you otherwise, that is a red flag.
Section 25D expired December 31, 2025. Homeowners who buy with cash or loan get $0 in federal credits.
Texas has no state-level solar rebate program. Local utility programs (Austin Energy, formerly CPS Energy) are the only rebates.
Texas charges 6.25% state sales tax on solar equipment (plus local taxes up to 8.25%). Most other major solar states exempt solar from sales tax.
Texas has no statewide net metering requirement. In deregulated areas, buyback rates ($0.04-$0.12/kWh) are set by your REP, not regulators.
TX has no Solar Renewable Energy Credit program and no per-kWh production incentives like MA (SMART) or RI (REG).
Texas has no state income tax at all, so there is no state income tax credit for solar. (This is also why the federal ITC mattered even more in TX.)
Texas has fewer solar incentives than any major solar state. No ITC, no state rebate, no sales tax exemption, no mandatory net metering. But TX makes up for it with fundamentally different economics: lower installation costs ($2.50-$2.90/W vs $3.00-$3.50/W in NE), massive solar production (1,500+ kWh/kW vs 1,100-1,200 in NE), and the property tax exemption that saves $400-$650/year permanently. The payback is longer (12-20 years vs 8-15 in NE), but with 25+ year panel life, most TX homeowners still see strong returns.
Solar economics vary dramatically across Texas because of different utility structures, rates, and local incentives.
| Region | Avg Rate | Buyback | Market | Production | Payback |
|---|---|---|---|---|---|
| Dallas-Fort Worth | $0.15/kWh | $0.04-$0.09/kWh | Deregulated (Oncor) | ~1,500 kWh/kW/yr | 14-18 years |
| Houston | $0.16/kWh | $0.05-$0.10/kWh | Deregulated (CenterPoint) | ~1,450 kWh/kW/yr | 13-17 years |
| Austin | $0.12/kWh | ~$0.10/kWh (VOS) | Municipal (Austin Energy) | ~1,550 kWh/kW/yr | 12-15 years |
| San Antonio | $0.125/kWh | ~$0.07-$0.09/kWh | Municipal (CPS Energy) | ~1,550 kWh/kW/yr | 15-20 years |
Lowest rates = longest payback. Battery rebate from Oncor helps.
Hurricane resiliency drives battery adoption. Humid climate lowers production slightly.
$2,500 rebate + VOS rate. Best overall incentive package in TX.
Rebate exhausted. Low rates make payback longer without rebate.
Texas took a market-driven approach to solar, relying on deregulation and local utility programs rather than statewide mandates.
Texas deregulates electricity market (SB 7). ERCOT manages 85% of state grid.
Austin Energy launches first solar rebate program in Texas.
Property tax exemption for solar codified in TX Tax Code Section 11.27.
CPS Energy (San Antonio) launches aggressive solar rebate. Becomes top US municipal solar market.
Texas surpasses 10 GW of utility-scale solar capacity. Solar buyback plans proliferate.
Winter Storm Uri exposes grid vulnerability. Battery storage interest surges.
CPS Energy rebate funds exhausted. Austin Energy reduces rebate to $2,500.
Federal residential ITC (Section 25D) expires December 31. No replacement.
TX relies on local utility programs, property tax exemption, and solar buyback plans. Section 48 TPO deadline: July 4.
Common questions about Texas solar incentives in 2026.
No. The federal residential solar tax credit (Section 25D) expired on December 31, 2025. Texas homeowners who purchase solar panels with cash or a loan receive $0 in federal tax credits. However, if you go solar through a lease or PPA, the third-party system owner may still claim Section 48/48E credits through July 4, 2026, which can translate to lower pricing for you.
Texas has no statewide solar rebate, no state tax credit, and no SREC program. Solar incentives in TX come from local utilities (Austin Energy $2,500 rebate, Oncor battery program) and the statewide property tax exemption under Tax Code Section 11.27. The deregulated electricity market also offers solar buyback plans through various REPs.
Under Texas Tax Code Section 11.27, the added value of a solar energy system is 100% exempt from property tax. If your solar installation adds $20,000 in value to your home, you pay $0 in additional property taxes on that amount. This is automatic and permanent — no application required. With TX average property tax rates around 1.8-2.2%, this saves roughly $360-$440 per year on a typical system.
Texas does not have statewide mandatory net metering. In deregulated ERCOT areas (85% of the state), you need a "solar buyback plan" from your Retail Electric Provider (REP). Buyback rates range from $0.04 to $0.12 per kWh — far less than the full retail rate. In municipal utility territories, Austin Energy offers a Value of Solar (VOS) rate of about $0.10/kWh, which is more favorable.
Yes, as of March 2026, Austin Energy still offers a $2,500 residential solar rebate. However, funding is limited and first-come, first-served. You must use an Austin Energy-qualified contractor and be within their service territory. Contact Austin Energy directly to confirm current availability before committing.
A solar buyback plan is offered by Retail Electric Providers (REPs) in deregulated ERCOT areas. When your solar panels produce more electricity than you use, the excess is exported to the grid. Your REP credits you at the buyback rate, which typically ranges from $0.04 to $0.12/kWh. This is NOT the same as net metering — the buyback rate is usually much lower than what you pay for electricity.
It depends on your region and electricity plan. In Austin, with the $2,500 rebate and VOS rate, payback is 12-15 years with 25+ year panel life. In DFW or Houston, lower buyback rates push payback to 14-18 years. The key advantage in TX is high solar production (1,450-1,600 kWh/kW/year) — your panels produce 20-30% more energy than in the Northeast. Self-consumption (using solar power directly rather than exporting) provides the best economics.
Yes. Unlike many other states, Texas does NOT exempt residential solar equipment from sales tax. The standard 6.25% state sales tax applies to solar panel purchases, plus any applicable local taxes. On a $25,000 system, that is approximately $1,562 in sales tax. This is an often-overlooked cost that increases your total investment.
Battery storage makes strong sense in Texas for several reasons: (1) ERCOT grid reliability concerns after Winter Storm Uri, (2) buyback rates are low so storing excess solar for self-use is more valuable than exporting, (3) Oncor offers battery rebate incentives, and (4) time-of-use benefits during summer peak demand. A battery shifts your economics toward self-consumption, which is the most valuable use of solar in TX.
Oncor, the largest transmission and distribution utility in Texas (serving DFW and surrounding areas), offers a battery storage incentive program. The program provides rebates for customers who install battery storage systems, particularly when paired with solar. The goal is to reduce peak grid demand. Contact Oncor or your installer for current rebate amounts and eligibility requirements.
TX Energy Hub
All TX solar & heat pump guides
TX Solar Cost 2026
Pricing breakdown by city
TX Solar Guide
Complete solar overview
Solar Buyback Guide
Compare REP buyback plans
Austin Energy Rebate
$2,500 rebate details
CPS Energy Guide
San Antonio solar details
Oncor Battery Rebate
DFW battery incentives
TX Net Metering Guide
How buyback plans work
Buy vs Lease vs PPA
Best financing for TX
Property Tax Exemption
Section 11.27 details
Solar Without the ITC
Is it still worth it in TX?
Section 48 Guide
How commercial ITC helps you
TX Rate Trends
ERCOT rate analysis
TX Solar Tax Info
What is and is not exempt
Commercial Solar TX
Business solar incentives
ERCOT Battery Guide
Grid backup & resilience
Solar + Heat Pump TX
Electrification bundle
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Section 48 lease/PPA deadline: July 4, 2026. Austin Energy rebate available while funds last.