State solar tax credits in 2026: which states still have one, and what each pays

What is in this table and what is not

A fair warning before the numbers: this is not a complete list of every state incentive. It covers the states where we could open the statute or the state tax department's own form instructions and read the credit terms ourselves. A state missing from the table has not been confirmed to have no credit. It means we could not verify one against a primary source in this run, and under the site's rules an unverified figure stays out.

The scope is also narrow on purpose. We cover state income tax credits for rooftop solar owned by a household. Property tax exemptions, sales tax exemptions, utility rebates, solar renewable energy credits and net metering are different instruments with different rules. The incentives hub and the incentives checklist are where those are handled, and export pricing is covered in the net metering explainer.

For anything not in the table, DSIRE, the Database of State Incentives for Renewables and Efficiency, is the standard directory. Its individual program pages did not render for our fetch tool in October 2026, so we link its main site rather than citing a page we could not read. Use it to find your state's program, then confirm the terms in the statute or on the tax department's page, the way the table below does.

The table: seven states, read from primary sources

Each row below comes from the statute or form linked in the last column and the source list at the bottom of the page, all checked October 22, 2026. Where the text we read is silent on a point, the cell says verify rather than guessing. Rates and caps can change at any legislative session, so treat the table as a map of where to look, and confirm on the tax form for the year you file.

The five states with a live, clearly readable credit and a hard cap are the useful ones for planning. Utah is in the table as a warning: articles written a few years ago still describe a Utah residential solar credit that no longer applies to new systems, which is the failure this page exists to prevent.

Reading each state's rule

The table compresses a lot. These notes cover what each state's text actually says and where the sharp edges are.

New York: the largest cap, and the only one that reaches leases

New York's credit is 25 percent of qualified solar energy system equipment expenditures, limited to $5,000, claimed on Form IT-255 for a system installed and used at your principal residence in the state. Qualified spending includes materials, on-site labor, architectural and engineering services, and designs directly related to the installation, and it excludes spending paid for with nontaxable federal, state or local grants and any interest or finance charges. A system that produces electricity must be under a net energy metering contract or comply with the electric company's schedule and be connected to its grid.

The unusual feature is lease and PPA treatment. The 2025 instructions allow the credit for payments under a written lease or power purchase agreement that runs at least ten years, up to the same $5,000 limit, with no credit after the fifteenth year of an agreement longer than fifteen years. For a household in a leased system, the credit builds up as payments are made, not in one year. The credit is not refundable, but unused credit can be carried forward up to five years, after which it expires. The Tax Department's older web page for the credit carries a December 2019 update date, so we rely on the 2025 instructions for the terms and recommend you check the form for the year you file.

South Carolina: a generous percentage that pays out slowly

South Carolina allows 25 percent of the cost of buying and installing a solar energy system, but the credit claimed in any one year cannot exceed $3,500 per facility or 50 percent of that year's tax liability, whichever is less. The statute says the credit cannot be claimed before installation is complete, and that if the credit exceeds $3,500 for a facility the excess can be carried forward up to ten years. The statute requires the facility to be owned by the taxpayer, which is why leased systems look excluded.

On a $23,600 system, 25 percent is $5,900, about 1.7 times the annual cap. So the credit is realistic only for a household with enough state income tax to absorb it. A household owing $4,000 a year in South Carolina income tax can use at most $2,000 a year under the 50 percent limit. The statute's carryforward language mentions the excess over $3,500; how a year held down by the 50 percent limit carries forward is something we could not settle from the text, so confirm that with the Department of Revenue before counting on the full $5,900. The same section also states that a solar system must be certified for performance by the Solar Rating and Certification Corporation or a comparable entity endorsed by the State Energy Office, which is worth asking an installer about before signing.

Arizona: a small credit with a lifetime cap per home

Arizona's credit is 25 percent of the device cost, with a maximum of $1,000 in a tax year, and the statute bars claiming more than $1,000 in total over different years for the same residence. Excess can be carried forward up to five consecutive tax years. Joint filers who file separately split the credit. The credit is in lieu of any state tax allowance for depreciation of the device. The credit applies to residents installing a device in their residence in the state, and the device and installation must meet the state's licensing and standards rules, found in a separate statute article.

On any modern system price the cap binds. A device costing even $4,000 reaches the $1,000 maximum, so the credit is a fixed $1,000 for nearly every rooftop buyer, once per home. If the installation happened in an earlier year and you already claimed $1,000, an add-on system at the same home gets nothing more.

Massachusetts: the federal credit used to reduce it

Massachusetts allows 15 percent of the net expenditure for renewable energy source property on a principal residence, or $1,000, whichever is less. In the statute, net expenditure is the purchase price plus installation cost, less any credits received under the Internal Revenue Code and less certain federal housing grants. For systems placed in service through 2025 that subtracted the federal credit, which shrank the base. For a system with no federal credit to subtract, the statute's wording leaves the full cost as the base, though at a $1,000 cap the base rarely matters: 15 percent of any cost above about $6,700 already reaches the cap.

Unused credit can be carried over to up to three following years, but in no year can the credit exceed the tax due. Joint owners share the credit in proportion to ownership, and a newly built residence's credit goes to the original owner who occupies it.

Hawaii: the biggest percentage, with a refund election

Hawaii allows 35 percent of actual cost for a solar energy system, capped at $5,000 per system for single-family residential property, or $2,250 where the main purpose is heating water. The actual cost includes accessories and installation but excludes costs for which another credit is claimed under the chapter, and any utility rebate is deducted from the cost before the credit is applied. Excess credit can be used against tax in later years until exhausted, and claims must be filed within twelve months after the close of the tax year.

Two features stand out. First, a taxpayer can elect, irrevocably and in the year the system is placed in service, to reduce the credit by 30 percent and receive any excess over tax due as a refund. Second, the statute reduces the credit for the part of a system that Hawaii's building rules require on newly constructed single-family homes permitted on or after January 1, 2010. Legislative bills in 2026 proposed income limits and other changes to this section; we did not confirm whether any became law, so check the Department of Taxation's current form before relying on the text above.

New Mexico: a pending increase you should not count on

New Mexico's solar market development income tax credit is 10 percent of a system's cost up to $6,000 per taxpayer per year, as the existing-law text appears in the introduced 2026 bill (Senate Bill 55). That bill would raise the rate to 30 percent and the cap to $15,000 for systems purchased and installed on or after March 1, 2026, but according to the Legislature's bill status page (checked October 22, 2026) it passed the Senate 26 to 10 on February 5, 2026 and was then postponed indefinitely in the House, so it did not become law. Plan with the existing 10 percent unless a later session changes that. The existing credit text runs for taxable years ending before January 1, 2032.

We have not verified New Mexico's certification steps, application deadline, refundability or battery treatment from a primary source, so those cells say verify. They matter, because a credit with a filing deadline you miss is no credit at all.

Utah: a credit that is gone

The Utah State Tax Commission's credit instructions describe the renewable residential energy systems credit and then state that the credit for residential solar power systems expired effective 2023, with carryforwards allowed through 2027. That means a new rooftop solar system in Utah does not earn it, and only a household that earned it earlier can still be using a carried-over balance. The Governor's Office of Energy Development is the contact the Tax Commission names for the credit. For a Rocky Mountain Power customer the Utah-specific number left in the payback math is the Schedule 137 export credit, which the Utah export credit guide works through rate by rate.

Why the headline percentage is not what you receive

Looking across the seven states, the percentage is the least informative number. Four limits decide what a household receives.

The dollar cap. Arizona and Massachusetts cap at $1,000, so on a typical system the credit is a flat amount no matter the price. New York and Hawaii cap at $5,000, which a typical quote reaches. New Mexico's $6,000 cap is rarely the binding limit at 10 percent. South Carolina's annual $3,500 cap is a pace limit rather than a lifetime one.

The tax-liability limit. Almost all of these credits are nonrefundable, meaning they can reduce your state income tax to zero but not below. A retired couple owing $900 a year in state income tax can use $900 a year. Hawaii is the exception in the text we read: it lets a taxpayer take a refund in exchange for a smaller credit.

The carryforward window. Unused credit survives only so long: three years in Massachusetts, five in New York and Arizona, ten in South Carolina, and until exhausted in Hawaii. A credit that cannot be used inside its window simply expires, so the question to answer before buying is how many years of state tax you will actually owe.

Basis reductions. New York excludes spending covered by nontaxable grants. Hawaii subtracts utility rebates. Massachusetts subtracts a federal credit if one was received. A rebate that looks free can reduce a credit in the same breath, so net each incentive against the others in a table before adding them up.

What each credit does to the payback of one example

To compare, we run one household through each state's rule. The inputs are the ones this site uses elsewhere: an 8 kW system at the U.S. Department of Energy's Q1 2025 residential benchmark of $2.95 per watt DC (modeled market price for an 8 kW system, 2024 dollars, checked October 30, 2026), so $23,600 (a comparison line, not a quote), producing 12,000 kWh a year, with each kWh worth 20 cents, so $2,400 of first-year value. Simple payback is price divided by that value, with no degradation or rate escalation, in the way the payback method page describes. No federal credit is in the math. The household is assumed to owe enough state income tax to absorb the credit, which is the most favorable case.

These are illustrations with stated inputs, not predictions for your roof, and they use the headline rules in the table.

The spread is the lesson. A $1,000 credit trims about five months from a payback of just under ten years, while a $5,000 or $5,900 credit removes about two to two and a half years. Both matter less than the system price, which can swing by far more than any state credit: a quote $5,000 above the benchmark undoes a $5,000 credit entirely, as the cost per watt guide shows. The cheapest way to use a state credit is to compare it against the price you are paying, not to treat it as a reason to accept one.

Timing also differs. In the table, South Carolina's $5,900 arrives at up to $3,500 a year, so the credit's value is received over at least two tax years, and a household with a small liability waits longer. The simple-payback figure above ignores that delay, so it flatters South Carolina, and a household in that position should run its own year-by-year numbers. For the broader question of whether a roof system pays at all without any credit, the worth-it-in-2026 guide works the break-even electricity price.

Leases, PPAs and who can claim

Whether you own the system decides eligibility in most states. In the texts we read, South Carolina requires that the facility be owned by the taxpayer, and the Massachusetts and Arizona texts speak of property purchased or installed by the individual without addressing leases. New York is the clear case in the other direction, and its form instructions explain how to enter lease and PPA payments. Utah's expired credit let a lessor transfer rights to the new owner of a residence, which shows that even where leases are contemplated, the mechanics are specific.

If you are weighing a lease or PPA partly because of an incentive, ask the company in writing who claims each credit and whether the price reflects it. Our lease, buy or PPA guide sets out the comparison, and the leased-solar sale guide covers what happens to the contract when the house sells. A state credit claimed by the company is not a credit you receive, even if the sales pitch mentions it, and the same holds for the federal owner's credit explained in the lease and PPA 48E guide.

Batteries and state credits

The federal residential credit used to cover battery storage; it ended for property placed in service after 2025 along with the rest of that credit. At state level the picture is murkier. None of the statutes or form instructions we read in New York, South Carolina, Massachusetts or Hawaii names a battery. Arizona's definition of a solar energy device says such systems may have the capability of storing solar energy, which is not the same as saying a battery bought with the panels counts.

Do not read silence as approval. Ask your state tax department whether a battery installed with the panels counts toward the cost base, get the answer in writing, and put the battery outside your payback math until you have it. The battery decision guide treats storage on its own merits, and the batteries and backup hub shows where it sits among the other battery topics.

Checking your own state in about twenty minutes

If your state is not in the table, or it is and you want to be sure, the work is the same. Credits are only one of the ways a state pays; the certificate guide covers the states that pay per megawatt-hour instead, and the income-qualified guide covers the tiered programs.

1. Find the program on DSIRE by choosing your state and the residential, state-level filter. Treat the summary as a pointer.
2. Open the statute or the tax department's own page for the credit. The statute gives the rate, cap and carryforward; the form instructions give the practical rules, such as what costs count.
3. Look at the form for the tax year you will file. A credit page last updated years ago, like New York's web page dated 2019, can lag the current form.
4. Confirm the credit's end date. Several state credits have sunset years, and some are tied to the date a system is placed in service, as the federal credit was.
5. Find out whether your expected state income tax is large enough to use the credit inside its carryforward window. Take last year's state return, find the tax line, and divide the credit by it.
6. Ask the installer which credit it assumed on the quote, and do not accept a quote that nets the credit into the price without showing the gross price and the cap.