California solar incentives in 2026: what's actually left.
The 30% federal credit for homeowners ended on December 31, 2025. Most solar company websites — including some very large ones — still advertise it. This page is our attempt at an honest, dated accounting of what a Californian can genuinely claim today.
The 30% homeowner credit is gone.
The Residential Clean Energy Credit — Section 25D, the one everybody knows as "the 30% solar tax credit" — was terminated by the One Big Beautiful Bill Act, signed July 4, 2025. The statute now reads that the credit "shall not apply with respect to any expenditures made after December 31, 2025."
If you buy a solar system with cash or a loan in 2026, your federal tax credit is zero. There is no phase-down and no reduced rate. It went from 30% to nothing on New Year's Day.
- Credits already earned still carry forward. If you installed in 2025 or earlier and couldn't use the whole credit against your tax liability, the unused portion carries forward as before. That hasn't changed.
- Batteries went with it. Section 25D covered storage of 3 kWh and up. The whole section is terminated, so battery purchases lost the same 30%.
- So did the adjacent credits. Section 25C — heat pumps, electrical panel upgrades, weatherization — ended for property placed in service after December 31, 2025. Section 30C, the EV charger credit, ended for property placed in service after June 30, 2026. That deadline has now also passed.
- Don't count on it coming back. A restoration bill was introduced in March 2026 and has had no committee action. We would be delighted to be wrong, but nobody should plan a purchase around it.
Leases and PPAs still carry the 30% — indirectly.
Section 48E, the commercial credit, doesn't care whether the roof is residential. It cares who owns the system. On a third-party-owned arrangement — a lease or a power purchase agreement — the provider owns the equipment, claims the 30% themselves, and prices that value into what they charge you.
Residential-scale systems are under 1 MW, which exempts them from the prevailing wage and apprenticeship requirements, so they receive the full 30% rather than the 6% base rate. In practical terms, third-party ownership is now the only route by which federal incentive money reaches a residential solar customer in California.
We say that neutrally, not as a recommendation. TPO is a genuinely different product: you don't own the asset, the economics over twenty years are usually worse than a good cash purchase was under the old credit, and — as covered on our orphaned systems page — a lease creates real complications when you sell the house. But it is now the only place the 30% still exists for a home, and pretending otherwise wouldn't help anyone.
Own it
Cash or loan. You keep the asset, the production, and any resale value. Federal credit in 2026: none.
Lease / PPA
Provider owns it and claims 30% under 48E, passing value through as lower payments. You get no depreciation, no asset, and a contract that follows the house.
Own it — business
Commercial and agricultural buyers keep the full 48E credit plus depreciation. This is where the economics are still genuinely strong.
If you're weighing own-versus-lease and want the numbers side by side without a sales pitch attached, that's precisely the comparison a broker exists to run.
Business solar still works — and one number surprises people.
Nearly everything above applies to homeowners. For a business, an agricultural producer, or a hotel, the federal picture is materially better and largely intact.
| Item | 2026 status |
|---|---|
| §48E base credit | 6% of qualified investment |
| §48E with prevailing wage & apprenticeship, or under 1 MW | 30% |
| Domestic content bonus | +10 percentage points |
| Energy community bonus | +10 percentage points |
| Low-income communities bonus (§48E(h), under 5 MW) | +10 or +20 points, by allocation |
| MACRS depreciation | Solar remains 5-year property; basis reduced by half the credit claimed |
| Bonus depreciation | 100%, permanent |
| §179D deduction | Gone for construction beginning after June 30, 2026 |
| Placed-in-service deadline (construction begun after July 4, 2026) | December 31, 2027 |
This is the part of the market we know best — USDA REAP applications, SBA 504B green loan compliance, and ITC-plus-depreciation modeling for hotels, farms, and rural businesses. Note that USDA's REAP grant program has been through repeated rule changes since 2025 and grant windows are not always open; ask us for its current status rather than trusting a number from an older funding cycle. For the segment-specific rules — AG tariffs, meter aggregation and the Williamson Act on farm solar, or VNEM and SOMAH on apartment and multifamily solar — each has its own page.
California's own programs.
Property tax exclusion — and a January 1, 2027 deadline
California excludes the added value of an active solar energy system from property tax assessment, under Revenue and Taxation Code section 73. Adding solar doesn't raise your property tax bill.
SGIP battery rebates — closed to most people
The Self-Generation Incentive Program is the one we get asked about most, and it's the one most commonly misrepresented. Every ratepayer-funded SGIP budget stopped accepting new applications on December 30, 2025, and the waitlists closed the same day. If a company quotes you an SGIP rebate on a home battery in 2026, ask them to show you the open budget.
- What remains is income-qualified. The Residential Solar and Storage Equity budget, funded separately from the state's Greenhouse Gas Reduction Fund, is still running with an application deadline of June 30, 2028. Published rates are $1,100 per kWh of storage and $3,100 per kW of solar, with storage capped at 30 kWh for single-family homes.
- Eligibility, broadly: household income at or below 80% of area median income, or participation in SASH, DAC-SASH, CARE, FERA, or ESA. If you're on CARE, you should look at this.
- Sub-budget availability moves. Individual utility allocations open, waitlist, and close at different times, so we won't publish a status here that could be stale by the time you read it. Check the live program metrics at selfgenca.com, or ask us and we'll look with you.
DAC-SASH — for disadvantaged communities
The Disadvantaged Communities Single-family Affordable Solar Homes program is authorized through the end of 2030 at an incentive level of $3.00 per watt. It's for homeowners in the state's most environmentally burdened census tracts who are PG&E, SCE, or SDG&E customers and meet CARE or FERA income guidelines. It's administered by GRID Alternatives rather than by installers, so start at energyforallprogram.org.
There is no California solar sales tax exemption
Occasionally advertised, and it doesn't exist for homeowners. Under California's rules a furnish-and-install solar job is a construction contract, and sales tax is handled between the contractor and the state — it's embedded in your installed price, not a separate line you can escape. There are genuine partial exemptions for qualifying farm equipment and for manufacturing, which can matter on an agricultural project, but they aren't consumer incentives.
Net metering, and why the tariff you're on matters more than any rebate.
With the federal credit gone for buyers, how your utility credits your exports is now the dominant variable in whether solar pencils. Three facts that a surprising number of published pages get wrong.
- NEM 2.0 is closed, and the litigation is over. The Net Billing Tariff — "NEM 3.0" — has applied to new PG&E, SCE, and SDG&E customers since April 2023. The final deadline for NEM 2.0 electrical clearance passed on April 14, 2026. A California appellate court upheld the tariff in March 2026 and the California Supreme Court declined to review it in June 2026. It is settled law; nobody should be selling you on the prospect of it being reversed.
- NEM 2.0 does transfer when a home is sold. This is worth being precise about because it's frequently reported backwards. PG&E's NEM2 schedule states that eligible systems "shall not lose their eligibility if transferred to a new owner, operator, or PG&E account, provided the REGF remains at its original location." A buyer inherits the remainder of the original 20 years, measured from the first Permission To Operate date — not a fresh 20 years. If you're buying a home with legacy NEM 2.0 solar, that is a real and valuable asset.
- Net Billing Tariff legacy status does not transfer. The mirror image, and the part almost nobody mentions. PG&E's NBT schedule states the nine-year legacy period "is linked to the customer who originally causes the system to be installed, not to the system itself," and that a subsequent customer taking over the system generally has no legacy period. Narrow exceptions exist for spouses and for builder-to-first-buyer on new construction. Buying a home with newer solar is simply not the same proposition as buying one with NEM 2.0 solar.
- You may also have missed AB 942 news that turned out not to be news. That bill would have forced buyers of solar homes onto the current tariff. Those provisions were removed by Senate amendment in July 2025 and the bill has not moved since August 2025. A great deal of alarmed coverage is still circulating about a provision that no longer exists.
SMUD and PG&E are not the same deal.
The Sacramento metro is split between SMUD, PG&E, and Roseville Electric, and which side of the line you're on changes the arithmetic completely. SMUD is a customer-owned municipal utility that isn't regulated by the CPUC — NEM 3.0 does not apply in SMUD territory at all.
| SMUD (Solar & Storage Rate) | PG&E (Net Billing Tariff) | |
|---|---|---|
| Export compensation | 9.6¢/kWh flat, all hours | Hourly, varies by season and time of day |
| Predictability | Fixed; reviewed every 4 years, capped at ±30% | Varies hour to hour |
| Retail rate you offset by self-consuming | ~12.9¢ – 37.7¢ depending on time | ~40.6¢ average (non-CARE) |
| Monthly fixed charge | $27.00 | ~$24.15 Base Services Charge |
| Battery incentive | Up to $10,000 via My Energy Optimizer Partner+ | None comparable |
| Legacy protection | Pre-March 2022 systems run through Dec 31, 2030 | NEM 2.0 20 years from PTO; NBT 9 years |
- SMUD raised its export rate on June 1, 2026 — from 7.4¢ to 9.6¢ per kWh, a 30% increase and the maximum a single update allows. That runs directly counter to the usual industry narrative that export compensation only ever gets worse, and it applies to existing Solar and Storage Rate customers too.
- Neither utility is universally better. SMUD's export rate is higher and far more predictable, and its battery incentive has no PG&E equivalent. But PG&E's retail rates are much higher, so every kWh a PG&E customer avoids buying is worth more — which is why self-consumption and storage dominate PG&E economics. Anyone who declares a winner without modeling your actual usage is guessing.
- A trap for legacy SMUD customers. If you interconnected on or before February 28, 2022, you're on the old retail-rate net metering through the end of 2030. Adding a battery with a SMUD incentive moves you onto the Solar and Storage Rate — trading retail-rate credit that can reach 37.7¢ at summer peak for 9.6¢ exports plus up to $10,000. Sometimes that's a good trade. Often it isn't. Model it before you sign, and be wary of anyone selling you a battery who hasn't raised this.
So is solar still worth it in California?
Genuinely: it depends, and much more than it used to. We'd rather say that than pretend nothing happened.
Losing 30% off the top of a purchase is a material change to a payback period, and the Net Billing Tariff already made exports worth considerably less than they were under NEM 2.0. Between them, those two changes have moved some households from a clear yes to a genuine maybe, and a few to a no. Any company that tells you the math is unchanged is either not paying attention or hoping you aren't.
What hasn't changed is that California retail electricity remains among the most expensive in the country, and every kilowatt-hour you generate and consume yourself is one you don't buy at 40 cents. That arithmetic still works for a lot of homes — particularly ones with high usage, air conditioning load that lines up with production, an EV, or a battery to shift the evening peak. It works less well for a low-usage household that exports most of what it makes.
That calculation is what we do. We're brokers — we don't own crews, we don't hold inventory, and we have nothing sitting in a warehouse that needs to be sold this quarter. If the honest answer for your house is "not right now," we'd rather give you that answer and keep the relationship.
2026 incentives, frequently asked.
Is the 30% federal solar tax credit still available in 2026?
No. Section 25D was terminated by legislation signed on July 4, 2025, and the statute now provides that the credit does not apply to expenditures made after December 31, 2025. A homeowner buying with cash or a loan in 2026 gets no federal credit. Unused credits earned in 2025 or earlier still carry forward.
I paid in 2025 but was installed in 2026 — can I still claim it?
Generally no, and this is catching people out. The statute treats an expenditure as made when the original installation is completed, not when it was paid for. The IRS confirmed in its August 2025 guidance that installation completing after December 31, 2025 puts the expenditure after the cutoff. No transition relief was provided. Talk to your CPA about your specific facts, but don't assume a 2025 deposit preserved anything.
Can I still get 30% on a lease or PPA?
Effectively yes, indirectly. Section 48E depends on who owns the system rather than what kind of building it's on. Under third-party ownership the provider owns the equipment, claims the 30%, and prices that into your payments. It is the only remaining route by which federal incentive money reaches a residential customer. Weigh it against the real downsides — no asset, no depreciation, and genuine complications when you sell.
Is SGIP still paying for home batteries?
Not for general-market customers. All ratepayer-funded SGIP budgets closed to new applications on December 30, 2025, and the waitlists closed with them. The remaining path is the income-qualified Residential Solar and Storage Equity budget, which runs to June 30, 2028 — broadly for households at or below 80% of area median income, or on CARE, FERA, ESA, SASH or DAC-SASH. If someone quotes you a general-market SGIP rebate in 2026, ask which budget it's coming from.
Does California still exempt solar from property tax?
Yes, but it's scheduled to become inoperative on January 1, 2027. Systems that qualify before that date keep the exclusion until there's a subsequent change in ownership. Battery storage isn't covered. Note that SB 710, signed in October 2025 and widely reported as extending the exclusion, did not do so — it clarified grandfathering while keeping the 2027 date. The Legislature could extend it again, but as the law stands, timing matters. Your county assessor is the authority for your parcel.
Did PG&E raise rates in 2026?
No — residential rates decreased roughly 3.7% effective March 1, 2026, mainly because certain wildfire cost recovery ended. The average non-CARE bundled residential rate is about 40.6¢/kWh. PG&E has requested about 8% more for 2027 in its General Rate Case, but that hasn't been decided. The honest long-run framing is the trend — up roughly 39% over five years and 69% over ten.
Is SMUD better than PG&E for solar?
Neither is universally better. SMUD raised its export compensation to a flat 9.6¢/kWh on June 1, 2026 and offers a battery incentive up to $10,000 that PG&E doesn't match. But PG&E's retail rates are much higher, so avoided consumption is worth more there. It genuinely depends on your usage shape — see the comparison above, and let us model your actual bill rather than guessing.
Is solar still worth it without the tax credit?
Sometimes yes, sometimes no — and that's a real change from a year ago. Losing 30% materially lengthens payback. What hasn't changed is that California power is expensive and self-consumed generation still offsets it, which works well for high-usage homes, EV owners, and anyone adding storage, and works less well for low-usage homes that export most of their production. We'll run your numbers and tell you either way.
Want to know whether it still pencils for your house?
Get an honest assessmentListen: Residential Solar: Navigating PPAs and NEM 3.0
What the net billing tariff did to the value of an exported kilowatt-hour, why self-consumption replaced export credit as the thing that decides whether a system pays, and how leases and power purchase agreements compare once a third party is taking the tax benefit. Recorded before the residential credit ended — the podcast page notes what changed.