In recent years, Texas has emerged as a leader in solar energy adoption, surpassing California. This growth is backed by Federal tax credit, Texas solar incentives and other favourable policies. Plus, the benefits offered by local utility grids make it a more favorable option.
However, homeowners or businesses planning to go solar in Texas still have many questions like: Is Texas a good state for solar? How much is the solar tax exemption in Texas? Can I get solar panels for free in Texas? Are solar panels worth it in Texas? and so on?
In this handy guide, we will explain in detail about Texas solar incentives and provide answers to all your queries regarding it. By the end, you will have a clear understanding of how much you can save with solar incentives in Texas, how these policies work, and how can benefit from them.
Texas Solar Incentives: Local and Utility Rebates
There are no direct Texas solar incentives, but many municipalities and local utilities offer incentives to help homeowners and businesses. These incentives are provided in order to encourage them to adopt renewable energy. You can check the list of local rebates across Texas here.
Utility Company Incentives:
Oncor Electric Delivery: Oncor Electric Delivery offers many financial incentives to the solar contractors which they can pass on to the customers who purchase the qualifying solar power systems.
AEP Texas: AEP Texas a solar PV incentive program. This program offers financial incentives to help reduce the initial cost of installing a solar power system.
Garland Power & Light (GP&L): GP&L offers bill credits for solar panel installation. The solar rebate of $0.75 per watt, up to $5,000 per system, is renewed every October and is available until funds are exhausted.
Local Government Incentives:
SMTX Utilities (San Marcos): SMTX Utilities also has a rebate program offering a $2,500 rebate program for homeowners who install solar photovoltaic (PV) systems. It aims to promote solar power systems in Texas. For more details, you can visit the official SMTC Utilities website.
City of Sunset Valley: Residents of Sunset Valley who qualify for the Austin Energy solar rebate can receive extra Texas solar incentives from the city. The city offers an additional $1 per watt rebate of a maximum of $3,000 (if the solar power system cost doesn’t exceed $6,000). For more details on how specific eligibility criteria you can visit the official website of Sunset Valley.
NOTE: Texas solar incentives can reduce the upfront costs of solar power installations. However, the availability of these programs may vary based on your location and utility provider. For updated information, you can consult your local utility company or State Incentives for Renewables & Efficiency (DSIRE).
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Property Tax Exemption for Solar Systems in Texas
Generally, installing solar power systems can increase your property’s value and tax. However, in Texas, there is a property tax exemption for solar. According to Texas Property Tax Code Section 11.27, there is no additional increase in property tax due to solar panel installation. It allows homeowners to enjoy the increase in property value without paying Texas. This exemption encourages homeowners.
Solar Buyback Programs
Solar buyback programs allow homeowners to sell excess electricity generated by solar panels back to the grid. In return, they can receive credits on their electricity bill. It helps to reduce the electricity bills.
TXU Energy: TXU Energy offers solar buyback plans allowing Texas homeowners to earn credits for the extra solar energy generated. These credits can offset up to 100% of your monthly energy charges.
Octopus Energy: Similarly, Octopus Energy provides a solar buyback program with unlimited credits that roll over without expiration. It allows you to take maximum benefits of the solar energy production.
Gexa Energy: Gexa Energy offers plans that let you sell back your unused solar energy and reduce electricity costs.
👉Learn how to compare solar panel quotes here.
Federal Solar Investment Tax Credit (ITC)
The Federal Solar Investment Tax Credit (ITC) deducts a certain percentage of your solar panel installation costs from your federal taxes. For systems installed between 2022 and 2032, you can claim 30% of the cost of installing solar panels. It includes both equipment and labor costs.
If you install solar panels in 2033, the percentage will decrease to 26% and for those installing after 2033, it will be 22%. However, the best part is that there is no limit to the maximum amount you can claim. This program helps homeowners and businesses to save money while installing solar panels in Texas or any other state in the USA.
You Own the New Solar Panel System: If you have fully installed a new solar panel system outright or through financing, you are eligible for it. Leasing or signing a power purchase agreement (PPA) does not qualify for the same. It doesn’t apply to refurbished ones.
The Panels are Installed at a Qualifying Property: The solar panels must be installed at your home which includes: primary/secondary residence or rental properties that allow installation in the United States. Leased properties don’t qualify for it.
You Must Owe Federal Taxes: As ITC is a tax credit you must ower federal taxes to take advantage of it. In case your credit exceeds what you owe, you can roll the remainder next year.
Battery Storage May Count: As of the new updates in 2023, you can also be eligible for credit if your solar panel system includes a battery with a storage capacity of 3 kilowatt-hours or more.
NOTE: It’s important to note that this tax credit is non-refundable, meaning it can reduce your tax liability to zero, but you won’t receive a refund for any remaining credit. However, any unused credit can be carried forward to the next tax year.
How to Claim Texas Solar Incentives
Install Your Solar Energy System: Choose a solar provider and install your solar power systems. The installation must be completed during the tax year for which you’re claiming the credit. If it is not done, you can claim it in the next year.
Gather Necessary Documentation: Keep a proper record of all the expenses related to the installation in the form of invoices or receipts. It will support your claim for the federal tax credit.
Complete IRS Form 5695 and Submit: When filing your federal income tax return, fill out Form 5695, titled “Residential Energy Credits.” This form helps you calculate the credit amount based on your solar installation costs. Include the completed Form 5695 with your annual tax return to claim the credit.
Final Words: Is Solar Worth it in Texas with Solar Incentives?
Switching to solar energy in Texas is undoubtedly a smart move for both your wallet and the environment. Backed by federal tax credits, property tax exemptions, local rebates, and supportive policies, going solar has never been more affordable.
By investing in solar, you not only save on energy bills but also increase the value of your home while contributing to a cleaner, greener future.
Here are three quick tips to get started:
Research local utility and city-specific rebates to maximize savings.
Choose a reliable solar installer with experience in Texas incentives.
Keep all your installation receipts and documents handy for claiming tax credits.
Read More:
👉Is Solar Worth It in California
👉Cost of Solar Panels in California
FAQs on Texas Solar Incentives
Does Texas offer incentives for solar panels?
Yes, Texas offers several incentives for solar panel installation, including federal tax credits, property tax exemptions, and utility or local rebates. However, there is no statewide net metering policy.How much is the solar tax exemption in Texas?
In Texas, the property tax exemption eliminates any increase in property taxes due to the added value of a solar energy system. This means you won’t pay extra property taxes even if your home’s value rises because of the solar installation.Is Texas a good state for solar?
Absolutely. With abundant sunshine, falling solar installation costs, and various incentives, Texas is one of the best states for solar energy adoption.Is Texas more solar than California?
Yes, Texas has surpassed California in utility-scale solar capacity, making it a leader in solar energy growth.Do homes in Texas sell faster with solar?
Homes with solar panels often sell faster and at a higher price in Texas because buyers value the long-term energy savings and environmental benefits.
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