Residential Solar Incentives and Rebates Every Builder Should Know
By: Grace Waters, Senior Editor, Environment Co
Solar power is getting more affordable and effective, making it one of the most premium ways to generate electricity. Construction professionals need to remind residential and commercial clients of the opportunities available for further cost savings, ranging from local to federal incentives, including tax credits and rebates. These are some of the options experts need to keep in mind when helping their communities install solar and achieve financial and carbon savings.
Federal Solar Investment Tax Credit (ITC)
The Federal ITC for solar has changed since the OBBBA took effect in 2025. While this altered the benefits taxpayers received, it is still possible to benefit from solar technology. To be eligible, the residential or commercial solar facility must begin construction by July 4, 2026, and must be in service by December 31, 2027.
The credit deducts 30% of the investment expenses from federal income taxes. If the project is an affordable multifamily home, it will be eligible for further reductions. Claim the credit by filing IRS Form 5695 with a federal tax return, providing information about the cost of the system when submitting. This will verify when it was built and when it became active.
In 2026, Warren Woods Public Schools in Michigan demonstrated the value of the ITC. It installed 300 kilowatts of roof-mounted solar on a new roof. The 40% credit cut the total costs of the project by $735,836, powering all of its offices, labs and athletic facilities. While this was under a previous version of the ITC, it is subject to change, while still providing aid for projects.
California’s Self-Generation Incentive Program (SGIP)
California’s push to reduce energy emissions is notable, especially with efforts like the SGIP. It encourages citizens to install backup energy systems, combined solar and energy storage, and more. This helps Californians obtain energy independence, resilience and redundancy. If a household or business installs solar panels, they may delay installing energy storage due to the up-front cost. Programs like this soften this decision.
To obtain the rebates, applicants must review the SGIP Handbook, which details what they must do with the funds. They have one year to use them and enroll in a Demand Response Program. Customers of these eligible utility providers may apply by speaking to their provider:
- Pacific Gas and Electric
- Southern California Edison
- Los Angeles Department of Water and Power
- San Diego Gas and Electric
- Southern California Gas Company
Applicants will receive generous assistance even for low-income residential properties, which promotes environmental justice and equity.
Energy-Efficient Commercial Buildings Deduction (179D)
This is a federal program exclusively for business buildings. It provides deductions for energy-efficient structures that implement renewable energy for eligibility, with solar being one of the best options. It applies to buildings in service before January 1, 2027. The building must demonstrate a 25% or greater reduction in power costs and energy use compared to the reference in the requirements. It can achieve this by:
- Installing solar
- Updating HVAC systems
- Reinforcing the envelope
- Using energy-efficient lighting
This covers more than renewable energy, but it helps corporations justify the expense by bundling it into other energy-saving initiatives. This is also claimed on federal income taxes, provided the building is certified by the Illuminating Engineering Society of North America and the American Society of Heating, Refrigerating, and Air Conditioning Engineers’ standards.
Leveraging this tax credit will promote greater energy security, especially in places prone to severe weather and natural disasters. States like Georgia may receive 50 inches of rainfall yearly, so residents need well-insulated and resilient buildings to resist structural damage and temperature extremes.
New Jersey’s Successor Solar Incentive (SuSI) Program
Another well-known, state-specific program is New Jersey’s SuSI, which includes many smaller initiatives that pay homeowners and companies for the energy they generate. They reimburse the community with Solar Renewable Energy Certificates (SRECs) and other benefits. Some of the currently active options include:
- Administratively Determined Incentive Program: Incentives for net metering and community solar projects of five megawatts or less
- Competitive Solicitation Incentive Program: Aid for grid-supply solar systems with capacities of more than five megawatts
- Community Solar Energy Program: Help for community-focused generation projects
- Community Solar for Subscribers: Assistance for customers connected to conventional utilities that integrate solar into their generation
- Remote Net Metering: Rewards and approves remote net metering projects for public entities
Eligibility for each program is available, though customers need to register their system with the SuSI Program to start receiving payments.
Shining Returns on Investment
Construction professionals must dive into their local, state and federal offerings to help customers justify solar installations. It is one of the most critical recommendations they can make, especially as energy resilience and financial security are top of mind for residential and commercial clients alike.
