2025 Texas Solar Tax Credits, Incentives & Rebates

While Texas doesn’t have statewide solar incentives, don’t let that stop you. There’s still plenty of help to make solar more affordable. The Federal Solar Investment Tax Credit (ITC) knocks 30% off your installation costs, and Texas’s property tax exemption means your home’s value goes up without higher taxes. Throw in utility rebates and buyback programs, and going solar becomes a no-brainer—for your wallet!

Key Takeaways

• 2025 is the year to go solar in Texas, with federal tax credits, local rebates, and buyback programs making it more affordable than ever.

• The 30% Federal ITC slashes installation costs, saving you thousands upfront.

• Texas’s property tax exemption means higher home value without extra taxes.

• Utility rebates and buyback programs maximize your solar savings.

Federal Solar Investment Tax Credit (ITC)

The Federal Solar Investment Tax Credit (ITC) is a major perk for anyone going solar in 2025. This program allows you to deduct 30% of your solar installation costs directly from your federal taxes. It’s a straightforward way to save big while reducing your carbon footprint!

Here’s how it works: when you install a solar energy system, you keep the receipts for the total cost—this includes equipment, labor, and even certain upgrades like solar batteries. When tax season rolls around, you’ll report this amount on IRS Form 5695. The credit applies to your total federal tax liability, which means real money stays in your pocket.

For example, if your solar system costs $20,000, the ITC lets you save $6,000 on your taxes. With no cap on the credit, it’s one of the most valuable incentives out there, making solar energy a smart investment for your home and future.

Texas Property Tax Exemption

One of the most exciting benefits for Texas homeowners going solar is the 100% property tax exemption under Texas Property Tax Code Section 11.27. This exemption, in place since 1978, ensures that while adding solar panels can significantly boost your home’s value, it won’t increase your property tax bill. That’s right—you get all the equity benefits of solar without any of the tax burden.

Here’s how it works: when you install a solar system, its added value to your property is completely exempt from property taxes for as long as it’s operational. For instance, if your $25,000 solar installation increases your property’s market value by $20,000, you won’t pay any additional property taxes on that added value.

Utility Rebates and Local Solar Incentives

While Texas doesn’t offer a statewide solar incentive program, utility companies and local governments provide fantastic rebates to make solar more affordable. Here’s a closer look at some of the most popular programs. 

American Electric Power (AEP) SMART Source Solar PV Program

AEP Texas’s SMART Source Solar PV Program is designed to make solar installations more affordable for homeowners and businesses. The rebate amounts depend on the size and capacity of the solar system being installed. For residential customers, systems smaller than 3 kW receive $0.50 per watt DC, while larger systems, such as those between 7.5 kW and 30 kW, can receive up to $3,000 per system. Commercial customers are also eligible, with rebates of $0.50 per watt for the first 25 kW and $0.25 per watt for additional capacity up to 200 kW.

To qualify for these rebates, participants must adhere to AEP’s program requirements, including using certified contractors and ensuring the system meets specific energy efficiency standards.

Austin Energy Solar PV Rebate and Incentives

Austin Energy offers a Solar PV Incentive Program that provides a rebate of up to $2,500 for residential solar installations. To qualify, homeowners must complete a solar education course and install a system that meets program requirements using approved contractors.

In addition to the rebate, participants benefit from the Value of Solar Tariff, which credits solar customers at a rate of 9.91 cents per kilowatt-hour (kWh) of energy produced. This credit directly offsets electricity bills, providing ongoing savings.

Denton Municipal Electric Solar Photovoltaic Incentive

Denton Municipal Electric (DME) provides rebates of up to $30,000 for qualifying solar installations. The incentive amount depends on the system's size and energy generation. To participate, homeowners must complete a home energy audit and meet DME’s energy efficiency standards. The program emphasizes long-term energy savings while reducing upfront costs, making solar an accessible option for Denton residents. DME’s commitment to sustainability reflects its focus on supporting a greener, cleaner future for its community.

SMTX Utilities Solar PV Rebate

San Marcos residents can take advantage of the SMTX Utilities Solar PV Rebate Program, which offers $2,500 per project for qualifying solar installations. Rebate can also not exceed 50% of the installation costs. To participate, homeowners must ensure their system meets SMTX’s efficiency and size requirements. This program is part of SMTX’s broader efforts to promote renewable energy adoption across San Marcos. By lowering upfront costs, SMTX Utilities empowers homeowners to take control of their energy use while contributing to the city’s sustainability goals.

Sunset Valley Solar Rebate Program

Residents of Sunset Valley, located just southwest of Austin, can enjoy an additional solar rebate on top of the Austin Energy Solar Rebate. Eligible homeowners who qualify for Austin Energy’s program can receive an extra $1 per watt, up to a maximum of $3,000, for their solar installation.

To qualify, systems must cost $6,000 or less, and homeowners must be Austin Energy customers who meet their solar rebate eligibility criteria. This added incentive makes it even more affordable for Sunset Valley residents to adopt renewable energy and reduce energy costs while contributing to a sustainable future.

New Braunfels Utilities Solar Rebate Program

New Braunfels Utilities (NBU) offers a Solar Rebate Program to help residential customers reduce the upfront costs of installing solar photovoltaic (PV) systems. The program provides rebates of up to $3,000, credited directly to the customer’s NBU electric account after installation.

To qualify, applicants must be NBU electric customers, complete the required Solar Education Training, and use an NBU-approved solar contractor. The system must also meet specific technical requirements and be installed at the same location as the customer’s NBU electric account.

Net Metering and Solar Buyback Programs in Texas

Net metering is a powerful tool for Texas solar owners, allowing them to make the most out of their solar energy systems. It works by crediting homeowners for any excess electricity their solar panels generate and send back to the grid. These credits can then offset energy costs when their panels aren’t producing enough power, like at night or during cloudy weather. 

Unfortunately, net metering isn’t mandated statewide in Texas, so availability depends on your utility provider.

• Austin Energy: They offer a Value of Solar Tariff instead of traditional net metering. This program credits customers for the energy their solar systems produce at a competitive rate of 9.91 cents per kWh for systems under 1 megawatt AC and 7.24 cents per kWh for systems larger than that. 

• Brenham Distributed Generation Program: The Program provides customers with credits for excess solar energy sent back to the grid, applied at the utility’s avoided cost rate, helping reduce overall energy expenses.

• Brownsville PUB Solar Buyback Program: They offer a "buy all, sell all" solar program. Customers sell all the electricity their solar panels generate to BPUB at the Fuel and Purchase Energy Charge (FPEC) rate, currently set at $0.05 per kWh. 

• CPS Energy: CPS Energy provides a solar rebate program to offset installation costs and offers credits for excess energy sent back to the grid, promoting renewable energy use among its customers. 

• Green Mountain Energy: Their Renewable Rewards program allows customers to receive credits for every kWh of excess solar energy sent back to the grid, creating an environmentally friendly way to save money.

• Reliant Energy: Their Solar Payback Plan offers net metering to customers with solar panels, allowing them to earn unlimited bill credits for any excess energy their system produces. The plan is open to customers with solar installations under 50kW in capacity who already have interconnection agreements with their utility provider.

• Rhythm Energy: They offer two solar buyback plans: one pays a quarter of the retail rate for net importers, and the other pays half the retail rate for net exporters. Both plans come with rates locked in for one year. 

• Shell Energy: They offer a solar buyback program for Texas customers, providing credits for the excess energy generated by their solar panels. These credits are issued as renewable energy certificates, supporting sustainability and clean energy initiatives.

• TXU Energy: Their home solar buyback program offers net metering, reimbursing customers for surplus solar or wind energy up to 100% of their electricity bill. Excess energy beyond the bill amount does not roll over to future months.

With so many net metering and solar buyback options in Texas, now’s the perfect time to make your solar investment pay off. Every kilowatt-hour you generate puts money back in your pocket while contributing to a cleaner, greener future.

Don’t leave savings on the table—partner with a trusted solar expert to find the best programs for your needs. Reach out today for a free consultation, and let’s make your solar panels work harder for you—because saving money while helping the environment just feels good!

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