Texas Solar Tax Credit

The Texas Solar Tax Credit has led to an increase in the popularity of solar energy in Texas, which is not surprising given the state’s close ties with the energy sector. With abundant sunshine and low solar costs, Texas is well-positioned to embrace sustainable resources and maintain its status as a leader in energy production and consumption. 

If you’re considering going solar in Texas, here are some important facts to keep in mind.

Solar Power in Texas

Based on ChooseEnergy.com’s May 2022 report, Texas ranks second to California among the top U.S. states that generate solar energy. It generates 12.4% of all U.S. energy.

The largest state in the lower 48 encourages residents with utility-dependent rebate programs, renewable energy tax exemptions, and local metering and solar rights laws to prevent property taxes from rising.

Texas Solar Panel Costs

According to EnergySage, the average cost of solar panels in Texas was $2.69/W as of May 2022. The cost of solar panels varies depending on the size. More panels will result in higher equipment and installation costs. However, panels can be bought at bulk prices which results in lower cost per watt.

The average Texas solar system cost is $15,468. This is based on a size of five kilowatts (5 kW). After taking into account the Federal Investment Tax Credit as well as other incentives from state and local governments, your net price is likely to drop by thousands of dollars.

Apart from equipment and installation fees, the cost of solar also includes inspection costs, permitting costs, and profit margins. These costs will vary depending on the region and company.

Federal Solar Investment Tax Credits

If you meet certain criteria, federal tax incentives are available to install a solar system.

You can claim 26% of the total cost of your solar investment project (including permits and equipment) as a credit on a federal tax return. ($1 credit equals $1 less in taxes the next year.) This is not a tax refund. You must still owe taxes in order to claim the credit.

All states have the federal solar investment credit at 26% for solar systems purchased and installed before December 31, 2022. This rate decreases to 22% by 2023.

Texas Solar Rebates and Credits

The Texas solar panel tax credit program is an incentive designed to promote the adoption of solar energy systems across the state. This initiative aims to encourage individuals and businesses to invest in solar panel installations by offering tax credits as a financial benefit. By taking advantage of the Texas solar panel tax credit, residents and organizations can reduce their overall tax liability while simultaneously embracing clean, renewable energy sources. This program not only supports the growth of the solar industry in Texas but also contributes to the state’s sustainable energy goals, fostering a greener and more environmentally friendly future.

Texas residents can be eligible for a number of solar benefits. However, most of these are local policies and not statewide.

Instead of having a state-wide net metering policy in place, utility companies in Texas have policies that credit solar energy system owners for any electricity they produce. Texans will be able to use these credits instead of purchasing electricity from the utility if their panels don’t produce enough electricity, like at night or in cloudy seasons.

The following utilities offer net metering benefits in the state:

  • El Paso Electric
  • The City of Brenham
  • CPS Energy
  • Green Mountain Energy

Residents living in HOA-governed neighborhoods do not need to worry about HOA regulations prohibiting them from installing solar. Texas has a Solar Rights Law which prohibits HOAs from preventing solar energy systems from being installed on individual properties.

Texas Solar Property Tax Exemption

The renewable energy tax exemption means that residents of Lone Star State won’t be subject to additional taxes due to the increase in property value from going solar.

Local Incentives

Texas does not have a state-wide solar rebate or tax credit, but there are many incentives for homeowners to go solar.

Austin Energy benefits are available to residents of Austin, the capital city. You are eligible for a $2,500 rebate and Austin Energy’s Value of Solar Tariff which pays $0.097 per kilowatt hour (kWh) that your solar panels produce.

CPS Energy customers receive $2,500 to install solar panels onto their roofs. You can get an additional $500 if you choose to install solar panels locally.

Guadalupe Valley Electric Cooperative and the City of Sunset Valley offer homeowners additional rebates in their respective areas. You may also be eligible for additional solar incentives if you live in a specific county or city.

Which Solar System Is Right for Your Home

Your home’s solar potential and energy efficiency are the most important factors in choosing the right solar system. The U.S. Department of Energy recommends that you understand your home’s electricity usage before you decide to invest in solar. The department also recommends that homeowners assess their electricity consumption and learn how to maximize energy efficiency. An energy audit of your home can help you identify ways to reduce energy consumption and overspending.

Online tools are available that will help you determine the suitability of your home for solar panels. These include the solar rooftop opportunity from the Solar Energy Technologies Office (SETO), and their Sun Number Score technology. Google’s Project Sunroof can also help you estimate your roof’s potential solar savings.

Solar panels are most effective in homes that receive ample sunlight. Ideally, a slightly sloped roof facing south is optimal for solar panel placement. Additionally, the roof should be durable enough to endure harsh weather conditions and last for many years. However, if your roof is too small, heavily shaded, or lacks adequate support, you can still harness solar energy.

Local community solar installations distribute solar energy from an offsite array to customers in a particular area. Customers have the option to lease or buy panels in that formation. They will also receive an electric bill credit for electricity generated from their share, just like customers who own solar panels and homes. Community solar is a great option for renters who don’t own their homes but want to make use of solar resources.

Solar Energy Has Many Benefits

  1. Solar energy has many environmental benefits. It is an inexhaustible, clean, and renewable energy source. Using it reduces your carbon footprint, decreases your dependence on fossil fuels and natural gas, a strain on the electric grid, and produces no noise or pollutants. There will always be solar power, as long as there’s a sun.
  2. Tax breaks and rebate incentives are available to you. There are many financial benefits to going green, whether you get a tax break or rebate incentive for installing a solar system.
  3. It is possible to get a high return on your investment. Solar panels can increase your home’s value, reduce or eliminate your energy bills and save you money from rising energy costs.
  4. The cost of going solar has decreased and the green energy economy has grown. While a large financial investment in solar may seem daunting, both the federal and state governments have encouraged solar energy to be more accessible. The result is that there has been increased competition in the market and more jobs in clean energy. This means that solar panels can be installed at lower prices.

How to Choose the Best Texas Solar Panel Company

You need to evaluate solar panel companies carefully to ensure you get the best return on your investment.


All solar panels are not created equal. To determine how much energy panels can produce, you should evaluate their efficiency. This includes power rating, power tolerance, and efficiency. This compares to the industry average of 16% to 18% for solar panel efficiency. Even though the most efficient panels often have the lowest cost per kW, they may still be the most effective. The best value will vary depending on the number of panels you install, so it is worth doing some calculations.

Quality of the Manufacturer

Review the production and durability of solar panels, as well as warranties and guarantees. Industry average warranties last between 10 and 25 years. You should ensure that your panels are built to withstand extreme weather conditions if you live in an area where solar panel installations may be damaged.


As with any professional you hire, be sure to review the certifications, licenses, and warranties of any solar panel company. Also, make sure to check out reviews and reputation. A company that is considered the best will have full-time, knowledgeable staff who can answer all your questions throughout the installation process and for the life of your solar system.

Local Incentives

A study by the National Renewable Energy Laboratory (NREL), found that larger companies tend to be 10% more expensive than smaller local companies for the same equipment. By choosing a local solar company like ESD Solar, you can save money while still receiving high-quality solar equipment and installation services. Additionally, by supporting a local business, you’re contributing to the growth and prosperity of your community. So why not choose ESD Solar as your go-to local solar company in Texas? Contact our expert solar team today!

Texas Solar Panel Tax Credit FAQs

What are the advantages of going solar in Texas?

Texans can also receive federal solar investment credit and utility-dependent rebate programs. This is dependent on their county, city, or utility company. You are protected against increasing property taxes and HOA retaliation by going solar.

What cities are more likely to receive solar tax rebates or exemptions in Texas?

There are many benefits to going green in Texas. The size of your system and whether you shop locally will determine how effective these rebates can be. Solar calculators can be used to calculate savings based on your zip code or utility company.

Do I need to buy or lease solar panels?

It all depends on your goal to go solar. You may be eligible for rebates and tax benefits in some states that only homeowners who have purchased their solar panels. This can help you to save significant money. Leasing solar panels is a good option if your home cannot be supported by solar panels.

Go Solar With ESD Solar Today

If you’re interested in making the switch to solar energy and want to start saving money on your electricity bills, consider partnering with ESD Solar today! Our team of skilled professionals is committed to delivering high-quality solar equipment and installation services that cater to your unique requirements and budget. With our expertise, you can rest assured that you’re making a wise investment in your home or business. 

Go solar with ESD Solar today and start reaping the benefits of renewable energy!

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