Can I still get a federal tax credit for solar in Texas in 2026?

No. The Residential Clean Energy Credit (Section 25D) expired for systems placed in service after December 31, 2025. The only federal benefit available in 2026 is through third-party-owned leases under Section 48E, but construction must have begun before July 4, 2026. Most homeowners buying systems outright will not qualify for any federal credit.

Does Texas have net metering?

Net metering policies vary by utility. ERCOT-connected utilities generally do not offer net metering; instead, they use net billing or buy-all/sell-all arrangements. Austin Energy and some municipal utilities offer more favorable net metering terms. Check with your specific utility before installing.

What is the property tax exemption for solar in Texas?

Texas exempts 100% of the added home value from solar equipment from property taxes under Texas Tax Code Section 11.27. This means your home value may increase, but you will not pay additional property taxes on that increase. Note that Texas does not have a residential solar sales tax exemption (Texas exempts only the franchise tax for certain manufacturers, not residential sales tax).

Is there a state income tax credit for solar in Texas?

No. Texas has no state income tax, so there is no state-level solar income tax credit available.

How long does a typical solar installation take in Texas?

Most residential installations take 2 to 4 weeks from permit approval to final inspection and interconnection. Permitting timelines vary by city and county; Austin and Houston typically take 2 to 4 weeks, while rural areas may take longer.

What is the average payback period for solar in Texas?

Without the federal credit, payback in Texas typically runs 10-14 years depending on your utility, retail electric provider (REP) buyback rate, and local rebates. Austin Energy customers get the best terms thanks to the $2,500 flat rebate. CPS Energy's San Antonio residential solar rebate was discontinued in 2024, which lengthened payback for customers in that territory.

Texas Solar Incentives, Costs & Backup Power (2026)

Texas Solar in 2026: The Honest Picture

Texas is a major solar market, with roughly 450,000 residential systems deployed across the state. The Lone Star State’s abundant sunshine, strong solar irradiance averaging 5.2 kWh/m2/day, and declining equipment costs make solar financially viable for most homeowners. However, 2026 brings a critical change: the federal Residential Clean Energy Credit expired on December 31, 2025, and is no longer available for systems placed in service after that date.

This does not mean solar is no longer worth it in Texas. State and local incentives, combined with electricity bill savings, still deliver solid returns over 25 years. The key is understanding what incentives remain, calculating your actual payback period, and choosing a qualified installer who knows Texas-specific rules.

Average Solar System Cost in Texas (2026)

A typical 6 kW residential solar system in Texas costs $26,500 before incentives. This breaks down as follows:

Equipment (panels, inverter, mounting, wiring): $14,000 to $16,000
Labor and installation: $7,000 to $9,000
Permitting, inspection, and interconnection: $1,500 to $2,000
Sales tax: $2,000 to $3,000 (Texas does not have a residential solar sales tax exemption; the standard 6.25% state plus local rates is included in your installer’s quoted price)

Texas does not exempt residential solar equipment from sales tax (the state’s solar incentives center on the property tax exemption, not sales tax). Older marketing materials that quote a “Texas solar sales tax exemption” of $2,000 to $3,000 are inaccurate. Expect to pay approximately $26,500 for a 6 kW system inclusive of the standard sales tax.

Costs vary by region. Austin and Houston, with high installer density and competition, tend to be 5% to 10% cheaper than rural West Texas or the Panhandle. For current pricing in your area, check EnergySage’s Texas solar cost benchmarks.

Real Texas Homeowner Savings (Sample Scenarios)

Savings depend on your location, utility, electricity rate, and system size. Here are five realistic examples:

In ERCOT territory most retail electric providers credit solar exports at a “buyback” rate well below retail, so it is mathematically impossible for annual solar savings to exceed your total annual electricity bill. The scenarios below assume realistic 70 to 90 percent annual savings rather than a “120% offset,” and reflect the fact that CPS Energy’s residential solar rebate was discontinued in 2024 and Austin Energy’s rebate is a flat $2,500 in 2026 (with leased systems now eligible per the April 2026 update).

Austin (Austin Energy, 6 kW system)

Annual electricity bill: $1,400
Annual solar savings: $1,100 to $1,250
25-year savings: $32,000
Payback period: 9 to 10 years (with $2,500 Austin Energy rebate applied)

Houston (CenterPoint Energy delivers; competitive REP for energy, 6 kW system)

Annual electricity bill: $1,200
Annual solar savings: $950 to $1,050
25-year savings: $26,000
Payback period: 12 to 13 years (buyback rate varies materially by REP; shop the buyback plan as carefully as the panel quote)

San Antonio (CPS Energy, 6 kW system)

Annual electricity bill: $1,100
Annual solar savings: $900 to $1,000
25-year savings: $24,000
Payback period: 13 to 14 years (CPS Energy’s residential solar rebate was discontinued in 2024 and is not available for 2026 installs)

Dallas (Oncor delivers; competitive REP for energy, 6 kW system)

Annual electricity bill: $1,350
Annual solar savings: $1,100 to $1,200
25-year savings: $29,000
Payback period: 11 to 12 years

West Texas / Lubbock (Xcel-LP&L transition area, 6 kW system)

Annual electricity bill: $950
Annual solar savings: $800 to $900
25-year savings: $22,000
Payback period: 14 to 15 years

These estimates assume 5% annual electricity rate increases and no major system repairs. Actual savings will vary based on your roof orientation, shading, and local weather patterns.

Texas Solar Incentives Still Available in 2026

Property Tax Exemption

Texas exempts 100% of the added home value from solar equipment from property taxes. If your home value increases by $30,000 due to solar, you will not pay additional property taxes on that $30,000. This exemption applies statewide and is permanent. It is one of the strongest state-level incentives available.

Sales Tax: No Residential Solar Exemption

Texas does not exempt residential solar PV equipment from sales tax. The state’s solar incentives center on the property tax exemption (Texas Tax Code 11.27), not a sales tax exemption. Older marketing materials that describe a “Texas solar sales tax exemption” worth $2,000 to $3,000 are inaccurate; plan on paying the standard 6.25% state plus local sales tax as part of your installer’s quoted price.

Austin Energy Solar Rebate

Austin Energy offers a flat $2,500 rebate per residence in 2026 (not the $2,000 cited in older guides). Following an April 2026 program update, leased systems are now eligible to qualify (not just outright-purchased systems). Applications are processed on a first-come, first-served basis, and funding is limited. Confirm current program rules directly with Austin Energy before signing a contract.

CPS Energy Solar Rebate (DISCONTINUED 2024)

San Antonio’s municipal utility, CPS Energy, discontinued its residential solar rebate program in 2024. The program is not available for 2026 installations. Older marketing materials that quote a “$1,500 San Antonio CPS Energy solar rebate” are out of date and should not be factored into your savings math.

HERO Financing (Property-Assessed Clean Energy)

HERO is a property-assessed clean energy (PACE) financing program available in select Texas counties and cities. It allows homeowners to borrow up to $50,000 for solar and other energy improvements, with repayment tied to the property tax bill. Interest rates are typically 6% to 8%, and terms run 10 to 20 years. HERO is useful for homeowners who cannot qualify for traditional financing or who want to avoid a second mortgage.

Federal Section 48E (Third-Party Lease Only)

The only federal solar benefit available in 2026 is the Investment Tax Credit (ITC) under Section 48E, which applies to third-party-owned systems (leases and power purchase agreements). However, construction must have begun before July 4, 2026. If you are considering a lease, verify with your installer that their systems meet this deadline.

For a comprehensive list of all available incentives, visit the DSIRE state incentive database.

Is Solar Worth It in Texas Without the Federal Credit?

Yes, solar is still worth it in most of Texas, but the payback period is longer without the federal credit. Here is the decision framework:

Payback Period: 8 to 11 years In high-sun areas like Austin and Dallas, payback occurs in 8 to 10 years. In lower-sun areas like East Texas, payback may take 11 to 12 years. After payback, you benefit from 15+ years of free electricity (assuming a 25-year system lifespan).

Lifetime Savings: $25,000 to $38,500 Over 25 years, a typical Texas homeowner saves $25,000 to $38,500 in electricity costs, depending on location and utility rates. This assumes 5% annual rate increases, which is conservative based on recent trends.

Break-Even Analysis If you plan to stay in your home for 10+ years, solar is financially sound. If you plan to move within 5 to 7 years, the payback may not justify the upfront cost, unless you can transfer the system or sell the home with it included.

Non-Financial Benefits Solar also provides energy independence, protection against future rate hikes, and environmental benefits. These are harder to quantify but matter to many homeowners.

Top Cities for Solar in Texas

Austin: High solar irradiance (5.4 kWh/m2/day), strong utility rebate ($2,000), property tax exemption, and favorable net metering terms make Austin one of Texas’ best solar markets.
Houston: Large population, competitive installer market, and good solar irradiance (5.1 kWh/m2/day) drive down costs and increase availability.
San Antonio: Municipal utility with rebate program, high solar irradiance (5.3 kWh/m2/day), and lower electricity rates mean faster payback.
Dallas: Strong solar resource (5.2 kWh/m2/day), growing installer base, and competitive pricing make Dallas attractive.
Lubbock: Exceptional solar irradiance (5.5 kWh/m2/day) in West Texas, though lower population density means fewer local installers.

What to Look for in a Texas Solar Installer

Texas-Specific Licensing and Insurance: Verify the installer holds a valid Texas electrical contractor license (TECL) or is registered as a solar contractor. Confirm they carry general liability and workers’ compensation insurance.
Knowledge of Local Utility Rules: Each Texas utility has different interconnection rules, net metering policies, and rebate programs. Your installer should know your specific utility’s requirements and help you navigate the application process.
Permitting and Inspection Experience: The installer should handle all permitting, inspections, and interconnection paperwork. Ask how long they typically wait for permits in your city.
Equipment Quality and Warranties: Confirm the installer uses Tier 1 panels (from manufacturers like Canadian Solar, Hanwha Q Cells, or Enphase) and offers at least a 10-year workmanship warranty. Panel warranties should be 25+ years.
Financing Options: A reputable installer should offer multiple financing paths: cash purchase, traditional loans, HERO PACE financing, and leases (if available in your area). They should clearly explain the pros and cons of each.
References and Reviews: Check Google, Yelp, and the Better Business Bureau for reviews. Ask for references from customers in your city who installed systems in the past 12 months.
Transparent Pricing and Contracts: The installer should provide a detailed written quote breaking down equipment, labor, permitting, and incentives. The contract should specify the system size (kW), expected annual production (kWh), and warranty terms. Avoid vague language like “best price” or “special offer.”

Next Steps for Texas Homeowners

Want solar power without the installer process at all? A solar generator pairs portable panels with a battery in one box that ships to your door — no permits, no roof work, no sales calls. See our Texas backup power guide for the sizes that fit Texas homes and outage risks.

Sources for 2026 data: IRS Section 25D guidance, DSIRE state incentive database, Texas Comptroller of Public Accounts, Public Utility Commission of Texas, Austin Energy, San Antonio City Public Service, SEIA state market data, NREL solar resource maps, EnergySage cost benchmarks.

Incentive	Type	Amount
Property Tax Exemption for Solar	Tax exemption	100% of added home value from solar (Texas Tax Code Section 11.27)
Austin Energy Solar Rebate	Utility rebate	Flat $2,500 rebate per residence in 2026 (program rules were updated in April 2026 to allow leased systems to qualify)
CPS Energy Solar Rebate (CLOSED)	Utility Rebate (Discontinued)	CPS Energy in San Antonio discontinued its residential solar rebate program in 2024; not available for 2026 installs
HERO Financing Program	Financing	Property-assessed clean energy (PACE) loans up to $50,000