California electricity bills can feel unpredictable, and incentives headlines add confusion fast. In 2026, the key change is timing.
The IRS currently states the Residential Clean Energy Credit is 30% for qualified solar installed in 2022 through December 31, 2025, and it is not available for property placed in service after December 31, 2025.
That does not mean solar incentives disappear. In California, the biggest levers are now state and utility programs, plus a bill savings strategy under Net Billing rules.
This guide shows what still exists, what deadlines matter, and the steps to confirm your eligibility before you sign anything.
Key Takeaways
In 2026, most solar “tax credit” savings depend on timing. Your install completion and placed-in-service timing decide if the federal credit applies, so keep clean paperwork and confirm dates early.
Your biggest bill savings now come from using your solar power at home. California Net Billing makes exports less valuable than they used to be, so system sizing and daily usage habits matter.
Batteries can help you control evening bills and outages, and incentives may help. SGIP is the main California storage incentive, but eligibility varies, so check early before you plan your budget.
How you pay changes what you get. Owning solar (cash or loan) is different from a PPA or PACE. Ownership affects incentives, long-term cost, and what happens if you sell your home.
Does California Have a Solar Tax Credit?
Not in the way most people mean it. California does not offer a single statewide personal income tax credit that works like the old “30% solar tax credit” headline. When you look for a California solar tax credit, you are usually looking for one of three things:
A federal tax credit applied to a solar purchase
California incentives that reduce cost for eligible homeowners, often tied to income or location
Utility billing rules that change how solar savings show up on your monthly bill
In 2026, it helps to separate language:
A tax credit usually means something you claim on your federal income tax return. The IRS guidance is the reference point for eligibility and deadlines.
Incentives or rebates are usually program-based and eligibility-based. Examples include CPUC programs like SGIP, which offers incentives for energy storage and includes a Residential Solar and Storage Equity budget.
Billing credits depend on the Net Billing Tariff, which sets how exported solar energy is credited.
Next, you will see the federal credit status in 2026 in plain language, plus a simple table to help you map your timeline.
Federal Credit Status in 2026
In 2026, most California solar tax credit searches are really about the federal Residential Clean Energy Credit. The IRS currently states two key rules:
The credit equals 30% of qualified costs for clean energy property installed in 2022 through December 31, 2025.
The credit is not available for property placed in service after December 31, 2025.
The timing detail that matters is how the IRS treats the “expenditure date.” IRS instructions for Form 5695 say you cannot claim residential clean energy credits for expenditures made after December 31, 2025.
A Congressional Research Service update also notes the IRS clarification that an expenditure is treated as made when the original installation is completed.
Quick timeline table you can use
Timeline item | What it means for you | What to keep |
Contract signed | Agreement date only, not the key IRS date | Signed contract and scope |
Equipment delivered | Delivery does not decide eligibility | Delivery receipt and invoices |
Installation completed | Often, the deciding moment for expenditure timing | Completion proof, paid invoices |
Placed in service | The system is operational and producing power | Permission to operate, utility docs |
What usually counts as “qualified costs”
The IRS describes the credit as a percentage of the costs of new, qualified clean energy property.
To stay accurate, confirm which project costs are treated as qualified costs with a tax professional using IRS guidance and Form 5695 instructions.
If your installation is completed in 2025
Use this checklist before tax time:
Collect your final paid invoice and a project completion record.
Save your permission to operate or interconnection documents.
File using Form 5695 with your return and retain records.
If your project is starting in 2026, focus on California and utility programs, plus the Net Billing savings strategy. Those can still shape your out-of-pocket cost and long-term bill results.
California Programs That Can Lower Out of Pocket Cost
California incentives in 2026 are mostly program-based, not a single statewide income tax credit. Eligibility often depends on income, location, and utility territory.
Start with programs that can materially change affordability for qualified homeowners.
DAC-SASH for disadvantaged communities
DAC-SASH supports income-qualified homeowners in disadvantaged communities with rooftop solar support. CPUC’s low-income solar programs page notes DAC-SASH is run by GRID Alternatives and is accepting applications.
GRID Alternatives lists core eligibility requirements, including living in one of the top 25% most disadvantaged communities using CalEnviroScreen, being a billing customer of PG&E, SCE, or SDG&E, and meeting income qualifications tied to CARE and FERA guidelines.
Quick check before you spend time:
Confirm your address falls in an eligible disadvantaged community area.
Confirm your utility territory matches the program requirements.
Confirm household income eligibility.
Property tax treatment for active solar energy systems
California has an Active Solar Energy System Exclusion that can prevent a solar installation from increasing assessed value for property tax purposes. The Board of Equalization notes that the statute is scheduled to sunset on January 1, 2027.
This is not a cash rebate, but it can affect the total ownership picture for some homeowners.
A simple table to keep you oriented
Program type | What can it change | What do you confirm first |
DAC-SASH | Upfront affordability for eligible households | Address, utility territory, income |
Property tax exclusion | Property tax assessment treatment | Sunset timing and eligibility |
If you want to move fast, ask your installer for a written incentive checklist tied to your address and utility, and keep every document in one folder.
CA Home Solar can help homeowners in Southern California identify which California programs fit the property and utility area, as part of the early evaluation process.
SGIP Battery Rebates and Storage Incentives
In 2026, storage incentives matter because batteries can change how much solar you use in your home versus export to the grid.
California’s main storage incentive is the Self-Generation Incentive Program (SGIP). CPUC describes SGIP as an incentive program that supports distributed energy resources, including energy storage.
SGIP is not a single flat rebate for everyone. Incentive levels and eligibility can depend on factors like customer type and program categories.
CPUC also notes Residential Solar and Storage Equity incentives as part of SGIP, which is designed to support specific eligible residential customers.
Who SGIP is most relevant for
SGIP tends to be most relevant if you are in one of these situations:
You want backup capability for outages, especially if you rely on medical devices or work from home
You expect better bill results by shifting solar energy usage into evening hours
You qualify for SGIP equity categories, which can increase incentive value
What to collect before you apply or request a bid
Keep this list ready. It saves time and reduces back-and-forth:
Your utility name and service territory
Recent electric bills, ideally 12 months
Your planned battery size and whether it is paired with solar
Any documentation tied to equity eligibility, if applicable
A practical tip that improves outcomes
Ask for an estimate that shows two scenarios:
Solar only
Solar plus battery
This forces the savings assumptions into the open and helps you see the value of self-use versus export under your rate plan.
For homeowners in Southern California comparing storage options alongside solar, CA Home Solar can help align system sizing with your usage patterns and the incentive pathways you may qualify for, so the storage decision stays practical and budget-aware.
Net Billing Changes The Math
California’s Net Billing Tariff changed how exported solar energy is credited. Under Net Billing, export compensation is not the same as receiving a full retail credit for every kWh exported.
CPUC explains Net Billing as the successor tariff and provides the official reference for how credits work.
The plain-language takeaway
Solar savings now come more from what you use in your home when it is produced, and less from exporting large amounts back to the grid. That is why system sizing and usage timing matter more than panel count.
A simple example: solar only vs solar plus battery
This example shows the decision logic, not your exact numbers.
Scenario | What happens midday | What happens after sunset | Typical impact |
Solar only | Home uses some solar, extra may be exported | Home buys more from the grid | More exposure to evening rates |
Solar plus battery | More solar stored for later | The battery can cover part of the evening use | Higher self-use, more bill control |
Export value adders and timing
CPUC references an export compensation adder for certain Net Billing customers who apply to interconnect before the end of 2027, with the adder applying for a defined period.
This is not a blanket promise of higher export rates for everyone. Eligibility and value depend on the tariff and your utility.
What to pull from your bill before you size a system
You can do this in 10 minutes:
Your monthly kWh usage for the past year
Your highest bill months and what drove them
Your rate plan name, if shown
Any notes about time-of-use periods, if listed
Now that you know why exports matter less than they used to, the next step is to check local and utility programs that may still apply in your service territory.
Local Utility Incentives You May Still Find
California does not have one universal solar rebate for every homeowner. Incentives can show up through utility programs, low-income pathways, or storage programs that run statewide but have utility-specific steps.
Start with your electric utility’s official program hub and look for active solar and storage pages.
For example, Southern California Edison maintains a solar billing and incentives page that points customers to solar and storage programs and related resources.
Other utilities publish similar portals, and program availability can vary.
Quick checklist to use while you research
Confirm the incentive is active for your utility territory
Check if your home must meet income, location, or equipment requirements
Ask if incentives apply to solar, storage, or both
Save a screenshot or PDF of the program requirements for your records
If you are comparing offers, ask each installer to list the utility programs they are assuming in the proposal and to name the utility territory used. This keeps your quote grounded in what you can actually access.
Paying For Solar in 2026
Price is not only about system size. Payment structure can change your total cost, your incentives, and what happens if you move.
1. Cash purchase
A cash purchase means you own the system outright. Ownership can simplify long-term planning, but it is not the best fit for every budget.
2. Solar loan
A solar loan keeps system ownership with you, while spreading the cost over time. Confirm the total financed amount, interest rate, term length, and any fees.
Compare the projected monthly payment to your typical utility bill, using realistic assumptions.
3. Power Purchase Agreement (PPA)
A PPA is a financial agreement where a third party owns the solar system, and you purchase the electricity it produces at an agreed rate. SEIA describes a solar PPA as a model where the developer installs, owns, and operates the system, and the customer buys the solar output.
A PPA may reduce upfront cost, but it also changes who receives incentives and how future home resale conversations work.
4. PACE financing
PACE financing is repaid through your property taxes. California’s Department of Financial Protection and Innovation explains PACE and highlights consumer considerations and risks.
Treat PACE as a decision that needs careful review, especially if you plan to sell in the next few years.
Quick comparison table
Option | Who owns the system | Upfront cost | What to watch |
Cash | You | Higher | Total cost and contractor scope |
Loan | You | Lower | APR, fees, total financed cost |
PPA | Provider | Often low | Contract terms, escalators, resale impact |
PACE | You | Often low | Property tax repayment terms and risk notes |
If you want help comparing these options in plain language for a Southern California install, CA Home Solar can walk through ownership and payment choices while keeping your design and permitting path clear.
Quick Checklist to Confirm Eligibility Before You Sign
Use this checklist to keep the incentives conversation practical. Print it or copy it into your notes so every quote is based on the same facts.
Federal credit status check
Confirm the system completion timeline and “placed in service” date using current IRS guidance.
Keep invoices and a completion record in one folder.
Program eligibility checks in California
If you are exploring DAC-SASH, confirm address eligibility, utility territory, and income requirements before you plan around it.
If you are exploring SGIP storage incentives, confirm you meet the program category requirements and that the equipment and project type align with SGIP rules.
Utility and Net Billing checks
Confirm your utility territory and rate plan name.
Ask for a proposal that lists assumptions for self-use versus export under Net Billing.
Ask which programs the installer included, and request links or screenshots of program requirements.
Paperwork to keep
Contract, scope, and change orders
Final paid invoice and equipment list
Utility interconnection documents and permission to operate.
Wrapping Up
If you want to act on this guide, keep it simple.
Pull 12 months of electric bills and note your utility and rate plan.
Decide your main goal: bill control, outage protection, or both.
Shortlist two installers and ask each for a proposal that states Net Billing assumptions and any incentive programs included.
If storage is part of your plan, ask for solar-only and solar-plus-battery scenarios, and confirm SGIP pathways you may qualify for.
If you are in Southern California or other high-utility-cost parts of the state, request an evaluation from CA Home Solar. You will get a system design based on your usage, plus clear guidance on permitting, utility steps, and an incentive fit for your address.
FAQs
Do you need a Permission to Operate to claim the federal credit?
Not always. IRS guidance focuses on when the installation is completed and treated as placed in service, which can differ from utility PTO timing. If PTO is delayed, keep installation completion documents and ask a tax professional how to document placed in service for your return.
What happens if you do not owe much in federal taxes this year?
Form 5695 instructions explain that the credit can be carried forward. If your credit is larger than your tax liability limit for the year, the unused portion can carry to a future year, subject to the rules in the instructions.
Does a battery qualify for the Residential Clean Energy Credit?
The IRS states that battery storage technology can qualify for the residential clean energy credit. Eligibility depends on meeting the IRS requirements and timing rules.
Do PPAs qualify for the solar tax credit?
With a PPA, a third party owns the system, and you buy the electricity produced. In many cases, the system owner claims the credit, not the homeowner. Confirm who owns the equipment and who claims incentives before signing.
How do you check if your address qualifies for DAC-SASH?
DAC-SASH eligibility is tied to living in a disadvantaged community and meeting income and utility territory requirements. Start with the official DAC-SASH program information and confirm eligibility for your address before you plan around the benefit.
How long does SGIP take, and what timing rule trips people up?
SGIP has a defined process, and CPUC notes that applicants have one year after reserving funds to meet program requirements. Timelines vary by category and administrator, so confirm your category steps and deadlines early.
Does solar increase your property taxes in California?
California’s Active Solar Energy System Exclusion can prevent certain solar systems from increasing assessed value for property tax purposes, and the Board of Equalization notes a sunset date for the exclusion. Confirm how the exclusion applies to your property with the official FAQ guidance.
Do rebates change the amount you can claim as a tax credit?
Some incentives are treated differently from others for tax purposes. The safest approach is to keep all rebate and incentive documents, then confirm with a tax professional how they affect your qualified cost basis using IRS instructions and forms.
