2025 Solar Incentives Guide for Houston, TX - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Houston.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2024 and beyond)
- Ways to optimize your solar investment
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What Solar Tax Credits, Incentives, and Rebates are Available in Houston?
Renewable Energy Systems Property Tax Exemption
Texas Gas Service - Residential Energy Efficiency Rebate Program
Home Improvement (includes attic insulation, duct sealing, duct insulation, duct replacement, high-efficiency gas furnace, and Wi-Fi thermostat: Up to $1000
Solar Water Heater With Natural Gas Backup: $750
Tankless or Super High-efficiency Water Heater: $650
Furnace: $675
Furnace Tune-Up: $40
Natural Gas Dryer with moisture sensor: $225
Natural Gas Dryer Stub: $300
Federal Residential Renewable Energy Tax Credit
Source: https://www.dsireusa.org/
Solar incentives are meant to encourage homeowners to switch to renewable energy by providing incentives that lower the financial burden of solar panel installation and use. Solar incentives may include upfront discounts, cash back or monthly credits towards your utility bill. Some incentives are offered by the federal government, some by the Texas government and some by your utility company, county or municipality. Some solar incentives you might qualify for are:
- Tax Credits: Tax credits decrease, dollar-for-dollar, the total amount of tax you owe the government. These differ from tax deductions.
- Rebates: A solar rebate is a partial refund after the purchase of your solar panels. Rebates might be offered by your local utility company, your state or your county. The cash back that you get from the rebates is normally applied before calculating tax credits.
- Net Metering: Net metering is an incentive you can get after your solar panels are up and running. If you've signed a net metering agreement with your Houston utility company, it will subtract the value of the excess energy produced by your solar system from your monthly utility bill. In some places, this credit is dollar-for-dollar, while in other places you may get refunded a percentage of the value.
- Tax Exemptions: Sales tax exemptions are applied at the point of sale for your solar panels. Property tax exemptions let you exclude the value added by your solar system when you calculate how much property tax you need to pay on your home.
Federal Solar Incentives
When thinking about solar incentives, federal incentives might be the first thing that comes to mind. The solar incentive that you may be most familiar with is the Federal Solar Investment Tax Credit (ITC), which gives you a credit on your taxes equal to a predetermined percentage of the cost of your solar system.
The ITC can be applied to a solar system installed on your primary or secondary residence in the United States. The solar system has to have been installed on a property you own after January 1, 2006, for you to claim the credit. The ITC initially covered 30% of all installation costs (panels, equipment, accessories and labor), although the amount has fluctuated over the last few years between 26-30%. The amount you qualify for will depend on when your solar system was installed. There is no cap on the amount you can claim.
To better understand exactly how much money the ITC could save you, talk to your local Houston solar panel installation expert.
In August 2022, the Inflation Reduction Act laid out new provisions for the ITC, now titled the Clean Energy Credit. With the new provisions, solar installation projects begun after January 1, 2022, and finished by December 31, 2032, may be eligible for a 30% tax credit. The amount of the credit will then decrease slightly each year until the end of the current Clean Energy Credit in 2035. The expansion to the program also makes it easier to get credit for energy storage systems, beginning in 2023.
Click here to learn more about the new Inflation Reduction Act. The easiest way to fully understand how the new Clean Energy Credit applies to you is to talk with your local Houston solar panel installation expert.
State & Local Solar Incentives
Not all solar incentives are federal; tax credits, rebates and more may be offered at the state and local level. Some incentives are ongoing, while others are only available for a limited time. They may be given by the Texas government, or by your county or municipality.
Next Steps for Installing Solar in Houston
The large number of available solar incentives has enormously increased the adoption of solar energy nationwide over the past 15 years. You may receive solar incentives from your local utility company, the federal government or the Texas government. When you're prepared to switch over to solar energy, reaching out to your local Houston solar panel installation expert is a great first step.
EcoWatch's Houston, TX Solar Incentives FAQs
I already have solar panels installed. Does my system qualify for any incentives?
You should plan to talk to a representative from the company that installed your system – or speak to a local Houston solar installer — to better understand which incentives you might qualify for. If your system was installed after January 1, 2022, you likely qualify for the newly increased 30% tax credit under the Inflation Reduction Act. Solar panels installed between 2006 and 2021 may qualify for a tax credit of 26-30%.
How much can I save annually on my electric bill if I install solar panels on my Houston home?
Once you add solar panels to your Houston home, you can expect to save about $971.40 per year, or about $18,456.60 over the next 20 years.
What are the environmental benefits of switching to solar energy?
Solar energy is renewable — by changing where you get your energy, you can help lessen the strain on our planet's resources. Solar panels can also reduce your home's CO2 emissions by 400 pounds a year, or roughly 8,000 pounds over 20 years.
I want to change out my appliances for ones that are more energy-efficient. Are there any incentives I can claim?
With the passage of the new Inflation Reduction Act, there are a variety of new financial incentives that are available when you make eco-friendly improvements to your home. More details regarding these incentives, including information about incentives for purchasing new appliances, can be found here.
Can I qualify for incentives both towards the initial cost of solar panels, and later as reimbursement?
The order that incentives will be applied in may vary depending on which incentives you are claiming but usually yes, you can claim multiple types of incentives for your solar project. Speak to your solar installer or a local tax professional to make sure you are claiming all the incentives you're eligible for and applying them in the correct order.
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