California Solar Incentives at a Glance
Avg Cost per Watt
$2.68
6 kW System Cost
$16,080
Avg Electricity Rate
$0.32/kWh
Payback Period
6-8 years
25-Year Savings
$52,000-$78,000
Total Installations
1,950,000+
| State Tax Credit | No state tax credit |
| Net Metering | Net Billing (NEM 3.0) |
| Property Tax Exemption | Yes |
| Sales Tax Exemption | No |
If you are considering going solar in California, understanding the full range of available incentives is essential to maximizing your return on investment. This guide covers every California solar incentive available in 2026 -- from state tax credits and utility rebates to net metering policies and tax exemptions -- so you can make an informed decision before signing a contract.
Federal Tax Credit No Longer Available
The federal residential solar tax credit (ITC) under Section 25D expired on December 31, 2025. It is no longer available for new residential solar installations in 2026. This guide focuses exclusively on California state and local incentives that are still available to help reduce your solar costs.
California State Tax Credits and Rebates
California does not currently offer a state-level solar tax credit. However, the California Solar Initiative (CSI) laid the groundwork for the state's solar dominance, and several local incentive programs remain active.
Net Metering in California
California Net Metering Policy: Net Billing (NEM 3.0)
California transitioned from traditional net metering to Net Billing Tariff (NBT, often called NEM 3.0) in April 2023. Under NBT, solar exports are credited at the avoided cost rate, which is significantly lower than the retail rate. Homes with battery storage benefit most, since they can store daytime production and use it during expensive evening peak hours instead of exporting at low avoided-cost rates.
Net metering is one of the most important factors in your solar ROI. It determines how much you are credited for excess energy your panels send back to the grid. In California, the net metering landscape directly affects your payback period and 25-year savings projections.
Property and Sales Tax Exemptions
Property Tax Exemption
Yes
California's Property Tax Exclusion for Solar Energy Systems (Revenue and Taxation Code Section 73) ensures that adding solar panels does not increase your property's assessed value. This exclusion has been extended through 2026.
Sales Tax Exemption
No
California does not offer a statewide sales tax exemption for solar equipment. You'll pay the standard state sales tax rate (currently 7.25%, plus any local add-ons) on your solar purchase. However, many installers include this in the quoted system price.
Tax exemptions reduce the total cost of going solar and provide ongoing savings. A property tax exemption means you add home value without increasing your tax bill. A sales tax exemption reduces the upfront purchase price. Together, these exemptions can save California homeowners hundreds to thousands of dollars.
Utility Rebate Programs in California
Beyond state-level incentives, many California utilities offer their own solar rebate and incentive programs. These can significantly reduce your out-of-pocket costs or provide ongoing production-based income.
SGIP (Self-Generation Incentive Program)
Offers rebates of $150-$1,000/kWh for battery storage systems paired with solar. Low-income customers in high fire-risk areas receive the highest incentives. Administered by the state's major IOUs (PG&E, SCE, SDG&E).
SOMAH (Solar on Multifamily Affordable Housing)
Provides fully subsidized solar installations for qualifying multifamily affordable housing properties. Tenants receive direct bill credits from the solar production.
DAC-SASH (Disadvantaged Communities - Single-Family Solar Homes)
Offers fully subsidized solar systems to income-qualifying homeowners in designated disadvantaged communities.
California has the nation's largest community solar market, and the state's Title 24 building code requires solar on all new residential construction. The CPUC's CalFUSE program is expanding access to solar+storage for low-income residents.
Solar Cost and Savings in California
| Metric | California Average |
|---|---|
| Cost per watt (before incentives) | $2.68 |
| 6 kW system cost (before incentives) | $16,080 |
| Average electricity rate | $0.32/kWh |
| Estimated payback period | 6-8 years |
| Estimated 25-year savings | $52,000-$78,000 |
| Total installations statewide | 1,950,000+ |
These figures represent statewide averages. Your actual costs and savings will depend on your specific location, roof characteristics, electricity usage, utility rate plan, and which incentives you qualify for. We strongly recommend getting at least three quotes from licensed installers to compare pricing for your specific situation.
For a detailed breakdown of solar costs across all 50 states, see: Solar Panel Cost by State (2026).
Is Solar Worth It in California?
Despite the shift from NEM 2.0 to NEM 3.0 reducing export credits, California's extremely high electricity rates (averaging $0.32/kWh and rising) still make solar one of the best investments in the country. Pairing solar with battery storage maximizes savings under the new rate structure. Most California homeowners see payback in 6-8 years.
Get Your Free California Solar Estimate
See how much you can save with solar based on your roof, usage, and local incentives. Free, no obligation.
Get Your Free California Solar Quote →Frequently Asked Questions
Is California net metering still worth it after NEM 3.0?
Yes, but the economics have shifted. Under NEM 3.0 (Net Billing Tariff), export credits are lower than under NEM 2.0. However, California's high electricity rates still make solar highly profitable. Pairing solar with a battery to self-consume more of your production is now the optimal strategy, with most systems paying back in 6-8 years.
What is the SGIP battery rebate in California?
The Self-Generation Incentive Program (SGIP) provides rebates ranging from $150 to $1,000 per kWh of battery storage capacity. The highest rebates go to low-income customers in high fire-threat districts. For a typical 13.5 kWh battery, rebates can range from $2,025 to $13,500 depending on your eligibility tier.
Does California have a state solar tax credit?
No. California does not offer a state-level solar tax credit. However, the combination of high electricity rates, property tax exclusion, battery storage rebates (SGIP), and various local utility programs still make California one of the top states for solar savings.
How much does a solar system cost in California in 2026?
The average cost of a 6 kW residential solar system in California is approximately $16,080 ($2.68 per watt) before incentives. With the federal solar tax credit no longer available for purchased residential systems, homeowners should compare cash purchase, loan, lease, and PPA options carefully.
Do I need a battery with solar in California?
While not strictly required, a battery is strongly recommended under California's NEM 3.0 rate structure. Without a battery, you export solar at low avoided-cost rates during the day and buy expensive grid power at night. A battery lets you store daytime production and use it during peak evening hours, significantly improving your return on investment.
Learn More About Solar Incentives and Costs
Explore our other comprehensive solar guides to make the most informed decision: