Texas Solar Incentive Programs
State Incentives
Property Tax Exemption for Solar
Statute text (§11.27(a)): "A person is entitled to an exemption from taxation of the amount of appraised value of real property owned by the person that arises from the installation or construction on the property of a solar or wind-powered energy device that is primarily for production and distribution of energy for on-site use."
Device owners: Under §11.27(a-1), the exemption also applies to a person who owns the device but not the underlying real property, such as a third-party solar lease arrangement where the leasing company owns the panels.
To claim: File Form 50-123 (Exemption Application for Solar or Wind-Powered Energy Devices) with your county appraisal district. Filing deadlines vary by county but generally fall on April 30 of the tax year. The exemption may apply retroactively to the year of installation if filed timely.
Source: Texas Tax Code §11.27 (Justia) · Texas Comptroller Form 50-123
Sales Tax on Solar Equipment
Solar panels, inverters, racking systems, and related installation materials are subject to the full Texas sales tax rate, 6.25% state plus any local city/county additions up to a combined maximum of 8.25%.
Labor vs. equipment: In Texas, separately stated labor charges for installation may be treated differently from equipment purchases. Your installer's contract structure can affect your total sales tax bill. Ask your installer how they itemize labor versus materials.
Commercial/utility-scale note: Large solar generation facilities may qualify for a manufacturing equipment exemption under §151.318, but this does not apply to residential homeowners purchasing equipment for their own home.
Source: Texas Tax Code Chapter 151 (Subchapter H, Exemptions) · Texas Comptroller of Public Accounts
State Income Tax Credit
Homeowners in Texas cannot claim any state-level tax credit for a solar installation. All solar tax incentive value in Texas flows through the property tax exemption (§11.27) and any applicable utility rebate programs.
The elimination of the federal Section 25D credit by P.L. 119-21 (effective for systems installed after December 31, 2025) means there is now no income tax credit, state or federal, available for new residential solar in Texas.
Solar Buyback & Net Metering
ERCOT & REP Solar Buyback Plans
If you're in ERCOT territory (most of Texas except El Paso area and some border areas), check your REP's current solar plan offerings. Rates and terms change frequently. Popular plans credit excess generation at wholesale-adjacent or fixed rates that are typically lower than the retail rate you pay for consumption.
| Service Area | Utility Type | Buyback / Credit Structure | Notes |
|---|---|---|---|
| ERCOT territory (most of TX) | Deregulated, your REP | Varies by plan | Compare plans on PowerToChoose.org |
| Austin (Austin Energy) | Municipal utility | 12.89¢/kWh Value of Solar | Per Austin Energy website; rate set annually |
| San Antonio (CPS Energy) | Municipal utility | Net metering credit | Credit applied to bill; rate tied to tariff |
| El Paso (El Paso Electric) | Regulated IOU | Net metering available | Rate and export cap under PUCT review (effective July 2025); verify current terms with El Paso Electric |
Austin Energy, Value of Solar: Austin Energy uses a Value of Solar (VoS) tariff rather than traditional net metering. The VoS rate is calculated to reflect the actual value solar provides to the grid. The current posted rate is 12.89¢/kWh for residential customers (per Austin Energy's official rates page, last reviewed October 2026). This rate is reassessed annually during Austin Energy's budget process, verify the current rate at austinenergy.com before installing.
CPS Energy, Net Metering: CPS Energy (San Antonio) operates a net metering program through which residential solar customers receive credits for excess generation. The program requires interconnection behind a net meter. CPS Energy also offers a residential solar rebate (see Utility Rebates section below). Check the current tariff at cpsenergy.com for the applicable credit rate.
Sources: Austin Energy Value of Solar Rider (Electric Tariff, November 1, 2025) · CPS Energy Solar Program Manual · powertochoose.org
Municipal Utility Rebates
CPS Energy Solar Rebate (San Antonio)
CPS Energy's Rooftop Solar Rebate Program provides up to $2,500 for residential customers who install a qualifying solar PV system. An additional $500 premium is available for systems using locally manufactured solar modules. The rebate is capped at 50% of the total eligible project cost (panels, inverters, balance of system, labor, and permits).
System cost cap: The program requires that systems be priced at $4.00 per DC watt or less to qualify. Systems facing predominantly northward do not qualify.
Source: CPS Energy Solar Rebate Program Manual (cpsenergy.com)
Federal Incentives
Federal Residential Solar Tax Credit (Section 25D)
The Section 25D credit had been worth 30% of the total system cost (panels, inverters, labor, and battery storage) for systems installed in 2022 to 2025. For a typical $25,000 Texas installation, this would have represented a $7,500 federal tax credit, a substantial benefit that is no longer available.
2025 systems: If your system's installation was completed on or before December 31, 2025, you may still be eligible. Consult a tax professional and file Form 5695 with your federal return for the applicable tax year.
Source: P.L. 119-21 (One Big Beautiful Bill, signed July 4, 2025) · IRS Form 5695
Estimate Your Texas Solar Savings
Property tax savings only, estimated illustration based on inputs. Consult a qualified tax professional for your actual liability.
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