In Texas, your solar incentives are determined by the utility territory your meter is in. That one fact can swing your total available rebates from roughly $9,000 to $0 within the same state. It is the difference between a rebate that pays off half your battery bank and a program that was repealed more than three years ago.
This 2026 guide walks through every active program by territory, shows who receives each dollar (hint: sometimes it is the contractor, not you), and clarifies the federal tax credit change that went into effect at the end of 2025.
Find your utility first. Everything else follows from there.
Find your Texas utility and see which rebate applies
Do Solar Incentives Exist in Texas?
Yes, but in a narrower form than most local homeowners expect when they go in.
Texas does not run a statewide solar rebate, there is no state income tax credit, and the federal residential credit that most Texans have been told to plan around is gone for systems placed in service after December 31, 2025.
What remains is a patchwork of nine separate utility territories, each with its own program, its own eligibility rules, and its own answer to a question that matters more than the dollar figure: who gets the money?
An Oncor homeowner may see a calculated rebate worth thousands of dollars, but it is paid to the installer, not to them. A CPS Energy homeowner in San Antonio gets zero because the utility repealed its residential rebate on December 16, 2022, and has not reinstated it.
Austin Energy pays its $2,500 to the homeowner, but bans leases and PPAs. El Paso Electric offers no residential PV rebate and is still waiting on the outcome of a rehearing that may change export rules for new solar customers.
This guide walks through each of those nine territories, shows which numbers you can plan around and which you need to confirm before signing, and works through the lease and PPA questions that the December 2025 federal changes made more important, not less so.
What Happened to the Federal Solar Tax Credit?
Two things changed, and they point in opposite directions.
For cash and loan buyers, the 30% residential credit under Internal Revenue Code §25D is repealed for systems placed in service after December 31, 2025, under the One Big Beautiful Bill Act (§70506, Public Law 119-21).
Pre-2026 systems can still carry forward unused credit. For any new Texas system installed in 2026 or later on a cash or loan purchase, there is no federal tax credit.
For leases and PPAs, the 30% commercial credit under §48E survives, but only for the lessor. Under IRS Notice 2025-42, the project must begin construction on or before July 4, 2026 and be placed in service by December 31, 2027.
The Physical Work Test applies to projects starting on or after September 2, 2025, and the 5% safe harbor is disallowed except for systems at or below 1.5 MW-AC.
The lessor claims the credit. Nothing in federal law requires them to pass the 30% down to the homeowner through a lower monthly payment.
The Consumer Financial Protection Bureau’s August 2024 Issue Spotlight documented markups of about 30% on leased systems versus cash equivalents, which is reason enough to read any lease or PPA contract carefully before committing.
Texas Property Tax Exemption Under Tax Code §11.27
The one statewide solar benefit that applies regardless of utility territory is the property tax exemption under Texas Tax Code §11.27. It exempts 100% of the added appraised value from solar devices, including integrated battery storage.
Here is what §11.27 says:
| Item | Details |
|---|---|
| Who Qualifies | Any property owner with a solar device on the property. For leased systems, the lessor files under §11.27(a-1). |
| How To Claim | File Form 50-123 with your county appraisal district. |
| Deadline | April 30 of the tax year. |
| What Is Covered | Solar energy devices and integrated battery storage under §11.27(c)(1). |
| How Long It Lasts | Statute in effect since 1981, with no expiration. |
Texas has no residential solar sales tax exemption. The prior exemption was repealed in 1987 (SRC SB 857, 77R), and Comptroller STAR 201907005L limits §151.318 to commercial generation and manufacturing.
Residential equipment is subject to 6.25% state sales tax plus up to 2% local sales tax.
Find Your Utility Territory First
Every other incentive on this page depends on which of the nine territories your meter sits on. Start here.
Utility Territory | Rebate Ceiling | Who Gets Paid | Lease or PPA Available? |
|---|---|---|---|
Oncor | Calculated per PUCT TRM savings; $1.774M residential budget for 2026 (battery optional; ≤20 kW DC) | Contractor | No |
CenterPoint Energy | $135/kW DC; 15 kW cap (~$2,025 max) | Contractor | Available through REPs |
AEP Texas | Up to $3,000 residential | Contractor | Available through REPs |
TNMP | $0 direct incentive; $227 DG meter fee applies | N/A | Available through REPs |
Austin Energy | $2,500 flat | Homeowner | No |
CPS Energy | $0 (rebate repealed December 16, 2022) | N/A | Operationally unavailable |
El Paso Electric | $0 PV; $500 battery pilot (first 500 homes); Docket 57568 rehearing pending | Homeowner | Rare |
New Braunfels Utilities | Up to $3,000 two-tier | Homeowner | No |
SMTX Utilities | $1/W DC up to $2,500 | Homeowner | Rare |
Note: Confirm any rebate budget directly with the utility before you sign. The single largest risk for Texas solar buyers in 2026 is a first-come, first-served rebate that has already run out of money by mid-year.
Estimate your Texas rebate based on your utility and system size
Transmission Utility Territories on ERCOT
About 85% of Texans sit inside ERCOT on one of four Transmission and Distribution Utilities. None of them sells retail electricity. You pick a Retail Electric Provider (REP) for your energy plan, but the rebate program rides on your TDU.
Oncor (North & Central Texas)
Oncor runs the Take a Load Off Texas (TALOT) Residential Solar Photovoltaic Program. The 2026 Program Manual (Version 1.0, January 15, 2026) changed the program in three ways worth knowing about.
Incentives are now calculated, not fixed per kilowatt. The calculation uses the PUCT Technical Reference Manual, PVWatts, and Oncor’s EEPM tool, and varies by system size, azimuth, tilt, location, and installed cost, with a cap at 50% of project cost.
Battery storage is now optional, not a strict requirement. Eligible systems top out at 20 kW DC.
The 2026 residential budget is $1.774 million, operated first-come first-served until funds exhaust or November 30, 2026. The rebate is paid to an Oncor-approved Participating Service Provider. Owner-occupied single-family homes qualify; leases and PPAs do not.
Ask your installer to show you the exact EEPM calculator output for your system. The “up to $9,000” figure you may have seen elsewhere is a ceiling, not a quote.
CenterPoint Energy (Greater Houston)
CenterPoint pays $135 per kW DC up to a 15 kW system size, for a maximum of about $2,025. The incentive goes to a CenterPoint-approved Participating Service Provider and appears as a credit on the installation invoice.
Program funding is finite, and the public incentive page does not publish live fund balances, so confirm availability with your installer or with CenterPoint before you lock in a quote.
AEP Texas (Central & North Regions)
AEP Texas runs SMART Source Solar PV through Frontier Energy at txreincentives.com. Residential incentives reach $3,000, tiered by system size. The program is first-come, first-served within separate Central and North region budgets and is contractor-paid.
Check the program page for remaining funds before accepting any contract that builds the rebate into its pricing.
TNMP
TNMP offers no direct residential solar incentive and charges a $227 distributed-generation meter fee. TNMP’s first general rate review since 2018 was filed November 14, 2025 (PUCT Docket 58964), and the Blackstone and TXNM Energy acquisition was approved February 6, 2026 with closing expected in the second half of 2026.
Either of these could change the TDU’s solar program posture; there is nothing active to rely on today.
Municipal Utility Territories
Texas’s municipal utilities operate outside ERCOT deregulation and write their own solar rules. Five municipal utilities matter here.
Austin Energy
Austin Energy pays a $2,500 flat rebate to the homeowner as a bill credit. The system must be at least 3 kW DC, the installer must be an AE Participating Contractor, and the homeowner must complete the Solar Education Course and receive a Rebate Confirmation Letter before installation. Skipping the pre-install steps forfeits the rebate.
Austin Energy does not use net metering. Exports are compensated under the Value of Solar tariff, which is 9.91¢/kWh in 2026 and uses a 5-year rolling avoided-cost methodology. The next scheduled reset is November 2026 through the FY27 Council budget.
PPAs are prohibited in Austin Energy territory under the AE Residential Solar PV Guidelines. A homeowner who wants solar in Austin buys it.
CPS Energy (San Antonio)
CPS Energy discontinued its residential solar rebate on December 16, 2022 and has not reinstated it under STEP Bridge or any subsequent program. Solar customers receive net billing with exports paid at avoided cost, typically in the 2¢ to 4¢ per kWh range depending on when the export occurs.
Third-party ownership is operationally unavailable in CPS territory. A San Antonio homeowner paying cash in 2026 has access to the state property tax exemption and almost nothing else on the incentive side.
El Paso Electric (West Texas)
EPE is the only Texas utility on the Western Interconnection and operates outside ERCOT. It offers no residential PV rebate. A battery-backup pilot through Base Power provides $500 to the first 500 qualifying homeowners, targeting about 10 MW of installed capacity.
PUCT Docket 57568 approved a residential rate increase and changed distributed-generation provisions for new solar customers. The City of El Paso filed a motion for rehearing on March 2, 2026, and the final rehearing outcome and exact grandfathering terms for pre-effective-date customers are pending as of April 2026.
If you are quoting solar in EPE territory, consult the final PUCT order before committing to any export assumption.
New Braunfels Utilities
NBU pays a two-tier rebate up to $3,000 ($0.25 per watt for Tier 1 and $0.50 per watt for Tier 2), paid to the homeowner. An NBU Participating Contractor and the Going Solar Course are required. Interconnection carries a $1.58 per kW monthly surcharge plus a $100 annual inspection fee.
Leases and PPAs are prohibited by law under Texas Utilities Code §§40.051 and 40.054, which give municipal utilities MOU authority to bar third-party retail sales. NBU exercises that authority.
SMTX Utilities (San Marcos)
SMTX Utilities pays the homeowner $1 per watt DC up to $2,500. Eligibility requires a NABCEP-certified installer with a Texas Electrical Contractor License and pre-approval before installation. System size is capped at 100% of annual consumption, and there is a pro-rated clawback if the system is removed.
REP Buyback Plans Are Not Net Metering
Across most of ERCOT, the closest thing to ongoing export compensation is a voluntary contract with a Retail Electric Provider called a buyback plan. PUCT Substantive Rules §25.211 and §25.217 do not mandate retail-rate export compensation, which means every REP design is its own contractual product and can change at renewal.
Four structural designs dominate the 2026 market:
- Capped at usage: export credit applies only up to your monthly consumption. Example: TXU Solar Buyback Match 36.
- Wholesale linked: export credit tied to ERCOT settlement prices. Example: Green Mountain Renewable Rewards.
- Rollover bank: credits bank month to month and reconcile periodically. Examples: Chariot Shine, PowerBank, GreenVolt 24.
- Retail match: export credit at or near the retail rate. Examples: Rhythm PowerShift 12; Reliant Simple Solar Sell Back 12.
Read the Electricity Facts Label and Terms of Service for any buyback plan before you pick one. These rates change. Pull a current snapshot from powertochoose.org for your ZIP code on the day you sign.
Who Actually Receives the Money in a Lease or PPA
This is where the December 2025 federal change matters most in Texas. In a lease or PPA, the system owner is the financing company, not you. The company claims the §48E credit, the Texas property tax exemption (Form 50-123 filed by the lessor under §11.27(a-1)), and any applicable utility rebate that the program allows.
Your benefit is indirect: a lower monthly payment, if the lessor chooses to pass it through. No statute or regulation in Texas or in federal law requires passthrough.
Austin Energy and NBU prohibit leases and PPAs outright. CPS Energy is operationally unavailable for third-party ownership. Oncor’s owner-occupied requirement excludes leases from TALOT. That leaves ERCOT territories inside CenterPoint, AEP Texas, and TNMP as the main places where a Texas homeowner might sign a lease or PPA and still see §48E in play.
Before you sign, ask the lessor three questions in writing:
- What is the installed cost used to calculate my payment?
- How is the federal §48E credit reflected in that payment?
- What are the buyout, transfer, and end-of-term options?
The Texas Attorney General issued Civil Investigative Demands on April 6, 2026 to Freedom Forever, Sunrun, Lone Star Solar Services, and CAM Solar, citing the Deceptive Trade Practices Act. The investigations target bill-savings misrepresentation, performance claims, and misleading contract or warranty terms.
SB 1036 (Occupations Code Chapter 1806) adds a 5-business-day right to cancel (effective September 1, 2025), mandatory retailer and salesperson registration (September 1, 2026), and civil penalties up to $2,500 per violation, doubled to $10,000 for victims 65 and older, with a $100,000 aggregate cap.
TDLR’s rulemaking deadline is June 1, 2026.
Compare Texas lease/PPA offers against cash purchase economics
What to Check Before Relying on Incentives
Some of the numbers referenced on this page are stable for years, while others can change within a single quarter.
Before you sign any solar contract in Texas make sure you do the following:
Identify your utility. Confirm your territory and, for ERCOT territories, your REP.
Verify calculated rebates. For Oncor, CenterPoint, and AEP Texas, ask the installer for the specific calculator output and confirm remaining program funds with the utility.
Complete municipal pre-install steps. For Austin Energy and NBU, finish the required education course and receive written pre-approval before installation.
Wait out EPE uncertainty. Consult the final PUCT order in Docket 57568 before assuming any export rule.
Document lease or PPA terms. Get the §48E passthrough treatment in writing, check the TDLR registry once it launches September 1, 2026, and verify the retailer has not been named in a TX AG DTPA action.
File your property tax exemption. Submit Form 50-123 with your county appraisal district by April 30 of the tax year.
Need more details to understand if solar panels are worth it in Texas? Read our comprehensive guide for additional information.
The Bottom Line for Texas Homeowners in 2026
Texas does not have a single solar incentive program, and after December 31, 2025 it no longer has a federal tax credit for homeowners who buy their systems with cash or a loan.
What it has instead is nine separate utility territories, one property tax exemption that never expires, and a lease-or-PPA pathway that still qualifies for the federal commercial credit if construction begins on or before July 4, 2026.
Whether solar makes financial sense in 2026 depends less on the headline rebate numbers and more on whose meter is on your house and where the dollars end up.
The next step is the same everywhere in Texas. Find your utility first. Confirm the current rebate budget and application window with that utility before you lock in a contract.
If you are considering a lease or PPA, get the §48E passthrough treatment in writing and check the TDLR retailer registry once it launches September 1, 2026. File your Form 50-123 property tax exemption with your county appraisal district by April 30 of the tax year.
Treat any rebate budget figure as something to confirm before you commit, not something to count on. If that’s too overwhelming and time-consuming for you, use our free costs and savings calculator or contact our professionals for help.
Get a personalized Texas solar quote with rebates and §48E factored in
Frequently Asked Questions
Not for cash and loan purchases placed in service after December 31, 2025. The §25D residential credit was repealed by OBBBA §70506.
The §48E commercial credit survives for lessors on lease or PPA projects that begin construction on or before July 4, 2026, subject to IRS Notice 2025-42. Whether a Texas homeowner sees any of that 30% in a lease payment depends on the specific contract.
No. The residential exemption was repealed in 1987, and Comptroller STAR 201907005L limits §151.318 to commercial generation and manufacturing. Residential solar equipment pays 6.25% state sales tax plus up to 2% local.
Texas has no mandatory net metering for residential solar. ERCOT-deregulated territories compensate for exports through voluntary REP buyback plans, whose rates change at contract renewal. Austin Energy uses a Value of Solar tariff, not net metering. CPS Energy and EPE net-bill at avoided cost. NBU and SMTX net-bill under their own rules.
In 2026, the federal §25D credit no longer exists for new cash or loan systems, so there is nothing to stack for most buyers. The §11.27 property tax exemption stacks with any utility rebate regardless of ownership structure. For leases and PPAs, the lessor is the one claiming §48E, not you.
Sources and References
- Internal Revenue Service. “Residential Clean Energy Credit Repeal” (FS-2025-05). irs.gov
- Internal Revenue Service. “Notice 2025-42: Beginning of Construction Guidance.” irs.gov/pub/irs-drop/n-25-42.pdf
- One Big Beautiful Bill Act, §70506 (Public Law 119-21). govinfo.gov
- Texas Tax Code §11.27 and Form 50-123. comptroller.texas.gov
- Texas Comptroller STAR 201907005L. comptroller.texas.gov/taxes/resources/star.php
- Texas Utilities Code §§40.051 and 40.054. statutes.capitol.texas.gov
- Texas Occupations Code Chapter 1806 (SB 1036, 89R). capitol.texas.gov
- PUCT Substantive Rules §25.211 and §25.217. puc.texas.gov
- PUCT Interchange Docket 57568 (El Paso Electric rate case). interchange.puc.texas.gov
- City of El Paso. “Press Release: City Council Seeks Rehearing” (March 2, 2026). elpasotexas.gov
- Oncor. “2026 Solar Photovoltaic Program Manual, Version 1.0.” oncor.com
- CenterPoint Energy. “Installation of Residential Solar System.” centerpointenergy.com
- AEP Texas SMART Source Solar PV Program. txreincentives.com
- Austin Energy. “Value of Solar Rate.” austinenergy.com
- CPS Energy. “Rooftop Solar.” cpsenergy.com
- New Braunfels Utilities. “Going Solar.” nbutexas.com
- SMTX Utilities. “Solar Rebates.” sanmarcostx.gov
- Consumer Financial Protection Bureau. “Issue Spotlight on Residential Solar Financing” (August 2024). consumerfinance.gov
- Texas Attorney General. “April 6, 2026 Civil Investigative Demands” (press release). texasattorneygeneral.gov
