Connecticut Solar Incentives: 2025 Tax Credits and Rebates

Connecticut has some of the best solar incentives in the country that make the upgrade more feasible, and with the right combination of rebates and tax incentives, you could save a lot of money on the initial installation costs. The average Connecticut homeowner could save more than $42,000 throughout their solar system’s life.

In this article, we’ll cover Connecticut’s solar incentives, explaining how to take advantage of the state’s incentives and how much you can save.

How Does Connecticut Rank for Solar Incentives?

Connecticut offers more solar incentives than most states, which is good news because the cost per watt of going solar in Connecticut is $2.80, $0.14 higher than the national average of $2.66. Connecticut residents also have more to gain by switching to solar than the residents of most states, since the average monthly utility bill is a staggering $161.55. That’s about $44 higher than the national average.

The table below summarizes all the available solar incentives in Connecticut, including a rough estimate of how much money each could save you. The following sections will break down how each program works and the eligibility requirements.

Federal Solar Investment Tax Credit (ITC)

The IRS runs a federal investment tax credit (ITC) program for solar and other clean energy systems. This is perhaps one of the best solar incentives in the country since you can claim up to 30% of your new solar system’s cost as a credit for the installation year. There is no annual or lifetime limit should you decide to make future energy efficiency upgrades.

An important point that some people miss about the ITC is that it is a nonrefundable tax credit, not a tax rebate. That means that you must owe taxes to take advantage of the incentive. You won’t receive a refund if the credit you claim exceeds your actual tax liability. However, you can roll over the credit and apply it to your tax liability in the following year.

The federal ITC is scheduled to phase out by 2032 unless Congress extends it. That gives you some time to claim the tax credit, but you should do so sooner than later. The longer you wait, the lower the amount you can claim. After December 31st, 2032, this is timeline for the ITC’s phase-out:

• 30% of your total system value for solar photovoltaic (PV) systems installed before 1/1/2033
• 26% of your total system value for solar PV systems installed after 12/31/2032 and before 1/1/2034
• 22% of your total system value for solar PV systems installed after 12/31/2033 and before 1/1/2035
• ITC discontinued for systems installed after 12/31/2034

How To Claim the Federal Solar Tax Credit in Connecticut

Claiming the federal ITC in Connecticut is relatively easy, but you should consult a certified public accountant (CPA) to be safe. You or your tax preparer will complete and submit Form 5695 with your tax returns for the year you installed your solar panels. Don’t forget to add the tax credit to line 5 of your 1040.

Connecticut’s State-Level Solar Incentives

Connecticut residents are lucky to live in a state with comprehensive solar incentive programs. The federal ITC is the largest incentive available, but Connecticut’s state-level incentives help reduce the cost of going solar even further.

The three main solar incentives available at the state level in Connecticut are Smart-E loans, property tax exemptions, and sales tax exemptions.

Smart-E Loans

Many homeowners have to finance their solar power system with a solar loan, but finding financing programs with reasonable rates can be challenging. The Connecticut Green Bank, together with Energize Connecticut, have created the Smart-E loan program to solve the problem. Going through this program makes it much easier to find low-interest loans that save you money compared to a traditional private bank loan.

You can take out a Smart-E loan to fund any of the following items:

• Solar photovoltaic (PV) arrays and systems
• Solar hot water systems
• Electric vehicle (EV) charging stations
• Other non-solar energy efficiency upgrades

Smart-E Loan Qualifications and Terms

To qualify for the Smart-E Loan program, Connecticut residents must own and live in a single-family or multi-family home with no more than four units. In 2023, the Connecticut Green Bank updated the minimum FICO credit score requirement to 580.

Smart-E Loans come in amounts from $500–$40,000. As of 2024, rates range from 6.99% to 7.99%, and terms last 5–20 years. Not every participating Smart-E lender will offer the longest terms.

How To Apply for a Connecticut Smart-E Solar Loan

If you meet the eligibility requirements, you can apply for a Smart-E loan on the Capital for Change website. Have the details of your solar project ready. They need to meet certain efficiency requirements to be eligible for a loan.

If you’re approved, Capital for Change will set up your payment plan and disburse funds directly to your installer.

Property Tax Exemption for Renewable Energy Systems in Connecticut

Solar panels typically increase your home’s property value, which normally would mean your property taxes go up. However, Connecticut offers an exemption that excludes renewable energy systems’ value from property tax assessments.

A 2019 Zillow study found that average solar panels increase a home’s value by about 4.1%. That could add to several thousand dollars in property tax savings over your new solar panels’ lifespan.

How To Claim Connecticut’s Solar Property Tax Exemption

While the solar property tax exemption is a state-wide policy in Connecticut, you participate in the program at the local level. That means the process of claiming the exemption differs based on where you live.

In general, you’ll have to apply for the exemption by filing the necessary paperwork with your local tax assessor. You should file your exemption claim before November 1st if you want the exemption to apply to the current tax year. If you’re having trouble finding your local tax assessor, you can use the spreadsheet at this link to find it.

Once you apply for the exemption, you don’t have to reapply every year. You’re done once your system has been inspected and deemed eligible for the property tax exemption.

Connecticut Solar Sales Tax Exemption

Connecticut is one of the many states that doesn’t charge sales tax on solar panels. While this probably won’t make or break your ability to purchase a solar energy system, it can help lower your out-of-pocket costs by several hundred dollars.

The average cost of solar panels in Connecticut before any incentives or rebates is $16,699 according to Angi. At Connecticut’s 6.35% state sales tax rate, the average solar customer saves about $1,060 on sales tax when they purchase a system in the state.

Steps To Claim Connecticut’s Solar Sales Tax Exemption

You might think your solar purchase is automatically exempt from sales tax, but unfortunately, that’s not the case. To claim the solar sales tax exemption, you must submit a copy of Certification Form CERT-140 to the seller when you purchase the system.

Your solar salesperson should walk you through the process. However, if they don’t advise you of the sales tax exemption, you should remind them.

What Solar Incentives Are Offered at the Local Level in Connecticut?

Connecticut’s state-level incentives are great, but the state also has several local incentives that city and county governments offer their residents. Here’s a quick rundown of Connecticut’s best local incentives:

• PACE Financing Programs: Property Assessed Clean Energy (PACE) financing lets Connecticut residents go solar with zero up-front costs using a government loan. The loan gets paid back through increased property taxes, which means it gets transferred to the new owner if you sell your house. Local governments handle these programs, so the details and application process vary based on where you live.
• Building Permit Fee Waivers: The State of Connecticut allows local governments to pass laws exempting some renewable energy projects from permit fees. These fees can cost anywhere between $50 and $150, depending on where you live. Your solar installation company should be able to help you determine whether your local government waives permit fees for home solar projects.
• Shared Clean Energy Facility (SCEF) Program: Connecticut public utilities providers Eversource and United Illuminating administer a community solar program that makes solar power accessible to residents who cannot or choose not to install rooftop solar on their homes. These shared facilities help reduce the state’s reliance on fossil fuels while simultaneously saving homeowners money on energy costs by letting them purchase energy from localized shared solar installations. The availability of SCEF programs and community solar varies throughout the state.

Can You Profit From Net Metering in Connecticut?

Net metering, or net energy metering (NEM), is a program that lets you sell the excess energy your solar panels generate back to the grid for a credit. You can then use that credit to offset your electric bill when your panels aren’t producing energy, such as at night or on cloudy days.

The best net metering programs pay customers at the retail rate, which is the price you pay when you purchase energy from your electric company. Unfortunately, many states, including Connecticut, are moving away from full retail rate net metering as local governments react to increased customer demand for solar.

The biggest change to Connecticut’s net metering policy, which it calls the Residential Renewable Energy Solutions program, takes effect after December 31, 2027. If you install a solar system before then, you can choose between two different compensation schemes: Buy-All or Netting.

How much you get paid for your system’s excess energy production depends on what electric company you have, which rate structure you choose, and whether or not you live in a low-income household or a distressed municipality. The following table breaks down the various combinations:

These numbers might be a bit confusing, so it helps to have a concrete example. If you choose the Buy-All rate structure and subscribe to Eversource or United Illuminating, you earn $0.2943 per kilowatt-hour (kWh) for the extra energy your solar system produces. The average 7.5-kW system produces roughly 625 watts per month, which means you earn $183.94 minus how much energy your home uses.

Connecticut’s decision to replace its net metering program with the Residential Renewable Energy Solutions tariff program is causing some residents to consider adding energy storage to their system by installing a solar battery. It is unclear what the net metering or net billing policy will be in Connecticut after 2027, so having your own battery storage solution is a great way to be able to use the excess energy your system produces.

Steps To Enroll in Net Metering in Connecticut

Your solar installer will connect your solar panels to the electric grid and sign you up for the program, so you don’t have to do anything yourself. If you’re interested in what the interconnection process entails, you can find the relevant information here for Eversource and here for United Illuminating.

Watch Out for Solar Incentive Scams in Connecticut

As residential solar continues to grow in popularity, you must be more careful to avoid the increasing number of solar incentive scams. Most scams are easy to avoid if you know what to watch out for. Here are the three types of scams you’re most likely to encounter in Connecticut.

• Fake incentives: The most common type of scam you’ll see is a fake incentive scam. The scammer solicits solar customers to apply for an enticing incentive, charging a small application fee. However, the incentive doesn’t really exist, and you never hear from the scammer again after you pay the application fee. You can avoid this scam by researching solar incentives and going through official channels for any incentives you apply for. Your solar installer should help you find and apply for the incentives you qualify for.
• Overcharging for equipment: Some low-quality solar companies charge exorbitant prices for solar installations, preying on homeowners who don’t know any better. The average cost of a solar panel array in Connecticut is $16,699 before incentives. If you get a quote much higher than that, shop around to see if you can get a better deal elsewhere. Start your company search with this curated list of the best solar installers in Connecticut.
• Exaggerated incentives: This is less insidious than a fake incentive scam, but it’s also more difficult to detect if you don’t know what to look for. Some companies will exaggerate how much money you can save with solar panels by misrepresenting the price of their solar systems to include the money you’ll save after incentives. Get a detailed breakdown of the total cost of your solar system—including installation costs—before you sign a contract.

For more information, read our guide on how to avoid solar panel scams.