Updated On

January 15, 2025

Why You Can Trust Us

Today’s Homeowner exists to help you maintain or improve your home safely and effectively. We uphold strict editorial standards and carefully vet the advice and resources referenced in our articles. Click below to learn more about our review process and how we earn money.

Learn More

    If you’re a homeowner in the Lone Star State who’s worried about rising electrical costs, you’re not alone. A solar energy system that harnesses Texas’s sunny weather is a great way to save on utility bills, at least after the initial installation costs. In this guide, you’ll learn the federal, state, and local financial incentives that can make the upgrade easier.

    Government-Run Solar Incentives and Tax Credits in Texas

    Some solar incentive programs in Texas are run by the state and federal government. These programs will often net you the most savings.

    Federal Solar Investment Tax Credit (ITC)

    Texas residents may qualify for a federal tax credit for up to 30% of the value of new solar energy equipment until 2032, with no annual or lifetime limit. This credit can save you a good chunk of money off your income taxes, and it’s created revenue and jobs for the U.S. solar industry since Congress enacted it in 2006.

    If you’re eligible for the ITC, you can claim it by filing Form 5695 with your federal returns. The catch is that this credit is nonrefundable. If the amount you’re claiming exceeds your tax liability, you can’t receive a refund for the difference.

    Texas Solar Property Tax Exemption

    Solar panels can give your property value a healthy boost, and in Texas, they also won’t increase your property taxes. That means you can exclude your solar energy system’s value at appraisal from your property’s assessed value.

    This exemption is not an automatic one. If your solar contractor didn’t fill out the paperwork for you, you’ll need to submit documentation about your new system to your local assessor before the deadline. Once you’re approved for the exemption, you can receive it each year for the life of the system.

    Net Metering in Texas

    Net metering isn’t mandatory in Texas, but TXU Energy and many other electric companies offer it to their customers. That means you can earn compensation for the surplus energy you generate with your solar panels and send back to the grid. Some homeowners offset the cost of power drawn from the electric grid with net metering, while others build a zero net energy system that’s completely self-sustainable.

    Contact your utility company to see what net metering options it offers to solar customers.

    Solar Rebate Programs in Texas

    Besides net metering, local utilities offer rebates you can claim when you purchase your solar energy system. Here are just a few:

    • American Electric Power (AEP) Solar Rebate: If you get your energy from AEP, you may qualify for a cash incentive between $2,500 and $8,500 based on your solar system’s kilowatt capacity.
    • CPS Energy Solar Rebate: CPS Energy customers may also qualify for a $2,500 to $8,500 rebate for new solar equipment. How much you can receive will depend on the system’s size, your location, and your income.
    • Austin Energy Solar Rebate: If you live in Austin, you may qualify for a per-kilowatt rebate on new solar panels.
    • Oncor Solar Rebate: Oncor provides rebates for solar installations within its service area. Like other local programs, how much you can receive depends on your new system’s size and specifications.

    Why Go Solar in Texas?

    Solar is the perfect energy source for a state that gets a lot of sun. Texas averages over 300 sunny days per year, which is leaps and bounds higher than the American average of 205 days per year. It’s therefore no surprise that the Lone Star State ranks second in the country for solar energy system installations.

    Most solar panels last 25 to 30 years. Once you’re finished paying off a solar loan, the system essentially provides free electricity for the remainder of its life span. That translates to low energy costs in a state where utility bills are above the national average. Learn more about how solar panels help you save.

    Finally, solar panels can dramatically increase your home’s value. According to a Zillow study, the average U.S. home appreciated by 4.1% after adding solar. That’s close to $9,274 in new value exempt from property taxes.

    Texas Solar Cost

    According to Angi, the average total cost of solar installations in Texas is between $20,274 and $37,692. Your cost per watt depends on the type of solar panel you choose, and can range from $0.70 to $1.50.

    More wattage means a more expensive system. However, with energy bills increasing amid high oil and gas prices, the relative cost of solar may decline further.

    Check out our detailed overview of solar panel costs.

    Texas Solar Incentives FAQs

    Is solar worth it in Texas?

    Yes, you should invest in solar energy in Texas. Solar will save you a load of money on your utility bills and help reduce your production of emissions and your carbon footprint. Plus, various federal, state, and local financial incentives are available in Texas to make purchasing solar panels accessible to anyone.


    How much will my electricity bill go down with solar in Texas?

    Texas homeowners can save between $65 and $100 per month on electricity costs after paying back the cost of purchasing and installing a solar panel system that meets 50% or more of their energy needs. People who have invested in a solar energy system in Texas save as much as $16,803 on their energy bills over 20 years.

    With a payback period of just over 12 years, you can save thousands of dollars per year in almost half a decade. Over the 20 to 25-year lifetime of your solar photovoltaic equipment, you will experience loads of savings.


    How much does it cost for solar panels in Texas?

    The average total cost of solar installations in Texas is $13,450 for a 5-kilowatt (kW) system. On a cost-per-watt basis, solar panel installation in Texas is $0.70 to $1.50. These costs have come down significantly in recent years, and they are well below the American average of $3.03 per watt.


    Can you get solar panels for free in Texas?

    While it is not likely that you’ll find solar panels for free, Texans are fortunate to have the support of numerous federal, state, and local financial incentives that will help to lower the cost of purchasing a new solar energy system.


    What solar rebates are available in Texas?

    There are many federal, state, and local financial incentives for purchasers of solar energy systems in Texas. These include the federal government’s Solar Investment Tax Credit (ITC), the Texas Property Tax Exemption, and many local and private incentives.


    How many homes in Texas have solar panels?

    There is enough solar installed in Texas to power over 1.6 million homes, which accounts for 3.75% of the state’s electricity production.


    Do solar panels increase property taxes in Texas?

    Texas will exempt property taxes on the added value to your home that comes with installing a solar energy system. This is another excellent reason to invest in solar. However, you’ll need to submit application paperwork to qualify.


    How much can you write off for solar panels on taxes in Texas?

    Texas taxpayers are eligible for a rebate of up to 30% of the total cost of their solar power system. This rebate extends to both homeowners and business owners.


    More Resources for California Homeowners

    Editorial Contributors
    avatar for Alora Bopray

    Alora Bopray

    Staff Writer

    Alora Bopray is a digital content producer for the home warranty, HVAC, and plumbing categories at Today's Homeowner. She earned her bachelor's degree in psychology from the University of St. Scholastica and her master's degree from the University of Denver. Before becoming a writer for Today's Homeowner, Alora wrote as a freelance writer for dozens of home improvement clients and informed homeowners about the solar industry as a writer for EcoWatch. When she's not writing, Alora can be found planning her next DIY home improvement project or plotting her next novel.

    Learn More

    photo of Roxanne Downer

    Roxanne Downer

    Editor

    Roxanne Downer is a commerce editor at Today’s Homeowner, where she tackles everything from foundation repair to solar panel installation. She brings more than 15 years of writing and editing experience to bear in her meticulous approach to ensuring accurate, up-to-date, and engaging content. She’s previously edited for outlets including MSN, Architectural Digest, and Better Homes & Gardens. An alumna of the University of Pennsylvania, Roxanne is now an Oklahoma homeowner, DIY enthusiast, and the proud parent of a playful pug.

    Learn More

    Top Solar Pros in Texas Cities