Federal Incentive Layer
Residential Clean Energy Credit (Section 25D)
The primary driver for residential solar ROI in 2024 is the federal Investment Tax Credit (ITC), officially known as the Residential Clean Energy Credit. Under current federal law, eligible homeowners can claim a tax credit equal to 30% of the total cost of a qualifying solar photovoltaic (PV) system.
- Scope: Applies to materials, labor, and related equipment (including battery storage).
- Mechanism: A non-refundable tax credit that reduces your federal income tax liability.
- Carry-Forward: If your credit exceeds your tax liability in year one, the remainder can currently be carried forward to subsequent tax years.
Texas State-Level Policy
Property Tax Exemption (Tax Code §11.27)
Texas provides a significant incentive through Tax Code Section 11.27, which offers a 100% property tax exemption on the appraised value added by a solar energy device. While installing solar increases the market value of your home, this value is excluded from your annual property tax assessment, preventing an increase in your recurring tax burden.
Sales Tax Treatment
Solar installations in Texas are exempt from state and local sales tax. This exemption applies directly to the purchase of qualifying solar equipment, effectively reducing the initial capital requirement by up to 8.25% depending on your local jurisdiction.
Avoided Cost & Export Framework
In Texas's deregulated market (ERCOT), there is no statewide mandate for 'Net Metering'. Instead, the financial value of excess solar energy sent back to the grid is determined by your Retail Electric Provider (REP).
Modeling Note
GetSunScore models 'Avoided Cost' based on publicly available EIA residential rate benchmarks for Texas (2024 reference year). We do not assume 1-to-1 net metering, as this is not a guaranteed feature in the Texas market. Analysis includes delivery charges that remain regardless of solar production.
Interconnection Framework
The physical connection of your solar system to the grid is managed by your Transmission and Distribution Utility (TDU), such as Oncor, CenterPoint, or AEP Texas. TDUs follow Public Utility Commission of Texas (PUCT) Rule 25.242, which outlines the technical and administrative requirements for distributed generation interconnection.
Frequently Asked Questions — Incentives
The federal Residential Clean Energy Credit (ITC) allows homeowners to claim a tax credit equal to 30% of their solar installation costs. In Texas, this applies to the net system price including panels, inverters, and labor. As a non-refundable tax credit, it can reduce your federal tax liability dollar-for-dollar, but it is not a direct cash rebate. Any unused credit can currently be carried forward to future tax years under existing IRS rules (2024 reference).
Yes. Under Texas Tax Code Section 11.27, the appraised value added to your home by a solar energy device is 100% exempt from property taxes. This ensures that the increase in home value resulting from a solar installation does not result in higher annual property tax bills. This is a statewide exemption available to all Texas homeowners.
No. Texas does not have a mandatory statewide net metering law for its deregulated (ERCOT) markets. Instead, solar export compensation — often referred to as 'solar buyback' plans — is offered voluntarily by individual Retail Electric Providers (REPs). The value of your exported solar energy depends entirely on the specific REP plan you select and is typically based on 'avoided cost' benchmarks or real-time wholesale energy prices.
Texas provides a 100% sales and use tax exemption for solar energy equipment. This means that qualifying solar panels, racking, inverters, and related system components can be purchased without paying the typical state and local sales tax (currently up to 8.25%), provided the proper exemption certificate is used during the transaction.
Incorporating Incentives into SunScore™
SunScore™ projections layer these incentives into a multi-year economic model. While the 30% ITC is treated as a scenario variable, the property tax exemption is applied to the long-term ROI forecast to reflect Texas-specific legal protections.