Solar Incentives & Tax Credits in California
Federal tax credits, state rebates, and local programs that put thousands back in your pocket.
The 30% Federal Investment Tax Credit (ITC)
The federal Investment Tax Credit is the single largest incentive available for residential solar. Thanks to the Inflation Reduction Act signed in August 2022, homeowners who install solar panels can claim 30% of the total system cost as a dollar-for-dollar credit on their federal income taxes.
Unlike a deduction, a tax credit reduces the actual amount of tax you owe. If your solar installation costs $25,000, you receive a $7,500 credit. If your tax liability that year is lower than the credit amount, the remaining balance rolls forward to the next tax year.
30%
Through 2032
26%
In 2033
22%
In 2034
The ITC covers more than just panels. Solar battery storage systems, inverters, wiring, mounting hardware, and even a portion of your installation labor qualify. There is no cap on the credit amount for residential systems, meaning larger installations receive proportionally larger credits.
California-Specific Solar Incentives
Beyond the federal tax credit, California offers several programs designed to make solar and battery storage more accessible. These vary by utility provider and household income.
SGIP Battery Rebates
The Self-Generation Incentive Program provides rebates for battery storage systems. Homeowners in PG&E, SCE, or SoCalGas territory can receive incentives that cover a significant portion of battery costs. Rebate amounts vary by utility and budget availability, typically ranging from $150 to $1,000+ per kWh of storage capacity.
DAC-SASH Program
The Disadvantaged Communities - Single-Family Solar Homes program provides fully subsidized solar installations for income-qualifying homeowners in designated communities. Many neighborhoods in Kern County and the Central Valley qualify. Our team can check your eligibility during your free consultation.
Local Utility Rebates
Utilities like PG&E, Southern California Edison (SCE), and SDG&E periodically offer additional rebates and incentive programs. These vary by region and budget cycle. In the Central Valley, PG&E customers may access time-of-use rate plans that maximize the value of solar generation during peak hours.
Solar Won't Raise Your Property Taxes
California's Active Solar Energy System Exclusion means that adding solar panels to your home does not increase your property's assessed value for tax purposes. While solar typically adds $15,000 to $25,000 in home value according to national studies, you pay zero additional property tax on that increase.
This exclusion applies to both new construction and retrofit installations. It covers solar electric (photovoltaic) systems, solar thermal systems, and qualifying battery storage paired with solar. The exclusion is automatic -- you do not need to file a separate application with your county assessor.
What This Means For You
- Home value increases by an average of 4.1% with solar
- No increase in annual property tax bill
- Exclusion applies automatically -- no paperwork required
- Covers solar panels, inverters, and paired battery storage
NEM Credits for Excess Energy
When your solar panels generate more electricity than your home uses, that surplus energy flows back to the grid and earns you bill credits from your utility. This net energy metering policy allows most California solar homeowners to offset a significant portion -- sometimes all -- of their electric bill.
California's current NEM 3.0 framework (Net Billing Tariff) values exported energy based on the time of day and grid conditions. Pairing solar with battery storage lets you store daytime generation and use it during expensive peak evening hours, maximizing the financial value of every kilowatt-hour your system produces.
For a detailed breakdown of how NEM works and strategies to maximize your credits, see our complete guide to net metering in California.
How to Claim Your Solar Incentives
Claiming your federal tax credit and state incentives is straightforward. Here is the process from start to finish.
Install Your System
Work with a licensed installer like Solar Center by Dura-Foam. We handle all permitting, interconnection paperwork, and utility coordination.
Receive Documentation
After installation, we provide your final contract, itemized receipt, and certification documents. Keep these for your tax records.
File IRS Form 5695
When you file your federal taxes, complete IRS Form 5695 (Residential Energy Credits). Enter your total system cost and calculate 30% as your credit.
Apply State Incentives
SGIP and other state programs are typically applied for during installation. We submit applications on your behalf and track approval status.
Total Savings for a Typical Bakersfield Home
Bakersfield averages over 270 sunny days per year, making it one of the best locations in the country for solar energy production. Here is what a typical residential installation looks like after all incentives are applied.
This example assumes a 7.5 kW system for a home with a $200/month average electric bill. Actual savings depend on your roof orientation, shading, energy usage, and chosen equipment.
Sample Savings Breakdown
Estimates based on average Bakersfield energy costs and solar production. Your results may vary. Contact us for a personalized quote.
Solar Incentive FAQs
Can I claim the federal tax credit if I finance my solar system?
What happens if my tax liability is less than the credit amount?
Do battery storage systems qualify for incentives too?
Is there a deadline to take advantage of the 30% tax credit?
Find Out Exactly How Much You Can Save
Every home is different. Let our team calculate your specific incentives, tax credits, and projected savings based on your actual energy usage and roof.
Get a Personalized Incentive Estimate
Tell us about your home and we will calculate the exact incentives and credits available to you.
Request Your Free Incentive Estimate
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