Solar incentives and financing in California, as of 2026
The rules changed materially in 2025 and 2026, and most of what is written online now describes programs that have ended. This page is the current position, dated, with the deadlines spelled out.
Where things stand, as of August 2026
Two thousand twenty-five and 2026 were unusually eventful for solar policy. A federal tax act rewrote the credits, a California property-tax provision moved toward its sunset, and the net-metering change from 2023 has now fully worked through the market. The result is that a lot of what you will read online — and a lot of what salespeople still say — is describing rules that no longer exist.
Here is the current picture in one table.
LADWP’s own programs are in LADWP solar rebates and programs. Installed-cost context is in the home solar, home battery and panel upgrade cost guides.
| Program | Who it applies to | Status as of August 2026 | Key date |
|---|---|---|---|
| Section 48E clean electricity investment credit | Businesses and third-party system owners | Available, with new restrictions | Begin construction before Jul 5, 2026, or placed in service by Dec 31, 2027 |
| Section 25D residential clean energy credit | Homeowners buying their own system | Ended | Systems placed in service after Dec 31, 2025 do not qualify |
| MACRS + 100% bonus depreciation | Businesses | Available; bonus depreciation made permanent | Property acquired after Jan 19, 2025 |
| California property tax exclusion (R&TC §73) | All California property owners | Available, approaching sunset | System completed before Jan 1, 2027 |
| Net Billing Tariff (NEM 3.0) | PG&E, SCE and SDG&E customers | In effect since Apr 15, 2023 | NEM 2.0 customers keep grandfathered terms for 20 years |
| Self-Generation Incentive Program (SGIP) | Storage customers in participating utility territories | General market closed; only the Residential Solar and Storage Equity (AB 209) budget accepts applications, and it is fully reserved with new applications wait-listed | New applications to that budget are wait-listed |
| Title 24 Part 6 (2025 Energy Code) | New construction | An obligation, not an incentive | Effective Jan 1, 2026 |
This is information, not tax advice
Current Energy is a licensed contractor, not a tax advisor, attorney or financial adviser. Everything on this page is a plain-English summary of publicly available federal and California programs as they stood on August 21, 2026, and these rules change — sometimes quickly. Confirm anything that affects a real decision with your CPA or tax counsel. We will supply whatever project documentation they ask for.
The federal credit, split two ways
For businesses: Section 48E
The clean electricity investment credit survived the 2025 tax act, but with a compressed timeline and new sourcing conditions. The practical position now is that a project which did not begin construction before July 5, 2026 generally needs to be placed in service by December 31, 2027. Foreign-entity ownership and material-assistance requirements also apply to project equipment, with thresholds tightening over the remaining years.
For a commercial project starting today, that means the in-service deadline is the binding constraint — and given that engineering, plan check, interconnection and construction all take real time, it is closer than it sounds.
For homeowners: Section 25D has ended
The residential clean energy credit ended for systems placed in service after December 31, 2025. Eligibility depended on completion, not on when a contract was signed, so systems finished in 2026 do not qualify regardless of when they were sold.
The remaining route to federal value for a home is third-party ownership — a lease or power purchase agreement in which the system’s owner claims the commercial credit and reflects it in your rate. You do not claim it, and the benefit is indirect. We would rather explain that clearly than let you find out later.
California's property tax exclusion — the deadline nobody mentions
Normally, adding significant new construction to a property triggers a reassessment and a higher property-tax bill. California’s active solar energy system exclusion under Revenue & Taxation Code §73 prevents that for qualifying solar.
As the statute currently reads, the exclusion applies to systems completed before January 1, 2027. For a homeowner this is a useful saving. For an owner adding a large array across a commercial portfolio or a multifamily site, it can be the largest single number in the analysis — and because it is tied to completion rather than contract date, a project started too late misses it even if everything else goes right.
Sunset dates have been extended by the legislature before and could be again. We confirm the current position before any client relies on it.
What NEM 3.0 does to the arithmetic
Since April 15, 2023, new solar customers of PG&E, Southern California Edison and SDG&E have been on the Net Billing Tariff. Exported energy is credited at hourly values; SCE’s 2026 averages run from about $0.03 to $0.21 per kWh by season and hour, rather than at retail. Energy consumed on site still avoids the full retail rate, which in Southern California is several times higher.
Everything follows from that asymmetry. Batteries, load shifting, scheduled water heating and EV charging aligned to production are no longer refinements; they are how the project earns its return. Customers who interconnected under NEM 2.0 keep those terms for twenty years from their permission-to-operate date, and that grandfathering transfers with the property on sale.
More detail: NEM 3.0 explained.
How projects get paid for
| Structure | Up-front cost | Who owns it | Who takes the tax benefit | Suits |
|---|---|---|---|---|
| Cash | Full | You | You | Owners with capital and tax appetite; lowest lifetime cost |
| Loan / equipment finance | Low | You | You | Owners who want the asset without the outlay |
| Lease | None | Third party | Third party | Homeowners and entities without tax appetite |
| Power purchase agreement | None | Third party | Third party | Non-profits, municipalities, businesses preserving capital |
| Feed-in Tariff | Full | You | You | Sites with roof or land but limited on-site load, selling generation on a long-term contract |
We model these side by side for every project rather than presenting one. The right structure is a function of your tax position and your cost of capital, and it is not our place to decide either.
Questions we get asked
Is there still a 30% solar tax credit in 2026?
It depends entirely on who owns the system. For businesses, the Section 48E clean electricity investment credit still exists, but projects that did not begin construction before July 5, 2026 generally must be placed in service by December 31, 2027, and foreign-entity sourcing rules now apply. For homeowners buying a system outright, the Section 25D residential credit ended for systems placed in service after December 31, 2025. A homeowner can still see indirect benefit through a lease or power purchase agreement, where the third-party owner claims the commercial credit and prices it into the rate.
What is the California property tax exclusion?
Revenue & Taxation Code §73 excludes the value of an active solar energy system from the property-tax reassessment that new construction would normally trigger. As the statute currently reads, it applies to systems completed before January 1, 2027. On a large commercial or multifamily array this is frequently one of the biggest financial line items, and it is the deadline most owners have not heard about.
Can I still get money back on a battery?
The general market budget is closed. Since December 31, 2025, new applications are accepted only to the Residential Solar and Storage Equity (AB 209) budget, which is fully reserved; new applications are wait-listed.
Does depreciation matter for a business?
Substantially. Commercial solar is generally recovered over a five-year MACRS schedule, and the 2025 federal tax law made 100% bonus depreciation permanent for qualifying property acquired after January 19, 2025. For a profitable entity the depreciation benefit can rival the tax credit itself. This is exactly the kind of thing to model with your CPA, not to estimate from a website.
Deadlines are easier to hit if you start the clock now.
Engineering, plan check, interconnection and construction all take real time. If a 2027 in-service date matters to your project, the useful conversation is this quarter, not next year.