California Solar Tax Credit: What's Still Available in 2026

If you've been putting off going solar and now you're wondering whether you missed your window: the 30% federal tax credit homeowners used to count on is gone as of January 1, 2026. That's not the whole story, though. California still runs its own set of incentives, businesses can still claim a federal credit worth up to 50%, and thanks to a quirk in how the credit phased out, plenty of people who installed in 2025 can still claim the old 30% on the return they're filing right now. Here's what applies to you.

All California Incentives in 2026, At a Glance

This is where California homeowners still have real options, federal credit or not. None of these programs disappeared with the OBBBA — they're state, county, and utility programs, governed by different rules entirely. Coverage varies a lot by where you live, so confirm current status with the linked source before budgeting around any one line.

SOMAH's rate depends on whether the system is tenant-benefiting or common-area, and whether the project also claims federal tax credits — the $3.50/W and $1.10/Wh figures are the top of the range.

Rebates by Utility

Which rebates you can actually get often comes down to who bills you every month. Here's the honest breakdown for the five biggest utilities in the state.

PG&E

PG&E doesn't run its own solar or battery rebate — it administers SGIP for its territory rather than offering a PG&E-branded incentive. Through SGIP, PG&E customers can apply for the General Market rebate (covers roughly 15% of battery installation cost) or the Equity Resiliency rebate (80–100% for households in high fire-threat or PSPS-affected areas), funding permitting. Net billing (NEM 3.0) is the ongoing mechanism for solar exports.

SCE

Same setup as PG&E: no standalone SCE rebate. SCE administers SGIP for its own territory, offering the same General Market and Equity Resiliency tiers, and its customers fall under NEM 3.0 net billing for solar exports.

SDG&E

SDG&E doesn't administer SGIP itself — that's handled by the Center for Sustainable Energy (CSE) via sgipsd.org for the SDG&E service territory. Otherwise, the picture is the same: no SDG&E-branded cash rebate, and NEM 3.0 net billing for exports.

SMUD

SMUD is a municipal utility, not one of the three big investor-owned utilities, so none of the above applies. It runs its own battery incentive — up to $10,000 per household through the My Energy Optimizer Partner+ program, if you enroll within 90 days of getting Permission to Operate — and sets its own solar export rate (around 9.6¢/kWh) rather than following NEM 3.0.

LADWP

Also a municipal utility. LADWP offers a direct residential solar rebate of $0.30/W, capped at $6,000, and — unlike the rest of the state — LADWP customers still get full retail-rate net metering rather than NEM 3.0's lower export rate.

Federal Solar Tax Credit: What Changed in 2026

The 30% federal credit for residential solar (Section 25D) was supposed to step down gradually through 2034. Instead, the One Big Beautiful Bill Act, signed July 4, 2025, eliminated it outright for expenditures made after December 31, 2025.

One detail matters here: eligibility hinges on when your system's installation was completed, not when your utility approved interconnection (Permission to Operate). Utility paperwork can lag installation by weeks or months, so a system installed and running before the end of 2025 may still qualify even if PTO came through in 2026 — check with a tax professional if your situation falls near that line.

If your installation finished before 2026, you can still claim the full 30% on your 2025 return using IRS Form 5695 (with the credit added to Schedule 3, Form 1040) — whether you're filing on extension or need to file an amended return.

Commercial Solar Tax Credit (Section 48E)

Read also

U.S. Climate Bill: 30% Solar Tax Credit comes back

Businesses, nonprofits, and landlords who own a solar installation can still claim Section 48E — up to 30% of costs once prevailing-wage requirements are met (the statutory base rate is 6%), with bonus adders that can push it toward 50%.

Two deadlines matter, and one has already passed: projects that began construction before July 4, 2026 locked in the current rules under a multi-year safe harbor. Starting later means the only path left is getting the system placed in service by December 31, 2027 — a much tighter runway. A separate, earlier threshold (construction beginning after December 31, 2025) triggers foreign-sourced-component restrictions regardless of which side of the July 2026 cutoff a project falls on.

This isn't a path for homeowners installing panels on their own house — it's for businesses and landlords who own the system as a commercial asset. If you lease your system instead of owning it, the leasing company claims a version of this credit, not you. These rules are still being clarified through IRS guidance, so confirm current requirements with a tax professional before locking in a project timeline.

Is Solar Worth it in California in 2026?

For most homeowners, yes — but a battery is what makes the math work under NEM 3.0, not an optional add-on. Here's the actual arithmetic, using A1 SolarStore's own system pricing rather than a national average.

The two numbers that decide your payback period are your self-consumption rate (how much of your solar power you use directly, at the full $0.38/kWh retail rate, versus how much you export at NEM 3.0's ~$0.08/kWh) and your upfront cost. Without a battery, a typical California household self-consumes roughly 25–35% of what it generates — most solar production happens midday, while most household demand happens morning and evening. Add a battery to shift that midday surplus into the evening, and self-consumption typically rises to somewhere around 65–75%. Your own numbers will vary by roof size, household schedule, and appliance mix, so treat these as planning ranges, not a guarantee.

The table below applies those ranges to A1 SolarStore's roof-mounted, string-inverter system pricing at three common sizes, assuming CA's statewide average solar production of roughly 1,600 kWh per installed kW per year:

Assumes $0.38/kWh average CA retail rate, ~$0.08/kWh average NEM 3.0 export credit, 30% self-consumption without a battery and 70% with one. Actual payback depends on your utility's rate schedule, your household's usage pattern, and your specific quote.

The pattern holds across all three sizes: adding a battery raises the upfront cost by roughly 15%, but cuts the payback period by more than two years, because it lets you keep power you'd otherwise sell back at a quarter of its retail value. That gap would close further with a Self-Generation Incentive Program (SGIP) rebate toward the battery — but as of this writing, every SGIP track (General Market, RSSE, and Equity Resiliency) is fully reserved or waitlisted, so budget the numbers above without counting on it, and treat any SGIP rebate as a bonus if your installer gets you off the waitlist. Get a detailed, itemized quote before committing — it's the only way to see how your own roof, usage, and utility rate plan change this math.

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Andrei Gorichenskii

Senior Editor

Andrei has been a news editor and freelance writer for a number of medias before joining the A1 SolarStore. Climate change and its impact on people's lives have always been among his interests and it partially explains his degree in Philosophy and Ethics.

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