California solar tax benefits and incentives in 2026

The short answer: a California home solar or battery system installed in 2026 gets no federal tax credit, and California has no state income tax credit for it. The main state tax benefit, a property tax exclusion that keeps new solar from triggering reassessment, becomes inoperative on January 1, 2027, though homes that already have it keep it until they are sold. Income-qualified households may be able to get an SGIP incentive for solar and batteries.

Last checked: October 26, 2026. We are not tax advisers, and this is general information, not tax advice.

Key takeaways

• Federal credit: none for a system you own that is installed in 2026 or later, batteries included.
• State income tax credit: none. The Franchise Tax Board’s list of personal credits includes no solar or battery credit.
• Property tax: the active solar energy system exclusion becomes inoperative on January 1, 2027. Systems already excluded stay excluded until a change in ownership.
• SGIP: the CPUC’s Residential Solar and Storage Equity budget is for low-income residential customers. Funding steps open and close, so check the tracker.
• Leases and PPAs: the system owner may claim a federal business credit within strict deadlines; you do not.

What ended at the federal level

The 30% federal Residential Clean Energy Credit (section 25D) ended under Public Law 119-21 for “any expenditures made after December 31, 2025.” The IRS treats an expenditure as made when installation is completed, so paying in 2025 for a system completed in 2026 does not qualify. Batteries of at least 3 kilowatt-hours were covered from 2023 and ended at the same time.

If a 2026 proposal still subtracts a federal credit from the price, ask for a corrected quote. Our guide to solar tax benefits in 2026 covers the federal rules in more detail.

Property tax: the section 73 exclusion is ending for new systems

California’s constitution (Article XIII A) normally has new construction reassessed, but it lets the Legislature exclude active solar energy systems. Revenue and Taxation Code section 73 carves out solar: “newly constructed” does not include “the construction or addition of any active solar energy system.” For systems that produce electricity, the section says this includes storage devices, power conditioning equipment and transfer equipment.

What changed, according to the State Board of Equalization’s September 1, 2026 letter to county assessors:

• The exclusion becomes inoperative on January 1, 2027. SB 710 (Stats. 2025, ch. 328) made a technical change so the exclusion becomes inoperative on that date rather than being repealed.
• Existing exclusions continue. A solar energy system already excluded as new construction stays excluded from property tax until the property changes ownership.
• New-home buyers get a filing deadline. From January 1, 2027, AB 1516 (Stats. 2025, ch. 72) requires the first buyer of a newly built home with solar to file the claim form (BOE-64-SES) within three years of purchase to be timely. Late claims get relief only from the lien date of the year the claim is filed.

What this means for you:

• Finishing a system before January 1, 2027? Ask your county assessor whether it will qualify. The section’s wording ties the exclusion to specific assessment years, and we did not find guidance on how a system completed in late 2026 is handled, so get an answer from the assessor rather than relying on an installer’s sales pitch.
• Adding solar in 2027 or later? Unless the Legislature changes the law again, a new system would not get this exclusion, so your county assessor may add its value to your assessment. Ask how it would be valued before you sign.
• Buying a home that already has solar? The seller’s exclusion ends at the change in ownership, per the BOE letter.

No state income tax credit

California does not offer a state income tax credit for home solar or batteries. The Franchise Tax Board’s personal credits page lists no such credit.

SGIP: incentives for income-qualified households

The CPUC’s Self-Generation Incentive Program (SGIP) pays incentives for systems installed on the customer’s side of the meter. For homeowners, the budget the CPUC highlights is Residential Solar and Storage Equity, available to low-income residential electric or gas customers in California.

According to the CPUC’s SGIP page:

• $280 million has been authorized for the Residential Solar and Storage Equity budget.
• Incentive rates for that budget are listed as $1,100 per kWh of storage and $3,100 per kW of solar.
• Applicants have one year after reserving funds to meet program requirements, which include enrolling in a qualified demand response program.
• Several other residential budgets, including Small Residential Storage, are marked “available through 2025.”

Funding is released in steps, and some steps are closed or waitlisted depending on your utility. Check the SGIP step tracker for your area, and start with an installer on the approved SGIP developer list, as the CPUC suggests.

Leases and PPAs in California

With a lease or PPA, the company that owns the system may claim the federal clean electricity credit (section 48E or 45Y). You cannot. For solar that began construction after July 4, 2026, the owner can claim it only if the system is placed in service by December 31, 2027 (IRS Notice 2025-42 explains how construction start is shown). Energy storage is exempt from that 2027 cutoff, which can matter for lease offers that include a battery.

Whether any of the credit lowers your payment is a matter of contract, not law. Ask the company in writing whether it is claiming a credit and what happens to your price if the timeline slips. See solar lease vs buy for how to compare offers.

What this means for payback

California’s bill savings now depend heavily on net billing (NEM 3.0), which changed how power you send to the grid is credited. Our NEM 3.0 and batteries guide explains what that means for solar and batteries. With no federal credit, the installed price has to be earned back through bill savings alone.

The California calculator assumes no federal credit and shows a low, likely and high range for your home. For Florida, see Florida solar tax benefits in 2026. For the bigger question, read is solar worth it without the tax credit. Nothing here is a promise of savings.