Commercial solar incentives

What is available to a business installing solar, how each incentive actually behaves in a payback model, and where the value differs most by state.

Federal incentives

These apply nationwide and are set in statute, so unlike state programmes they are stable enough to plan against.

30%Investment tax creditBase credit against federal tax on installed cost

5-yearAccelerated depreciationRecovery period for solar as business property

Two things that change these numbers: the credit is only worth its face value if your business has federal tax liability to offset — otherwise it carries forward and its present value drops. And claiming it reduces the basis you depreciate, so the credit and the depreciation must be modelled together. Bonus rates above the base credit exist for meeting labour, domestic-content or location conditions, and each carries documentation requirements. Have your accountant model your own position before treating any of this as a number.

The incentives, and how each one gets misread

Every one of these is real. Each also has a failure mode that turns an attractive projection into a disappointing project.

Federal investment tax credit

A credit against federal income tax worth a percentage of the installed system cost, claimed in the year the system is placed in service. It is a credit, not a deduction, so it reduces tax owed dollar for dollar.

Watch out: You need tax liability to use it. A business that owes little federal tax may carry it forward rather than benefit immediately, which changes the payback maths considerably.

Accelerated depreciation

Commercial solar is depreciable property, recoverable over an accelerated schedule rather than the decades a roof would take. For many businesses this is worth nearly as much as the tax credit.

Watch out: Claiming the tax credit reduces the depreciable basis. Your accountant should model the two together, not separately.

Net metering

Credit for the energy you export to the grid when generating more than you use. The credit rate is the single biggest variable in a commercial solar model.

Watch out: Full retail-rate credit and wholesale-rate credit produce wildly different returns. Several states have moved from the first to the second. Confirm which applies to a commercial account, not just a residential one.

Renewable energy certificates

In some states each megawatt-hour generated creates a tradable certificate you can sell, producing a revenue stream on top of the energy you avoid buying.

Watch out: Certificate prices are set by a market and move. Treating a current price as fixed across a 20-year model is the most common way these projections overstate returns.

Property and sales tax treatment

Many states exempt solar equipment from sales tax, and exclude the added value from property assessment so improving the building does not raise the tax bill.

Watch out: These are state and sometimes county level, and exemptions can be capped or time-limited.

Utility and state rebates

Direct payments per watt installed or per kWh generated, offered by some utilities and state energy offices, usually from a capped fund.

Watch out: Capped programmes close when the money runs out, often mid-year, and reopen on a different basis. Never assume last year's programme is still open.

Where solar is worth most, by state

Ranked by first-year value of generation per kilowatt installed — the electricity price and the sunshine together, which drive returns more than any single rebate.

#	State	Avg. commercial rate	Sun hours / day	kWh/yr per kW	Value per kW / yr	Can you shop supply?
1	Hawaii HI	39.13¢	5.7	1,664	$651	No
2	California CA	31.25¢	5.8	1,694	$529	No
3	Massachusetts MA	24.96¢	4.3	1,256	$313	Yes
4	Rhode Island RI	23.17¢	4.4	1,285	$298	Yes
5	Arizona AZ	15.61¢	6.5	1,898	$296	No
6	Connecticut CT	23.00¢	4.3	1,256	$289	Yes
7	District of Columbia DC	19.98¢	4.5	1,314	$262	Yes
8	Maine ME	21.39¢	4.2	1,226	$262	Yes
9	New Hampshire NH	20.24¢	4.1	1,197	$242	Yes
10	Tennessee TN	18.01¢	4.6	1,343	$242	No
11	New York NY	20.64¢	4.0	1,168	$241	Yes
12	Vermont VT	19.25¢	4.0	1,168	$225	No
13	Delaware DE	16.54¢	4.5	1,314	$217	Yes
14	Alabama AL	14.84¢	4.9	1,431	$212	No
15	Maryland MD	15.74¢	4.5	1,314	$207	Yes
16	New Mexico NM	10.91¢	6.4	1,869	$204	No
17	New Jersey NJ	15.85¢	4.4	1,285	$204	Yes
18	Nevada NV	10.88¢	6.3	1,840	$200	No
19	Alaska AK	22.25¢	3.0	876	$195	No
20	Ohio OH	16.09¢	4.1	1,197	$193	Yes
21	Colorado CO	11.87¢	5.5	1,606	$191	No
22	Montana MT	13.30¢	4.7	1,372	$183	No
23	Michigan MI	14.64¢	4.1	1,197	$175	No
24	Florida FL	11.25¢	5.3	1,548	$174	No
25	Mississippi MS	12.06¢	4.9	1,431	$173	No
26	Wyoming WY	11.00¢	5.3	1,548	$170	No
27	Georgia GA	11.65¢	5.0	1,460	$170	No
28	Minnesota MN	12.78¢	4.5	1,314	$168	No
29	Kansas KS	11.05¢	5.1	1,489	$164	No
30	South Dakota SD	11.26¢	5.0	1,460	$164	No
31	Illinois IL	12.43¢	4.5	1,314	$163	Yes
32	Pennsylvania PA	13.31¢	4.2	1,226	$163	Yes
33	South Carolina SC	11.07¢	5.0	1,460	$162	No
34	Wisconsin WI	12.86¢	4.3	1,256	$161	No
35	Indiana IN	12.73¢	4.3	1,256	$160	No
36	Louisiana LA	10.60¢	4.9	1,431	$152	No
37	Texas TX	9.55¢	5.4	1,577	$151	Yes
38	Kentucky KY	11.64¢	4.4	1,285	$150	No
39	Utah UT	9.23¢	5.5	1,606	$148	No
40	North Carolina NC	10.57¢	4.8	1,402	$148	No
41	Oregon OR	12.58¢	4.0	1,168	$147	No
42	Iowa IA	10.72¢	4.6	1,343	$144	No
43	Arkansas AR	9.94¢	4.9	1,431	$142	No
44	West Virginia WV	11.59¢	4.2	1,226	$142	No
45	Missouri MO	10.14¢	4.8	1,402	$142	No
46	Washington WA	13.22¢	3.6	1,051	$139	No
47	Idaho ID	9.51¢	4.9	1,431	$136	No
48	Nebraska NE	9.19¢	4.9	1,431	$131	No
49	Virginia VA	9.65¢	4.6	1,343	$130	No
50	Oklahoma OK	8.38¢	5.2	1,518	$127	No
51	North Dakota ND	7.56¢	4.8	1,402	$106	No

Value per kW is first-year generation multiplied by the state average commercial rate, at a 0.80 derate. It excludes every incentive, so it is a floor for comparison between states rather than a projected return. The last column matters because in a state where you can shop supply, lowering your rate and generating your own power are two levers on the same bill.

Why there are no rebate amounts in this table: state and utility programmes open, close and change value continually, and several are capped funds that close mid-year. Any figure we printed here would go stale silently, and you would have no way to tell. For current programme values in your state, DSIRE (dsireusa.org) is the maintained public database, and your utility publishes its own commercial programmes.

Incentive questions

Which incentive is worth the most to a business?

Usually the federal tax credit, with accelerated depreciation close behind — together they commonly recover a large share of installed cost for a profitable business. But the incentive that most often decides whether a project works is net metering, because it sets the value of every exported kilowatt-hour for twenty years.

Do incentives change what size system I should build?

Yes, sharply. Where exports are credited at full retail value, building larger is rewarded. Where they are credited at wholesale value, the return falls away past the point that matches your own daytime consumption, and a smaller array often returns more per dollar.

Can I claim incentives on a leased system?

Generally not the tax credit — under a lease or power purchase agreement the owner claims it, and passes some benefit through in the pricing. That is not necessarily worse, particularly for a business without the tax liability to use the credit itself, but you should know which party is claiming what.

How current is this page?

The structural explanations were last reviewed 2026-07. They describe how incentive types work, which changes slowly. Specific programme values are deliberately not published here precisely because they change quickly — check DSIRE and your utility for those.

Model the production first

Incentives act on a system size. Estimate what an array would generate at your location before pricing the incentives on it.

Open the generation estimator