California Solar Incentives in 2026: What’s Left

The IRS is plain about it: the Residential Clean Energy Credit “is not available for any property placed in service after December 31, 2025.” A system you buy with cash or a loan in 2026 gets nothing federal. The home-improvement credit that helped pay for heat pumps and electrical panel upgrades ended at the same time. California has no state income-tax credit to replace them — the Franchise Tax Board’s list of personal credits has none for solar.

Leases and PPAs are different because the installer or financier owns the system and claims a business credit (section 48E). Under IRS Notice 2025-42, that credit ends for solar placed in service after December 31, 2027 unless construction began by July 4, 2026. A 2025 change did shut off the business credit for some leased home equipment, but the IRS instructions limit that to the property in section 25D(d)(1) and (4) — solar water heating and small wind — not solar panels. Whether a lease is priced lower because of the credit is the company’s choice; compare it on total cost. See what the end of the federal credit means and cash vs loan vs lease.

California’s active solar energy system exclusion (Revenue and Taxation Code §73) keeps a qualifying system out of your assessed value, owned or leased, including storage that is part of the solar system. No form is needed for an existing home; the assessor learns about it from the permit. Under current law the Board of Equalization applies it to systems completed before January 1, 2027, and a system excluded once stays excluded until the home changes hands. AB 2389, which would have extended it, was held in committee on May 14, 2026.

On October 5, 2026 that leaves under three months. A project that is designed, permitted and installed in that time qualifies; one finished in January does not, unless the Legislature acts first. See does solar raise your property tax?

The general SGIP battery rebate — $0.15 per watt-hour at its last step — took its last new applications on December 30, 2025, and its waitlists closed the same day (SGIP 2026 Handbook). What remains is the Residential Solar and Storage Equity budget funded by AB 209: $280 million statewide, paying $1.10 per watt-hour of storage and $3.10 per watt of solar. On paper that is $14,850 for a 13.5 kWh battery, subject to program caps. For a single-family home you qualify with household income at or below 80% of area median, or through enrollment in CARE, FERA, ESA, SASH or DAC-SASH. Your administrator depends on your electric utility:

A waitlist is not a closed door: applications and waitlist entries are accepted until June 30, 2028, and money freed by cancelled projects is offered to waitlisted applications. But nobody can promise a date, so a project should make sense without it. See SGIP battery incentives.

Batteries can also earn by helping the grid. The Energy Commission’s Demand Side Grid Support program pays for discharging during grid emergencies, but only through an approved aggregator, and terms change by provider and season. See what a battery can earn in a virtual power plant.

See who actually qualifies for free solar.

For most Los Angeles homeowners the largest ongoing benefit is not a rebate but how the utility credits exported power. LADWP nets exports at the full retail price under its net metering rider. It also runs Solar Rooftops, which pays $30–75 a month for 20 years to put an LADWP-owned system on your roof, with the power going to LADWP. SCE customers are on the Solar Billing Plan, which credits exports at hourly values that are low at midday — the reason most new SCE systems now include a battery. Neither is an incentive in the rebate sense, but either can matter more to payback than any program above. See LADWP solar and battery incentives and SCE solar billing explained.

Loans, leases, PPAs and PACE change how you pay, not how much the system costs. Solar loans can carry dealer fees built into the price; see solar loan dealer fees. PACE is repaid through your property-tax bill and stays with the house; Los Angeles County no longer administers a residential PACE program itself. Compare offers on total cost over the term. See is solar worth it in California in 2026?

Cali Energy designs solar and battery systems in Los Angeles for SCE and LADWP customers and can check which of these programs apply to your home. Call +1-323-844-7777 or ask for a review — program status changes, so treat every incentive as confirmed only once the program confirms it.

Figures on this page come from the primary sources below and, where noted, from Cali Energy calculations using the stated assumptions. Rates, incentives, and program terms change; each was verified October 5, 2026.

1. IRS — Residential Clean Energy Credit (not available for property placed in service after Dec 31, 2025)
2. IRS — Energy Efficient Home Improvement Credit (improvements through Dec 31, 2025)
3. IRS — Notice 2025-42: beginning of construction for wind and solar under §§ 45Y and 48E
4. IRS — Instructions for Form 3468: no 48E credit for leased § 25D(d)(1) or (4) property
5. 26 U.S. Code § 25D (d)(1) solar water heating, (d)(2) solar electric, (d)(4) small wind
6. California Franchise Tax Board — Personal credits
7. California Revenue and Taxation Code § 73
8. California State Board of Equalization — Active Solar Energy System Exclusion
9. AB 2389 (2026) — bill history: held under submission May 14, 2026
10. SGIP — Program Metrics (budget status as of October 5, 2026)
11. SGIP — 2026 Handbook (V3): AB 209 allocations, deadlines, eligibility
12. SGIP — AB 209 Program Administrator Assignments
13. CPUC — Solar in Disadvantaged Communities (DAC-SASH, DAC-GT, CSGT)
14. SOMAH — About the program
15. LADWP — Solar Programs
16. LADWP — Service Rider NEM, Net Energy Metering
17. SCE — How the Solar Billing Plan works
18. California Energy Commission — Demand Side Grid Support Program
19. Los Angeles County ISD — PACE program information