What Changes Are Coming to Pennsylvania Solar Incentives in 2026

Quick answer: Pennsylvania solar incentives in 2026 no longer include the 30% federal residential tax credit, which expired for homeowner-owned systems on January 1, 2026.

What remains: Pennsylvania's SREC program, mandatory net metering at retail rates, local programs like the Philadelphia Solar Rebate and HEELP, the PACE financing option, and the federal commercial tax credit, which still applies to businesses, non-profits, and homeowners who go solar through a lease or power purchase agreement.

Pennsylvania solar incentives in 2026 are not what they were when Congress passed the Inflation Reduction Act in 2022. Back then, the conversation was simple: a 30% federal tax credit applied to nearly every solar and battery storage project, residential or commercial.

That changed when the One Big Beautiful Bill Act ended the federal residential tax credit for systems placed in service after December 31, 2025.

If you're a homeowner, a business owner, or a nonprofit in Pennsylvania trying to figure out what's still available, here's the current situation everyone should know.

TL;DR

The 30% federal residential solar tax credit expired January 1, 2026. That's the big change. What's still in play for Pennsylvania homeowners and businesses:

• SRECs: still active, trading $25–$40/credit, ~9–12 earned per year for a typical home (~$250–$480/year)
• Net metering: unchanged, 1:1 credit at retail rate, rolls over monthly
• Local programs: Philadelphia Solar Rebate, HEELP, PACE financing still available
• Businesses/non-profits: federal commercial credit (Section 48E, 30%) still runs through at least 2027, plus direct pay for non-profits
• Leases/PPAs: the only remaining way for homeowners to indirectly access federal tax benefits

What Changed Pennsylvania Solar Incentives in 2026 at the Federal Level?

The federal solar tax credit expired on December 31, 2025, for homeowners who purchase a solar panel system with cash or a loan. Through IRS Form 5695, homeowners could previously claim a 30% federal tax credit against their federal income tax liability for the cost of solar equipment and installation.

That option is gone for any system placed in service starting in 2026. There is no phase-down period and no partial credit. The federal residential tax benefits Pennsylvania homeowners used to count on simply ended.

This is the single biggest shift in solar incentives in Pennsylvania this year, and it has shifted the focus from federal tax credits to state-level and local incentives. It doesn't mean solar stopped making financial sense for Pennsylvania homeowners.

It means the math now depends more heavily on net metering, SRECs, electricity costs, and how you finance the system.

Two groups are not affected in the same way:

• Businesses and non-profits still qualify for the federal commercial tax credit (Section 48E), which remains available through at least December 31, 2027, and longer for projects that begin construction by mid-2026.
• Homeowners who go solar through a solar lease or power purchase agreement (PPA) can still access a version of the federal tax benefits, because the company that owns the equipment — not the homeowner — claims the 48E tax credit and passes the value through as a lower monthly rate.

We covered the federal side of this in more detail in our piece on the federal solar tax credit, which is worth reading if you want the full history of how this credit evolved from 2005 to today.

Wondering how big a system you actually need to offset your bill? Talk to our expertand get a sizing estimate built around your real usage

Pennsylvania's SREC Program: Still One of the Strongest State-Level Incentives

With the federal residential tax credit gone, Pennsylvania's Solar Renewable Energy Credits (SRECs) carry more weight than they used to.

Here's how it works. Pennsylvania's Alternative Energy Portfolio Standard requires electric utilities to source a portion of their electricity from solar. To prove compliance, utilities buy SRECs from solar system owners.

One SREC is generated for every 1,000 kWh, or one megawatt-hour, your solar panel system produces. A typical residential system earns 9 to 12 SRECs annually, depending on system size and sun exposure.

Pennsylvania SRECs currently trade between $25 and $40 per credit. That puts annual SREC income for most homes in the $250 to $480 range, which adds up over the 25-year lifespan of a solar system.

SRECs are registered through the Pennsylvania Public Utility Commission and tracked in the Generation Attribute Tracking System (GATS). Once your system is registered and producing, credits accrue automatically and can be sold through SREC brokers.

The catch: only solar system owners can sell SRECs. If you sign a solar lease or PPA, the company that owns the panels keeps the SRECs, not you. This is one of the bigger trade-offs to weigh when comparing ownership to leasing.

For a closer look at how SREC income factors into the total return on a system, our article on the levelized cost of electricity breaks down how installers calculate the real net cost of solar — and why some installers overstate SREC value to make their numbers look better than they are. We also cover the full range of financial and practical direct benefits of installing solar panels in Pennsylvania, New Jersey, and Delaware, including how SREC income, bill savings, and home value gains add up over the life of a system.

Net Metering in Pennsylvania: 1:1 Credits at the Retail Rate

Net metering is the other major piece of solar incentives in Pennsylvania that didn't change with the federal rollback.

Under Pennsylvania's net metering rules, when your solar panel system produces more electricity than your home uses, the excess energy flows back to the grid, and you receive credit at the retail rate.

The same rate you'd otherwise pay to buy that electricity. Credits roll over monthly, and all investor-owned utilities in Pennsylvania, including PECO, PPL, and Met-Ed, are required to offer this to customers.

This matters more now that electricity costs keep climbing across the state. A solar panel system sized to your home's annual usage can offset most or all of your electric bill through net metering, even without a federal tax credit covering part of the upfront cost.

We go into more detail on right-sizing a system in how many solar panels you actually need, which walks through the calculation utilities use to determine your system size.

One correction worth making here: Pennsylvania does NOT have a statewide property tax exemption for solar, unlike neighboring New Jersey. Adding a solar panel system can increase your home's assessed value, and in most municipalities, that means a modest increase in property tax.

A handful of local jurisdictions have the option to exempt the added value, so it's worth checking with your county assessor, but don't assume a property tax exemption applies by default. The Database of State Incentives for Renewables & Efficiency (DSIRE) tracks which Pennsylvania municipalities currently offer this at the local level.

Net metering works best when it's paired with lower household energy use, since less of your production gets exported and more of it offsets consumption directly.

Our articles on cutting down appliance energy usage and ways to keep cool using less electricity cover practical steps that improve how far your net metering credits go, particularly during Pennsylvania's high-demand summer months.

Request a custom solar proposal from our expert now.

Local and State Financial Incentives Still Available to Pennsylvania Homeowners

Beyond SRECs and net metering, a few other programs reduce the upfront cost or financing burden of going solar in Pennsylvania:

• The Philadelphia Solar Rebate Program pays residential customers $0.20 per watt installed, capped at $100,000 per project, for systems within city limits. Funding is limited and processed on a first-come, first-served basis, so check current availability before counting on it.
• The Homeowners Energy Efficiency Loan Program (HEELP), run through the Pennsylvania Housing Finance Agency, offers loans between $1,000 and $10,000 at a fixed 1% interest rate for qualifying energy efficiency repairs and upgrades for homeowners who meet income limits.
• Pennsylvania's Property Assessed Clean Energy (PACE) program allows certain property owners to finance solar installation costs through a special assessment tied to the property rather than the individual, which can lower the barrier to entry for businesses and some residential projects.
• Utility rebates are available in some service areas. PECO, for example, has offered time-limited rebates for new residential solar installations, separate from the federal or state programs. We covered one specific example in our post on the PECO residential solar rebate.

None of these programs individually replace what the federal residential tax credit used to provide, but stacked together with SRECs and net metering, they still meaningfully reduce the total cost of a solar panel system for most Pennsylvania homeowners.

Battery Storage and Energy Independence

Battery storage is part of the broader conversation around Pennsylvania solar incentives, even though the federal residential credit no longer applies to homeowner-owned batteries the same way it once did.

For businesses, non-profits, and leased residential systems, batteries paired with solar still qualify under the same federal commercial credit structure described above.

Beyond the financial side, battery storage gives homeowners a way to keep power running during a grid outage, which matters more as battery technology keeps improving.

We've followed this evolution for years, from early advances like the world's first solar battery developed at Ohio State University to real installations we've completed, including a residential off-grid solar and battery project that gave one Pennsylvania homeowner full energy independence from the grid.

Federal Tax Benefits for Businesses and Non-Profits Haven't Disappeared

This is the part of Pennsylvania solar incentives in 2026 that's easy to miss if you only read headlines about the residential credit expiring.

Businesses installing solar still qualify for the federal commercial Investment Tax Credit under Section 48E, generally at 30% of project cost, provided labor and apprenticeship requirements are met.

This credit remains in place through at least the end of 2027, with longer eligibility windows for projects that begin construction before the mid-2026 deadline. Commercial properties can also pursue accelerated depreciation on top of the tax credit, which further improves the financial case.

What this looks like in practice: a Pennsylvania business installing a 100 kW commercial solar system at roughly $2.50 per watt would pay about $250,000 before incentives. The 30% Section 48E credit brings that down by $75,000.

Depreciation under current bonus depreciation rules can offset a meaningful share of the remaining federal tax liability in year one, on top of the credit. From there, the system also generates commercial-scale SRECs — a 100 kW system can produce well over 100 SRECs a year.

And qualifies for the same net metering rules described above, crediting any excess electricity at the retail rate. Stacked together, these incentives meaningfully shorten the payback period compared to running the math on the tax credit alone.

Non-profit organizations — including charities, religious institutions, schools, and community programs — can access the same 30% credit through "direct pay."

Because non-profits don't have income tax liability to offset, direct pay allows the IRS to pay them the cash equivalent of the credit directly, something that wasn't available before the original Inflation Reduction Act passed in 2022. This opened federal solar incentives to entities that had been excluded from this kind of financial assistance for decades.

If your business or organization is weighing whether solar makes sense, our piece on creating an energy efficient building covers how commercial solar fits into a broader plan to cut operating costs.

We've also profiled how this plays out for property owners directly in our look at local commercial solar projects, and for sectors with high energy use, our article on solar power for agriculture addresses questions specific to farms and ag-businesses.

For the bigger regional picture, we've also written about why renewable energy is the future of the Mid-Atlantic grid, which provides useful context for why commercial solar adoption keeps accelerating in this region regardless of federal incentive changes.

Connect to our team now at: (888) 873-9995

Solar Leases and PPAs: The Remaining Path to Federal Tax Benefits for Homeowners

If you're a homeowner who missed the 2025 deadline for the federal residential credit, a solar lease or power purchase agreement is currently the only way to indirectly benefit from federal solar incentives.

In a lease or PPA, a third-party company owns the solar equipment installed on your roof. That company — not you — claims the 48E commercial tax credit, then typically passes part of that value through to you in the form of a lower monthly payment than you'd otherwise pay your utility.

You don't own the system, you don't earn SRECs, and you don't build home equity from the solar panel system, but you also don't pay anything upfront, and your monthly rate is usually lower than your existing electric bill from day one.

This is a real trade-off, not a clear win either way. Ownership gives you SREC income, net metering savings, and a property upgrade, but requires upfront cash or financing now that the federal credit is gone.

A lease or PPA gives you immediate savings with no upfront cost, but no ownership-based incentives. Which one makes more sense depends on your finances, how long you plan to stay in the home, and how much you value owning the asset outright.

Choosing a Reliable Solar Installer for a Pennsylvania Solar Project

With the federal tax credit landscape this complicated, working with a reliable solar installer who understands current Pennsylvania solar incentives matters more than it used to.

A solar company that's still quoting the 30% federal residential credit for new 2026 installations is giving you outdated information, and that's a sign to ask more questions before signing anything.

A few things worth confirming with any solar installers you're evaluating:

• Whether they're registered with the Pennsylvania Attorney General's office for home improvement contracting
• Whether their team holds NABCEP certification
• Whether they walk you through SREC registration and net metering paperwork as part of the installation process, not as an afterthought
• Whether their cost estimates reflect the current incentive landscape, not figures from before the federal credit changed

TerraSol Energies has installed solar systems across Pennsylvania, New Jersey, and Delaware since 2009 and was ranked among the top solar contractors in Pennsylvania by Solar Power World.

If you're trying to figure out what Pennsylvania solar incentives in 2026 actually mean for your specific home or business, we're glad to walk through the numbers with you directly.

Get A Custom Solar Proposal

Pennsylvania solar incentives in 2026 look different than they did even a year ago, but between SRECs, net metering, local rebate programs, and federal commercial tax benefits for businesses, non-profits, and leased systems, there’s still real financial value on the table for anyone in Pennsylvania considering solar.

For broader ways to cut both costs and your carbon footprint beyond solar alone, our article on simple ways to save money and the planet is a good next read. A useful reminder that Pennsylvania solar incentives in 2026 are just one part of a bigger energy savings picture.

Frequently Asked Questions

Is there still a federal solar tax credit for Pennsylvania homeowners in 2026?

No, not for homeowners who buy or finance a system with cash or a loan. The 30% federal residential tax credit expired for systems placed in service after December 31, 2025. Homeowners who use a solar lease or PPA can still access federal tax benefits indirectly through the company that owns the system.

What state-level solar incentives does Pennsylvania still offer?

Pennsylvania's main state-level incentives are the SREC program and mandatory net metering. SRECs currently trade between $25 and $40 per credit, and net metering credits excess electricity at the retail rate, with credits rolling over monthly.

Do solar panels increase property taxes in Pennsylvania?

In most municipalities, yes. Pennsylvania does not have a statewide property tax exemption for solar, unlike New Jersey. Some local jurisdictions allow exemptions for the added value, so check with your county assessor.

Are businesses and non-profits still eligible for federal solar tax credits?

Yes. The federal commercial tax credit under Section 48E remains available for businesses through at least 2027, and non-profits can access the equivalent value through direct pay.

How many SRECs does a typical Pennsylvania home earn per year?

A typical residential solar system in the 8 to 10 kilowatt range produces about 9 to 12 SRECs annually, which at current prices works out to roughly $250 to $480 per year.