Solar Incentives 2026: The Complete Guide for New England Homeowners

How Solar Incentives Work in 2026

Solar incentives are one of the most misunderstood aspects of going solar. Homeowners frequently overestimate what they'll receive — assuming every program stacks perfectly — or underestimate the total benefit because they only know about the federal tax credit. The reality is nuanced: New England homeowners who know what they're doing can dramatically reduce the net cost of a roof + solar bundle, but you have to understand what each program actually provides and how they interact.

The good news: 2026 is still an excellent year for solar incentives. The 30% federal Investment Tax Credit remains intact through at least 2032. Massachusetts has expanded its SMART 3.0 program. Rhode Island's Renewable Energy Growth program continues to offer above-market compensation for solar generation. Connecticut's RRES program provides monthly incentive payments. And states across our service area offer property tax and sales tax exemptions that further reduce your out-of-pocket cost.

The less-good news: some programs are in flux. The "Big Beautiful Bill" passed in Congress in 2025 made changes to clean energy incentives that are worth understanding before you sign a solar contract. We cover the key changes below.

Federal Investment Tax Credit (ITC): Still 30% in 2026

The federal Investment Tax Credit — officially the Residential Clean Energy Credit under Section 25D of the Internal Revenue Code — remains one of the most powerful solar incentives available. In 2026, the credit is worth 30% of the total installed cost of your solar system.

What the ITC Covers

• Solar panels and all equipment
• Labor costs for installation
• Balance-of-system equipment (inverters, wiring, mounting hardware)
• Energy storage (home batteries) installed at the same time
• Sales tax paid on solar equipment

For a roof + solar bundle, the roofing portion may qualify if the roof is directly supporting solar — check with a tax professional for the specifics of your project. The solar portion almost always qualifies. On a $35,000 solar installation, a 30% credit means $10,500 off your federal income taxes.

ITC vs. Deduction: What's the Difference?

This distinction matters enormously. The ITC is a tax credit — it directly reduces your tax bill dollar-for-dollar. A $10,500 credit means you owe $10,500 less in federal income taxes. By contrast, a tax deduction only reduces your taxable income, which then reduces your tax at your marginal rate.

The implication: you must have sufficient federal tax liability to use the full credit in year one. If your federal tax bill is only $7,000 but your credit is $10,500, you can use $7,000 in year one and carry the remaining $3,500 forward to the following year. The credit can be carried forward indefinitely (within the program window).

2025 Big Beautiful Bill: What Changed?

The "One Big Beautiful Bill Act" signed in 2025 made several changes to clean energy incentives. For residential solar, the key provisions include:

• The 30% Residential Clean Energy Credit (Section 25D) schedule was adjusted — the step-down to 26% that was previously scheduled for 2033 is now accelerated for certain taxpayers
• Bonus credits for domestic content (American-made panels) were modified
• Commercial and utility-scale solar faced more significant changes than residential

The bottom line for New England homeowners considering a system in 2026: the 30% ITC for residential solar remains available and is the same rate it has been since 2022. Future-year changes are possible, but the current year value is clear. If your installer tells you the federal credit is being eliminated imminently, ask them to show you the specific legislative text — some companies use ITC urgency messaging as a sales tactic.

Massachusetts Solar Incentives

Massachusetts has among the richest solar incentive environments in the country. The combination of a strong solar carve-out in the state's RPS, the SMART program, and multiple tax exemptions makes the Bay State one of the best places in the Northeast to go solar.

SMART 3.0 Program (Solar Massachusetts Renewable Target)

SMART is Massachusetts' primary solar incentive program, administered by the three major investor-owned utilities (Eversource, National Grid, and Unitil). SMART provides a fixed monthly incentive payment for every kilowatt-hour your solar system produces — for 10 years.

The SMART rate you receive is set when your system is approved and doesn't change for the duration of your contract. Rates vary based on utility territory, your system size, and when you apply — earlier applicants in each capacity block receive higher rates. As of 2026, SMART 3.0 rates for residential systems in the 10–25kW range are in the $0.04–$0.08/kWh range, depending on your utility and capacity block.

For a 10kW system producing approximately 12,000 kWh per year, a SMART payment of $0.06/kWh provides roughly $720 per year in additional incentive income — $7,200 over the 10-year term. This is in addition to the value of net metering credits for any electricity you export to the grid.

Massachusetts State Solar Tax Credit

Massachusetts offers a state income tax credit of 15% of the cost of your solar installation, up to a maximum credit of $1,000. While smaller than the federal ITC, every dollar counts. The credit is nonrefundable and can be carried forward for three years if it exceeds your tax liability.

Property Tax Exemption

Massachusetts exempts the added value of a solar energy system from your property taxes for 20 years. This is significant: a solar system can add $15,000–$25,000 to a home's assessed value. Without the exemption, you'd pay additional property taxes on that value. The 20-year exemption means you capture all of the home value increase without the annual cost.

Sales Tax Exemption

Massachusetts exempts solar energy equipment from the state's 6.25% sales tax. On a $30,000 solar system, that's $1,875 in savings — a meaningful reduction in your upfront cost.

Net Metering

Massachusetts has strong net metering rules. Customers of Eversource, National Grid, and Unitil can export excess solar generation to the grid and receive credits at the retail electricity rate. These credits offset your utility bill, effectively turning your meter backward when the sun is shining. Net metering credits can be banked month-to-month and used over a 12-month period.

For more on the Massachusetts solar market, including utility-specific information, see our state guide.

Rhode Island Solar Incentives

Rhode Island punches above its weight in solar incentives. For a small state, it has developed a robust suite of programs that make solar financially attractive — particularly for homeowners who qualify for the REG program.

Renewable Energy Growth (REG) Program

Rhode Island's REG program is administered by RI Energy (formerly National Grid Rhode Island) and provides a long-term incentive payment of 20 years for residential solar generation. Participants receive a fixed tariff for every kilowatt-hour their system produces.

REG rates for residential customers in 2026 are approximately $0.235–$0.244/kWh for systems under 25kW — one of the highest compensation rates for solar in New England. Under this structure, you essentially sell all of your solar generation to the utility at the REG tariff rate and purchase all of your electricity at the retail rate. For most households, this nets out favorably, especially given Rhode Island's relatively high electricity prices.

Renewable Energy Fund (REF) Grant

The Rhode Island Commerce Corporation's Renewable Energy Fund offers cash grants for residential solar installations. The program has historically offered grants of up to $7,000 for qualifying homeowners. Grant availability is subject to funding — check with your installer or the Rhode Island Commerce Corporation directly for current availability and application status.

Property Tax Exemption

Rhode Island municipalities are authorized to exempt solar systems from property tax assessment, though implementation varies by town. Providence, Warwick, and most major cities offer the exemption. Verify with your town assessor's office before assuming the exemption applies.

Sales Tax Exemption

Rhode Island exempts solar energy equipment from the state's 7% sales tax — a meaningful saving on equipment costs.

For more details, see our Rhode Island solar guide.

Connecticut Solar Incentives

Connecticut has historically had strong utility net metering and is transitioning to a new incentive structure through the Residential Renewable Energy Solutions (RRES) program.

Residential Renewable Energy Solutions (RRES) Program

Connecticut's RRES program, offered through Eversource and United Illuminating, provides a monthly bill credit based on the output of your solar system. Homeowners receive a fixed rate for each kilowatt-hour generated — the rate depends on your system's "Class" and utility service territory.

Under RRES, the solar compensation structure includes both a generation credit and a distribution component. The program is designed to provide predictable, long-term compensation for solar generation while evolving the original net metering framework. For most residential systems, the monthly RRES credit meaningfully offsets utility bills year-round.

Property Tax Exemption

Connecticut provides a full property tax exemption for Class I renewable energy systems, including residential solar, for 15 years. This prevents a solar installation from increasing your annual property tax assessment.

Sales Tax Exemption

Solar energy equipment is exempt from Connecticut's 6.35% sales tax.

Eversource and United Illuminating Programs

Both major Connecticut utilities participate in RRES and may offer additional programs for low-income customers or battery storage. Check with your utility directly, or see our Connecticut solar guide for more details.

Utility-Specific Programs and Interconnection

Beyond state programs, individual utilities in New England offer various incentives, rebates, and programs worth knowing about.

Eversource (MA and CT)

Eversource serves large portions of Massachusetts and Connecticut. In Massachusetts, Eversource participates in SMART and offers standard net metering. In Connecticut, Eversource administers the RRES program. Eversource's interconnection process is generally well-organized, though queue times can extend to 4–8 weeks during peak season.

National Grid (MA and RI)

National Grid serves portions of Massachusetts and Rhode Island. In Massachusetts, National Grid participates in SMART. In Rhode Island, National Grid (now branded as RI Energy) administers the REG program. National Grid's interconnection timelines are comparable to Eversource.

Unitil (MA)

Unitil is a smaller utility serving parts of New Hampshire and Massachusetts. Unitil participates in the SMART program for Massachusetts customers.

United Illuminating (CT)

United Illuminating serves southwestern Connecticut, including New Haven and Bridgeport. UI participates in the Connecticut RRES program.

How to Stack Incentives: A Real Example

The most important thing to understand about solar incentives is that most of them stack — you can claim multiple programs simultaneously. Here's a real-world example for a Massachusetts homeowner:

Project: 10kW solar system on a home in Worcester, MA, served by Eversource. Total solar installation cost: $32,000.

• Federal ITC (30%): $9,600 tax credit off federal taxes
• Massachusetts State Tax Credit (15%, max $1,000): $1,000 tax credit off state taxes
• Sales Tax Exemption (6.25%): $2,000 saved upfront on equipment cost
• Property Tax Exemption: Assume system adds $18,000 to home value; at a 1.2% property tax rate, that's $216/year × 20 years = $4,320 in avoided property tax
• SMART 3.0 (est. $0.06/kWh × 12,000 kWh/year × 10 years): $7,200 in SMART payments
• Net Metering (est. $0.18/kWh × 3,000 kWh exported × 25 years): $13,500 in bill credits over system life

Total incentive value over the system's lifetime: approximately $37,620 — effectively more than the entire installation cost. Your net cost before these benefits: $32,000. Net cost after: negative. The system more than pays for itself through incentives alone, and that's before counting the direct energy savings from the electricity you consume rather than buy from the utility.

Every situation differs — your tax liability, system size, roof characteristics, and utility all affect the exact numbers. But this example illustrates why solar financial decisions require careful analysis, not just a gut check on the monthly payment.

How to Claim Your Credits: A Practical Guide

Federal ITC

File IRS Form 5695 with your federal return for the tax year the system passes its final utility inspection and becomes operational. Your installer should provide a signed interconnection agreement or permission-to-operate letter that establishes the "placed in service" date. Keep all invoices and contracts.

Massachusetts State Tax Credit

File Massachusetts Schedule EC (Energy Credit) with your state tax return. The credit is based on the installed cost. Keep your installation contract and final invoice.

SMART Program (Massachusetts)

Your installer handles SMART enrollment — they submit the application on your behalf as part of the interconnection process. You'll receive a SMART agreement from your utility specifying your approved rate. Monthly SMART payments appear as credits on your utility bill or as separate payments depending on your utility's process.

REG Program (Rhode Island)

Similar to SMART — your installer manages the REG enrollment application. You'll receive a 20-year REG agreement specifying your tariff rate. Monthly payments flow through your RI Energy account.

RRES Program (Connecticut)

Your installer enrolls your system in RRES through Eversource or United Illuminating. RRES credits appear on your utility bill monthly.

The Bottom Line

Solar incentives in 2026 are substantial and real. A New England homeowner who carefully plans their installation and claims every available incentive can reduce the effective cost of solar by 40–60% or more. The federal ITC remains the cornerstone at 30%, augmented by state-specific programs that reflect each state's commitment to renewable energy growth.

The key is to work with an installer who knows these programs inside and out — one who handles enrollment on your behalf, gives you an incentive summary in their proposal, and doesn't use incentive expiration as a pressure tactic. Our evaluation methodology explicitly rates companies on their transparency around incentives and their ability to guide homeowners through the process.

Our top-rated company, Evergreen Solar Corporation, has guided hundreds of New England homeowners through state incentive programs and consistently receives high marks for its financial transparency. Use our matching tool to connect with companies serving your area.