California homeowners lost Section 25D when it expired December 31, 2025 — and that was a 30% federal credit that could reduce a $23,800 system to $16,660. That's gone. But California still has more active solar incentive programs than any other state, and if you know how to stack them, you can meaningfully reduce what you pay. The SGIP battery rebate, DAC-SASH for income-qualified buyers, and the dual sales and property tax exemptions are all real, active, and accessible in 2026.
Disclaimer: Incentive information is based on CPUC program data and NYSERDA-equivalent California programs. SGIP funding is allocated in steps — rates and availability change as blocks fill. Confirm current program status with your installer and the administering utility before relying on specific rebate amounts. Get at least three installer quotes before deciding.
Key Takeaways
- SGIP battery rebate pays up to $200/kWh of capacity — on a 13.5 kWh Powerwall, that’s $2,700 off the battery cost
- Income-qualified homeowners in disadvantaged communities can get $3.00/watt through DAC-SASH — on a 7 kW system, that’s $21,000 in free solar
- Sales tax exemption and 100% property tax exemption on solar added value both apply statewide to all California homeowners
- NEM 3.0 (not an incentive, but affects ROI) pays only ~$0.08/kWh for exports — making self-consumption the key strategy in 2026
- Section 25D is gone; no California state income tax credit for solar exists — the action is in battery rebates and equity programs
The Incentive Landscape After Section 25D
Before getting into specific programs, it's worth being clear about what California doesn't have in 2026. There is no California state income tax credit for solar panels. There was briefly a California Solar Initiative (CSI) cash rebate for residential solar, but that program ended in 2016. The state's approach shifted from direct subsidies to ratepayer-funded programs, NEM, and targeted equity programs.
What remains are:
- Tax exemptions (universal, apply to all California homeowners)
- The SGIP battery rebate (for battery storage, not panels alone)
- Income-qualified and equity programs (DAC-SASH, MASH)
- NEM 3.0 export credits (technically a tariff, not an incentive, but affects ROI)
None of these fully replaces the 30% federal credit, but stacked together they provide meaningful savings — particularly for battery storage buyers.
Sales Tax Exemption: Free Money You Don’t Have to Apply For
California exempts solar energy systems from the state sales and use tax under Revenue and Taxation Code Section 6363.4. This exemption applies automatically — your installer shouldn't charge California sales tax on solar panels, inverters, or related equipment.
At California's combined state and average local sales tax rate of approximately 9%, this saves:
| System Cost | Sales Tax Saved (at 9%) |
|---|---|
| $17,000 (5 kW) | $1,530 |
| $23,800 (7 kW) | $2,142 |
| $30,600 (9 kW) | $2,754 |
Some installers itemize equipment and labor separately; the exemption applies to the equipment portion. Confirm with your installer that they're applying the exemption — if they're not, that's a problem.
Property Tax Exemption: Permanent Benefit
Under California Revenue and Taxation Code Section 73, the added property value from a solar installation is permanently excluded from your property tax assessment. This means installing a $23,800 solar system — which could add $18,000–$22,000 to your home's appraised value — will not increase your annual property tax bill.
At California's effective average property tax rate of approximately 0.74%, that's:
- $18,000 exempted value × 0.74% = $133/year in avoided property taxes
- Over 25 years: $3,325 in cumulative tax savings (not discounted)
Not enormous, but it's permanent and automatic — no application required.
SGIP: The Battery Rebate That Actually Matters
The Self-Generation Incentive Program (SGIP) is administered by PG&E, SCE, SDG&E, and SoCalGas. It pays a per-kWh rebate on battery storage systems. In 2026, the standard residential SGIP rebate is approximately $200/kWh of battery capacity, with enhanced rates for income-qualified participants.
| Participant Type | SGIP Rebate Rate | Value on 13.5 kWh Powerwall |
|---|---|---|
| Standard residential | ~$200/kWh | $2,700 |
| Income-qualified (CARE/FERA) | ~$850/kWh (Equity Resiliency) | $11,475 |
| Vulnerable populations (medical baseline) | ~$1,000/kWh (Equity Resiliency) | $13,500 |
SGIP funding is allocated in steps — each step has a fixed budget, and when a step is fully subscribed, applications move to the next step at a different (usually lower) rebate rate. Earlier applicants in a step get better rates. Check current step availability with your installer or at SGIP's program website.
According to CPUC's SGIP Program Handbook, applications are submitted by the installer on the homeowner's behalf after system approval and before installation. The rebate is paid to the customer after inspection.
DAC-SASH: Up to $21,000 in Free Solar for Income-Qualified Buyers
The Disadvantaged Communities — Single-family Affordable Solar Homes (DAC-SASH) program is one of the most generous solar programs anywhere in the country — but it's strictly income-qualified and only available in disadvantaged communities (DAC) as defined by CalEnviroScreen.
Who qualifies:
- Must be enrolled in the CARE program (low-income utility discount program)
- Must own a single-family home in a CalEnviroScreen-designated disadvantaged community
- Must be a customer of PG&E, SCE, or SDG&E
What you get:
- $3.00/watt toward a solar installation
- On a 7 kW system: $21,000 in incentive funding
- This can cover the full cost of a system for many low-income homeowners
DAC-SASH is administered by GRID Alternatives, a nonprofit solar installer. If you qualify, contact GRID Alternatives directly — this program doesn't require going through traditional commercial installers.
MASH: Multifamily Affordable Solar
The Multifamily Affordable Solar Housing (MASH) program provides incentives for solar on affordable multifamily housing. Unlike DAC-SASH, this targets building owners and property managers rather than individual homeowners.
If you live in an apartment or condo in affordable housing, you may benefit from MASH if your building owner pursues it — but this isn't a direct homeowner program.
What NEM 3.0 Means for Your ROI
NEM 3.0 isn't technically an incentive — it's a tariff structure — but it's so central to California solar ROI in 2026 that it belongs in any discussion of "what saves you money."
Under NEM 3.0, solar exports earn avoided cost rates of approximately $0.05–$0.08/kWh rather than full retail rates. At California's average retail rate of $0.282/kWh, that's a dramatic reduction in export value.
The implication for incentive stacking: SGIP battery storage has a much stronger case in California than in states with full retail net metering, because a battery lets you consume your solar production at $0.282/kWh instead of exporting it at $0.08/kWh. The SGIP rebate effectively pays for some of that battery — making the combined solar + battery system more financially rational under NEM 3.0 than solar alone.
Use the Solar ROI Calculator to model your specific system with battery savings included.
See how California incentives affect your payback
Enter your utility rate, system size, and SGIP estimate — see your personalized California payback timeline. No email required.
Evaluating battery storage specifically? Our Home Battery Storage Cost Guide breaks down SGIP eligibility, Powerwall vs. Enphase IQ Battery costs, and whether storage pencils out in your utility territory.
Bottom Line
California's solar incentive stack in 2026 is smaller than it was in 2025 (no Section 25D), but it's not empty. The SGIP battery rebate is the most impactful program for most California homeowners — particularly under NEM 3.0, where battery storage is more valuable than grid export. DAC-SASH is extraordinary for those who qualify. And the sales and property tax exemptions quietly reduce real costs for everyone.
The honest summary: California solar without the federal credit and with NEM 3.0 export rates still makes financial sense for most homeowners — the state's high electricity rates do the heavy lifting. The incentive programs are the supporting cast, not the lead.
Related Guides
- Solar Cost in California 2026 — Full guide to California install costs, NEM 3.0 impact, and payback math.
- Home Battery Storage Cost in 2026 — SGIP in depth, Powerwall costs, and whether storage makes sense for your utility territory.
- Is Solar Worth It in 2026? — How California stacks up nationally for solar ROI after losing the federal credit.
- Solar Panel Financing Guide 2026 — Compare cash, loan, lease, and PPA financing options in California’s post-25D market.
