California Solar Tax and Permit Rules for 2026
Four rules apply to a California home solar purchase in 2026, whatever the city. The federal credit does not cover a system completed after December 31, 2025. New solar stays out of your property-tax assessment if it qualifies before January 1, 2027. Your city's permit fee is capped at $450 up to 15 kW. And the contract must open with a page showing the total cost.
California Rate Relief is a referral service. We are not a licensed contractor. This page explains the rules; it is not tax or legal advice.
The federal credit ended for systems finished after 2025
Section 25D(h) of the Internal Revenue Code says the residential clean energy credit “shall not apply with respect to any expenditures made after December 31, 2025.” Section 25D(e)(8)(A) treats an expenditure as made “when the original installation of the item is completed.”
So a system you buy gets no federal credit if installation is completed in 2026, even if you signed in 2025. Public Law 119-21 (July 4, 2025) moved the end date from December 31, 2034 to December 31, 2025. Ask a tax professional about your own return.
Source: 26 U.S.C. §25D, U.S. House Office of the Law Revision Counsel, checked September 24, 2026.
Leases and PPAs: the company's credit, not yours
Under a lease or a power purchase agreement the solar company owns the equipment. Any credit it claims is a business credit under section 48E. That is the company's tax position; it is not a credit you claim and it does not by itself lower what you pay.
Section 48E(i) denies the credit for leased property described in section 25D(d)(1) or (d)(4), which are solar water heating and small wind. Residential solar electric property is section 25D(d)(2), which that denial does not name.
The CPUC's guide says lease and PPA payments typically rise 1 to 3 percent a year under an escalator and advises caution about a higher one. Compare the total of all payments with the total cost of buying. Further reading: buying versus leasing, escalator clauses and dealer fees.
Sources: 26 U.S.C. §48E; CPUC, California Solar Consumer Protection Guide. Checked September 24, 2026.
Property tax: the solar exclusion ends January 1, 2027
Revenue and Taxation Code section 73(a) says “newly constructed” does not include adding an active solar energy system. So a qualifying system does not add to your assessment. The Board of Equalization calls it an exclusion, not an exemption: it neither raises nor lowers the assessment of what is already there.
Section 73(i)(1) keeps the section in effect only until January 1, 2027, and (i)(2) keeps a system that qualifies before then excluded until the property changes ownership. The Board's Letter to Assessors 2024/031 says a system completed on any day before January 1, 2027 may qualify.
The same letter says construction added during 2026 is not excluded unless it is completed before January 1, 2027. If your installation might finish around that date, ask your county assessor, not the contractor.
Sources: Rev. & Tax. Code §73; BOE, Active Solar Energy System Exclusion; BOE LTA 2024/031. Checked September 24, 2026.
The contract must open with the total cost
Business and Professions Code section 7169(b) requires a “solar energy system disclosure document” on the front or cover page of every solar contract, in boldface 16-point type. It must show the total cost and payments for the system, including financing costs, how to complain, and your right to cancel under section 7159.
The pages after it may include the salesperson's calculations of how many panels you need and how much energy they will make, and the company's contractor license number. Ask for them if they are missing, and look up the license and the salesperson on the CSLB license check.
Sources: Bus. & Prof. Code §7169; CSLB, Solar Energy System Disclosure; CSLB, Check a License. Checked September 24, 2026.
Permit fees: $450 up to 15 kW
Government Code section 66015(a) says a city's residential permit fee for solar may not exceed the reasonable cost of the service. For a photovoltaic system it may not exceed $450 plus $15 for each kW above 15 kW. The fee means the sum of all the charges for an application on a single- or two-family home.
A city may charge more only if, in a written finding and an adopted resolution or ordinance, it gives substantial evidence of its reasonable cost. The section is in effect until January 1, 2034.
Of the 93 cities in the California Solar Cost Index, 50 publish a fee for a standard home system; 43 are at or under $450 and 7 are above it (Chula Vista, $453, Irvine, $679.99, Napa, $472, Oakland, $471.49, Pacific Grove, $670, Roseville, $1,349.49 and Temecula, $568). Each city's own page states its fee and path.
Source: Gov. Code §66015, checked September 24, 2026.
Online permits: SolarAPP+ and similar platforms
Government Code section 65850.52 requires an online, automated permitting platform that issues permits in real time for a home system up to 38.4 kW AC and a battery paired with it. Cities over 50,000 people had until September 30, 2023; smaller cities until September 30, 2024.
Cities under 5,000 people, and counties under 150,000 with the cities inside them, are exempt. A design the platform cannot process can still go through ordinary plan review.
Source: Gov. Code §65850.52, checked September 24, 2026.
What moves the price on one house
- Size versus your bill. Size follows twelve months of billed kWh, not square footage. A larger array is more modules, racking and labor.
- The roof. Material, pitch, number of planes and remaining life change the labor and the attachments. A roof near the end of its life raises a sequencing question: see whether your roof suits solar.
- Shade. Trees, chimneys and neighboring buildings change the layout and the equipment list, and the production the system is sold on.
- Main panel. If the main service panel cannot take the new circuit, the job adds a panel upgrade or a derate, with its own permit.
- A battery. It is a separate system with its own equipment and interconnection. Price it as its own line.
Where the city cost figures come from
Every city cost page uses the California Distributed Generation Statistics Interconnected Project Sites data set, published under CPUC authorization, with data through May 31, 2026. It covers systems connected by PG&E, SCE and SDG&E only; municipal utilities such as LADWP and SMUD are not in it.
The cost per watt is the reported total system cost divided by system size, for homeowner-owned, solar-only systems of 1 to 25 kW approved from January 2025 to May 2026. Leases, PPAs and systems with a battery are left out, and values outside $1.50 to $12 per watt are dropped.
A city page shows the city's figure when at least 30 owners reported a cost there, and otherwise the county, the utility territory or the statewide figure, always named. The typical system price is that median times the median size of systems connected in 2025, rounded to $100.
The CPUC's consumer guide points shoppers to this data for recent installation costs and notes they are not verified by the government. A “city” is the service city written on the application, which can include nearby unincorporated addresses.
| Territory | Median | Middle half | Reports | Median size, 2025 |
|---|---|---|---|---|
| PG&E | $3.99/W | $2.71 to $5.66 | 33,577 | 6.1 kW |
| SCE | $3.48/W | $2.85 to $4.39 | 13,124 | 6.48 kW |
| SDG&E | $4.85/W | $3.84 to $6.36 | 11,927 | 5.49 kW |
| All three | $4.14/W | $2.90 to $5.53 | 58,628 | 6.15 kW |
Across all three territories, a 6.15 kW system at the median comes to about $25,500. Your own quote depends on your roof, panel and contract. Find your city's figure.
Sources: California Distributed Generation Statistics (CPUC), Interconnected Project Sites data set, data through May 31, 2026, checked September 24, 2026; CPUC, California Solar Consumer Protection Guide, checked September 24, 2026.
Frequently asked questions
Is there still a federal tax credit for home solar in 2026?
No, not for a system you own whose installation is completed after December 31, 2025. 26 U.S.C. §25D(h) says the residential clean energy credit does not apply to expenditures made after that date, and §25D(e)(8)(A) counts an expenditure as made when installation is completed. Checked September 24, 2026. This is not tax advice.
Does solar raise my property taxes in California?
Not while Revenue and Taxation Code §73 applies. It keeps a qualifying active solar system out of "new construction", so it does not add to your assessment. The section is in effect only until January 1, 2027; a system that qualifies before then stays excluded until the property changes ownership. The Board of Equalization says a system completed before January 1, 2027 may qualify. Checked September 24, 2026.
How much can a California city charge for a solar permit?
For a home photovoltaic system, Government Code §66015 limits the total of a city's permit charges to $450 plus $15 per kW above 15 kW, unless the city adopts a written finding, in a resolution or ordinance, with substantial evidence that its reasonable cost is higher. The section runs until January 1, 2034. Checked September 24, 2026.
Can I go solar without paying upfront?
Often, but that is a payment structure, not a lower cost. The CPUC's Solar Consumer Protection Guide lists little or no upfront cost for leases, PPAs, PACE and loan purchases. Lease and PPA payments typically rise 1 to 3 percent a year under an escalator, and the guide warns that solar energy is rarely free. Checked September 24, 2026.
Sources
- 26 U.S.C. §25D(h) and (e)(8)(A), residential clean energy credit — checked September 24, 2026
- 26 U.S.C. §48E, clean electricity investment credit: §48E(i), leasing arrangements — checked September 24, 2026
- California Revenue and Taxation Code §73, active solar energy system exclusion (amended by SB 710, Stats. 2025, Ch. 328) — checked September 24, 2026
- California State Board of Equalization, Active Solar Energy System Exclusion — checked September 24, 2026
- BOE Letter to Assessors No. 2024/031, section 73 sunset and construction in progress — checked September 24, 2026
- California Business and Professions Code §7169, solar energy system disclosure document (amended by SB 826, Stats. 2021, Ch. 188) — checked September 24, 2026
- CSLB, Solar Energy System Disclosure (Solar Requirements) — checked September 24, 2026
- CSLB, Check a Contractor License or Home Improvement Salesperson Registration — checked September 24, 2026
- California Government Code §66015(a), residential solar permit fees — checked September 24, 2026
- California Government Code §65850.52, online automated solar permitting (amended by AB 1754, Stats. 2023, Ch. 131) — checked September 24, 2026
- CPUC, California Solar Consumer Protection Guide — checked September 24, 2026
- California Distributed Generation Statistics (CPUC), Interconnected Project Sites data set, data through May 31, 2026 — checked September 24, 2026
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