Colorado is one of the most solar-friendly states in the nation, and it is not just because of our 300 days of sunshine. The combination of federal, state, and utility incentives makes solar more affordable here than in most other states. When you stack all available incentives, the effective cost of going solar in Colorado can be reduced by 35 to 45 percent or more.
This guide is your comprehensive reference for every solar incentive available to Colorado homeowners in 2026. We update it regularly to reflect the latest policy changes.
Federal Incentives
Federal Investment Tax Credit (ITC) — 30%
Value: 30 percent of total system cost Type: Dollar-for-dollar federal income tax credit Eligibility: All Colorado homeowners who purchase a solar system (cash or loan) Expiration: 30% rate available through December 31, 2032
The ITC is the single largest solar incentive. On a typical $21,000 Colorado installation, the ITC saves you $6,300. This credit applies to the total system cost including panels, inverters, racking, labor, permits, and battery storage.
Key details:
- The credit offsets your federal income tax liability dollar-for-dollar
- Unused credits can be carried forward to future tax years
- Batteries qualify for the credit (even standalone batteries as of the Inflation Reduction Act)
- Leased systems do not qualify — the leasing company claims the credit
For a complete explanation, see our Federal Solar Tax Credit Guide.
Residential Clean Energy Credit (Battery Storage)
Value: 30 percent of battery cost Type: Federal income tax credit Eligibility: Standalone or solar-paired battery storage
As of the Inflation Reduction Act of 2022, battery storage systems qualify for the 30 percent ITC whether installed with solar panels or as a standalone addition. A $12,000 battery generates a $3,600 tax credit, reducing the effective cost to $8,400.
Colorado State Incentives
Property Tax Exemption for Renewable Energy
Value: 100 percent of added value excluded from property assessment Type: Automatic property tax exemption Eligibility: All residential solar systems in Colorado
Colorado law exempts the value of residential solar energy systems from property taxation. Since solar panels can increase your home value by $15,000 to $30,000 (see Does Solar Increase Your Home Value?), this exemption saves you significant property taxes — potentially $200 to $500+ per year, every year.
This exemption is automatic. You do not need to apply or file any special paperwork with your county assessor.
Sales Tax Exemption for Solar Equipment
Value: Approximately 2.9 percent of equipment cost Type: State sales tax exemption Eligibility: Residential solar energy equipment
Colorado exempts solar energy equipment from the state sales tax (2.9 percent). On a $21,000 system, this saves approximately $600 in sales tax. Some local jurisdictions also exempt solar from their local sales taxes, though this varies by municipality.
Note: This exemption applies to the equipment itself. Labor charges are generally not subject to sales tax in Colorado anyway.
Colorado State Tax Deduction
Colorado's state income tax is a flat rate applied to federal taxable income. Since the federal ITC reduces your federal tax bill (which may increase your state adjusted gross income in some scenarios), the interaction is generally favorable for Colorado taxpayers. Consult your tax professional for specifics.
Utility-Specific Incentives
Colorado's utilities each have their own solar programs and incentives. Here are the major ones:
Xcel Energy
Xcel Energy serves the Denver metro area, Boulder, and much of the Front Range — roughly 1.5 million Colorado customers.
Net Metering Program:
- Full retail rate credits for exported solar electricity
- Monthly rollover of excess credits
- Annual reconciliation of net excess at avoided cost rate
- No capacity limit for residential systems up to 25 kW
- Bidirectional meter provided at no charge
Solar*Rewards Program: Xcel's Solar*Rewards program has varied over the years. While the upfront incentive amounts have decreased as solar costs have dropped, the program may still offer small production-based incentives. Check Xcel's current offerings or ask your ProGreen Solar consultant for the latest details.
Renewable Energy Standard: Colorado's Renewable Energy Standard requires Xcel to generate 100 percent clean electricity by 2050, driving continued investment in solar-friendly policies and programs.
United Power
United Power is a member-owned cooperative serving communities north of Denver, including Brighton, Firestone, Frederick, and parts of Longmont and Erie.
Net Metering:
- Available for systems up to 25 kW
- Excess generation credited at utility avoided cost rate
- Monthly rollover of credits
Holy Cross Energy
Serving Eagle, Pitkin, Garfield, and other Western Slope counties.
Net Metering:
- Available for residential solar systems
- Competitive rates and credit structures
Colorado Springs Utilities
Net Metering:
- Available for residential systems
- Credits at retail rate with monthly rollover
Other Colorado Utilities
Most other Colorado utilities — including Fort Collins Utilities, Longmont Power & Communications, Platte River Power Authority members, and rural electric cooperatives — offer some form of net metering or solar compensation. The specific terms vary. ProGreen Solar can advise you on your specific utility's programs.
Community Solar
For homeowners whose roofs are not suitable for solar (due to shading, orientation, or structural limitations), Colorado has one of the nation's most developed community solar programs.
How it works: You subscribe to a share of a larger solar installation located elsewhere. The electricity produced by your share is credited to your utility bill, just as if the panels were on your roof.
Benefits:
- No rooftop installation required
- No upfront cost (subscription-based)
- Savings of 5 to 15 percent on your electricity bill
- Available to renters and homeowners alike
- Can be combined with or serve as an alternative to rooftop solar
Colorado was one of the first states to establish community solar legislation, and the market is mature with many available options.
Additional Financial Benefits
PACE Financing (Property Assessed Clean Energy)
Some Colorado municipalities participate in PACE financing programs, which allow you to finance solar through your property tax assessment. The loan is attached to the property (not the homeowner), with payments made through your property tax bill.
Benefits:
- Can finance up to 100% of system cost
- Stays with the property if you sell
- May have favorable terms for older homes or commercial properties
Solar Renewable Energy Certificates (SRECs)
Colorado does not have a traditional SREC market like some Eastern states. However, utilities like Xcel Energy may purchase the renewable energy attributes of your system through their Solar*Rewards program, providing additional value.
Federal USDA REAP Grant (Rural Properties)
If your home is in a rural area (as defined by the USDA), you may qualify for a Rural Energy for America Program (REAP) grant covering up to 50 percent of your solar system cost. This is primarily aimed at agricultural and small business properties but is worth investigating for eligible rural homeowners.
Stacking Your Incentives: Maximum Savings
Here is how all incentives stack up for a typical 7 kW system in the Xcel Energy service area:
| Incentive | Savings |
|---|---|
| Gross system cost | $21,000 |
| Federal ITC (30%) | -$6,300 |
| Colorado sales tax exemption | -$600 |
| Net cost after incentives | $14,100 |
| Annual property tax savings (exemption) | $300/year |
| Annual electricity savings (net metering) | $1,500/year |
| Year 1 total savings | $8,700 |
With a net cost of approximately $14,100 and annual ongoing savings of $1,800 (electricity + property tax), the effective payback period is about 6 to 7 years. After that, your savings are pure profit for the remaining 18+ years of panel life.
Timeline: When to Act
Several factors suggest that 2026 is an excellent time to go solar in Colorado:
The ITC Is at Its Peak
The 30 percent federal tax credit is available through 2032, but every year you wait is a year of lost savings. A system installed in 2026 generates 6 more years of free electricity than one installed in 2032.
Electricity Rates Are Rising
Colorado utility rates increased 4.2 percent in 2024 and similar amounts in 2025. The sooner you go solar, the sooner you insulate yourself from these increases.
Net Metering Is Available Now
Net metering policies are subject to change. Homeowners who go solar now lock in their net metering arrangement under current favorable terms.
Equipment Costs Are Stable
After years of declining prices, solar equipment costs have stabilized. Significant further drops are unlikely in the near term, meaning there is little financial benefit to waiting for lower prices.
How ProGreen Solar Helps You Maximize Incentives
At ProGreen Solar, we are experts in Colorado solar incentives. Every proposal we generate includes:
- Full ITC calculation with guidance on claiming the credit
- All applicable state and local incentives
- Your specific utility's net metering details
- A clear net cost showing exactly what you pay and exactly what you save
- Documentation needed for tax filing
We also stay current on incentive changes and can advise you on timing your installation to maximize your benefits.
Ready to take advantage of Colorado's solar incentives? Get your free solar estimate or call ProGreen Solar at (303) 484-1410. We will show you every dollar of incentive you qualify for and design a system that maximizes your savings.
