Credit Guides
Commercial solar incentives by state in 2026: Illinois Shines, New Jersey ADI, Massachusetts SMART 3.0 and NY-Sun, plus how to stack them with the federal ITC.
Author -
Paulestini Francois
Published -
READ TIME
Commercial solar incentives now depend more on your state than ever. The federal tax credit is winding down for solar, while state programs in Illinois, New Jersey, Massachusetts and New York still pay for every megawatt-hour your system makes. Here's what each layer is worth in 2026, how the strongest state programs pay, and how to stack them with the federal ITC.
QUICK ANSWER
Commercial solar incentives in 2026 include the federal ITC (30% to 50%, if construction began by July 4, 2026 or the system is in service by December 31, 2027), 100% bonus depreciation, and state REC or SREC payments. Illinois Shines pays $31.96 to $80.77 per REC, and New Jersey ADI pays $85 to $100 or more per MWh for 15 years.
KEY FACTS
Which states have the best commercial solar incentives? Illinois, New Jersey, Massachusetts and New York run the strongest programs in 2026.
What does Illinois Shines pay for a 1 MW commercial system? $42.37 per REC in Group A and $49.57 in Group B for 500 kW to 2 MW on-site systems in 2026-27.
How long do New Jersey SREC-IIs last? 15 years from commercial operation under the ADI program.
Can businesses still get the solar ITC? Yes, if construction began by July 4, 2026 or the system is placed in service by December 31, 2027.
Are SREC payments taxable? Generally yes. REC and SREC income is usually taxable business income.
Can the solar investment tax credit (ITC) be combined with state incentives? Yes. The solar ITC stacks with state REC programs, depreciation, net metering, property tax breaks and C-PACE financing.
What commercial solar incentives are available in 2026?
Commercial solar incentives in 2026 stack in layers: the federal Investment Tax Credit (ITC) for qualifying projects, 100% bonus depreciation, state REC or SREC payments, net metering bill savings, property and sales tax breaks, and C-PACE financing. The state layer is where the biggest differences are.
The federal ITC is still the largest single incentive, but its window is closing for solar. Depreciation adds value on almost every business system, as our solar panel depreciation guide shows. State programs then pay for the solar output itself, usually per megawatt-hour (MWh), for 15 to 20 years.
That's why commercial solar incentives by state vary so much: the same rooftop system can pencil out in Illinois or New Jersey and struggle in a state without a renewable energy credit market. The sections below cover the federal rules first, then the strongest state programs for businesses.
Can businesses still get the federal solar tax credit?
Yes, if timing works. Under the One Big Beautiful Bill Act, commercial solar keeps the Section 48E ITC, 30% with prevailing wage plus up to 20 points of bonus adders, only if construction began by July 4, 2026, or the system is placed in service by December 31, 2027. Projects starting now must finish in 2027.
Projects that began construction by July 4, 2026 have four years to be placed in service. The energy community and domestic content adders can each add 10 points, taking the credit from 30% to as much as 50%. Our commercial solar tax credit guide and solar tax credit 2026 guide cover the rules in detail.
Businesses that can't use the credit can sell it for cash. Our guide on how to sell commercial solar tax credits explains the process.
Which states have the best commercial solar incentives?
Illinois, New Jersey, Massachusetts and New York run the strongest commercial solar incentive programs in 2026. Illinois and New Jersey pay per MWh for 15 to 20 years, Massachusetts pays a per-kWh rate over 20 years, and New York pays an upfront incentive per watt.
Illinois Shines: $31.96 to $80.77 per REC for on-site systems in the 2026-27 program year, on 15- or 20-year contracts.
New Jersey ADI: $85 per MWh for 1 to 5 MW ground mounts and at least $100 for 1 to 5 MW rooftops and carports, for 15 years.
Massachusetts SMART 3.0: a per-kWh rate that the state resets each year, paid for 20 years.
New York NY-Sun: an upfront incentive per watt, set by region and capacity block.
Other states offer property tax exemptions, sales tax exemptions or C-PACE financing without a REC market. Program capacity fills up, so check availability before you sign a contract.
How much does Illinois Shines pay commercial solar?
Illinois Shines pays $42.37 per REC in Group A and $49.57 in Group B, the ComEd area, for 500 kW to 2 MW on-site systems in the 2026-27 program year. One REC equals one MWh. Smaller systems earn more per REC, up to $80.77, and 2 to 5 MW systems earn $31.96 to $37.39.
The prices come from the Illinois Power Agency's final 2026-27 REC price table. The incentive equals the RECs a project is expected to make over its 15- or 20-year contract times the price, paid through an Approved Vendor. Large distributed generation projects get 18% of the 1,000 MW initial allocation, about 180 MW statewide.
A $20 per REC adder offsets the lost ITC for customer-owned Small DG projects, but it doesn't apply to larger commercial systems. Public schools and community-driven community solar get higher rates. Explore every category in the chart below.
A 500 kW-2 MW distributed generation (on-site) project earns $42.37 per REC in Group A and $49.57 in Group B. Bigger systems get lower prices per MWh but far more RECs.
Source: Illinois Shines, Final 2026-27 REC Prices (program year starting June 1, 2026). Prices are per REC over a 15- or 20-year contract, paid through an Approved Vendor. Large DG gets 18% of the 1,000 MW initial allocation. The $20 adder applies only to customer-owned Small DG projects.
How does New Jersey's ADI program pay businesses?
New Jersey's Administratively Determined Incentive (ADI) program pays a fixed SREC-II for each MWh a net-metered business system produces, for 15 years. In 2025 the Board of Public Utilities set $85 per MWh for 1 to 5 MW ground mounts and at least $100 for 1 to 5 MW rooftop, carport, canopy and floating systems.
The rates come from a BPU order dated April 23, 2025. A 2025 cost cap order raised non-residential incentives by $5 to $10 per MWh depending on the segment and set a 150 MW block for net-metered non-residential projects in energy year 2026. The 15-year clock starts at commercial operation, per the state's ADI program FAQs.
Projects larger than 5 MW go through the competitive Competitive Solar Incentive (CSI) program instead. Its fourth solicitation, approved June 30, 2026, awarded 238 MW.
What is Massachusetts SMART 3.0?
SMART 3.0 is Massachusetts' solar incentive program. It pays utility incentives per kWh for 20 years, with rates the state resets every year rather than a declining block. It favors rooftop, canopy and brownfield projects, and systems of 1 MW or more generally must include battery storage.
The program opened with 900 MW of statewide capacity for program year 2025 and a second enrollment window in January 2026, according to installer Solect Energy. Solect's example: a 250 kW rooftop system in program year 2025 earned a $0.2821 per kWh base rate plus a $0.03 building-mounted adder. Behind-the-meter projects also keep their utility bill savings.
A new adder raises the rate for rooftop systems above 900 kW, and owners of systems installed 15 or more years ago can repower and requalify. Because the state sets rates annually, confirm the current program year's rate before committing.
What other state and local incentives help commercial solar?
Beyond REC programs, businesses can use upfront per-watt incentives like New York's NY-Sun, property tax exemptions for added solar value, sales tax exemptions on equipment, net metering, and C-PACE financing, which is active in about 37 states and repaid through the property tax bill.
Property tax exemptions. Texas exempts the added appraised value of solar energy devices from property tax under Tax Code Section 11.27. Rules vary by state and locality.
Upfront incentives. NY-Sun pays commercial projects a per-watt incentive set by region and capacity block, administered by NYSERDA.
C-PACE. Commercial property assessed clean energy loans offer long terms and are repaid through a property tax assessment. Our commercial solar financing guide compares C-PACE, loans, leases and PPAs.
Net metering rules also shape savings: many states now credit exported power below retail rates. Use the calculator below to stack the federal ITC, a state REC program and depreciation for your system.
Illinois Shines Group B plus a 30% ITC covers about 102% of the cost. The ITC only applies if construction began by July 4, 2026 or the system is placed in service by December 31, 2027.
Illustrative only. REC income is taxable and paid over time; this view isn't discounted. Illinois prices are 2026-27 Distributed Generation rates; New Jersey rooftop is the minimum rate for 1-5 MW. Program capacity, adders and eligibility vary. Confirm with your installer and tax advisor.
What happened to USDA REAP grants for solar?
USDA paused new Rural Energy for America Program (REAP) grant awards in March 2026, rescinded its 2025-2027 funding notice in April, and issued a final rule in October 2026 that requires projects to be built and operating before applying. Rural businesses and farms should treat REAP as reimbursement, not upfront funding.
REAP provided more than $4.8 billion through over 19,000 grants and loan guarantees between 2014 and 2025, according to the National Sustainable Agriculture Coalition, as reported by BioEnergy Times. The March pause cited Executive Order 14315, which directed agencies to limit support for wind and solar. Applicants without an executed agreement had to reapply under the new rules.
Are state solar incentives taxable?
Usually, yes. REC and SREC sales and performance-based payments are generally taxable business income, while the federal ITC is a credit against tax. Upfront grants or rebates can also reduce the cost basis used for the ITC and depreciation, depending on how they're treated.
That makes the order of the stack matter. A $100 per MWh SREC is worth less after tax, and a rebate that lowers your basis also lowers the credit. Before you sign, have your tax advisor model the after-tax value of each incentive. Our commercial solar panel cost guide shows typical costs before and after credits, and the investment tax credit guide covers how basis works.
Sources
Illinois Shines, Final 2026-27 REC Prices (program year starting June 1, 2026)
New Jersey BPU, Order on CSI Third Solicitation Price Caps (April 23, 2025) and Cost Cap Order (May 21, 2025)
New Jersey Clean Energy Program, ADI Program FAQs
Solect Energy, A New Era for Clean Energy: Inside Massachusetts' SMART 3.0
BioEnergy Times, USDA changes REAP rules (October 1, 2026)
Texas Tax Code Section 11.27, solar and wind-powered energy devices
NYSERDA, NY-Sun
Frequently Asked Questions
What incentives are available for commercial solar in 2026?
Businesses can combine the federal investment tax credit, if construction began by July 4, 2026 or the system is in service by the end of 2027, with 100% bonus depreciation, state REC or SREC payments, net metering, property and sales tax breaks, and C-PACE financing.
Which state has the best commercial solar incentives?
How does Massachusetts SMART 3.0 work for businesses?
Are USDA REAP grants still available for solar?
Can Cenet Capital help with commercial solar incentives?
Building commercial solar? Stack every incentive
Cenet Capital helps businesses size the federal ITC, sell it for cash and pair it with state REC programs. Share your system size, state and target in-service date.
More Insights
