What is community solar?

Community solar is a shared solar project whose benefits flow to many customers, usually from an off-site array. Subscribers pay for a share of its output and get credits on their electric bills. No panels go on your roof, so renters and people with shaded roofs can take part.

That's close to the Department of Energy's definition. DOE also cites National Renewable Energy Laboratory analysis finding that nearly 50% of households and businesses can't host rooftop solar. Community solar projects, sometimes called solar gardens or community solar farms, were built for that group.

The market is no longer small. Wood Mackenzie and the Coalition for Community Solar Access count 10.1 gigawatts installed through 2025. Subscribers include homeowners, renters and apartment tenants, along with businesses, nonprofits and governments that often sign on as long-term anchor tenants.

How does community solar work?

A community solar array sends power to the grid, and the utility turns its value into bill credits. You get credits for your share and pay the provider a subscription fee, usually less than the credits are worth. You keep your utility, and the difference is your savings.

Your bill may still show a utility charge, since you stay connected to the grid as before. The credit's size depends on your state program, which might pay the full retail rate or something lower, as Wood Mackenzie notes. Some providers now combine both charges into one bill. Wood Mackenzie credits that consolidated billing, along with digital marketing, for a 12% drop in the cost of signing up subscribers in 2025.

Do community solar subscribers get a tax credit?

No. Community solar subscribers generally don't get a federal tax credit, and your benefit is the bill savings. The project owner claims the credit. The residential clean energy credit that a few panel owners could use ended for expenditures made after December 31, 2025, so buying a share no longer earns one either.

This is the question most guides skip. A 2015 IRS private letter ruling let one individual who bought panels in an off-site array claim the Section 25D credit, though a ruling like that binds only the taxpayer who asked for it. Either way, Section 25D now shuts off for spending after 2025. Our solar tax credit guide explains what ended and what's left. State incentives vary, so check your own state's program.

How much can you save with community solar?

Most community solar subscribers save about 5% to 15% on the credits they buy, and some contracts reach 20%. On a $140 monthly bill with 90% covered and a 10% discount, that's roughly $150 a year. Programs built for low-income households often aim for at least 20%.

Canary Media puts the usual discount at 5% to 15%, while EnergySage reports 5% to 20%. Before you sign, read the contract for the items DOE lists as consumer best practices: a guaranteed bill credit, no sign-up, exit or termination fees, and plain-language disclosures. Also ask whether the discount is fixed and how the provider handles a move out of the service area.

Use the calculator below to test your own bill. Developers can switch modes to size the project's tax credit.

What federal tax credit can a community solar project claim?

A community solar project can generally claim the 30% Investment Tax Credit (ITC) under Section 48E if prevailing wage rules are met or it's under 1 MW AC. Energy community and domestic content bonuses add 10 points each, and an allocated low-income bonus adds 10 or 20.

Community solar is a strong fit for the low-income communities bonus, a program with 1.8 GW of annual capacity for facilities under 5 MW AC. Category 1 (low-income communities) and Category 2 (Indian land) add 10 points. Category 3 (low-income residential buildings) and Category 4 (low-income economic benefit projects) add 20, and Category 4 holds the largest share at 800 MW in 2026.

To qualify for Category 4, at least 50% of the project's financial benefits must go to qualifying households, and each must get a bill credit discount of at least 20%. Stack everything and the rate can reach 70% on paper. For the other two bonuses, see our guides to the energy community map and the domestic content bonus, plus our Section 48E guide.

Did the July 4, 2026 deadline end the community solar tax credit?

Not for every project. Under Section 48E, solar projects that began construction by July 4, 2026 keep their path to the credit. Later starts must be placed in service by December 31, 2027. Projects that started in time still need to finish within continuity rules and meet foreign-entity limits.

The rule sits in Section 48E(e)(4), and it applies to facilities that begin construction more than 12 months after July 4, 2025. IRS continuity safe harbors have generally allowed four calendar years, which is why Wood Mackenzie talks about the ITC falling away in 2030. See our notes on Notice 2025-42 and the FEOC rules before you rely on a start date.

The result is a rush, then a question mark. Wood Mackenzie reports a pipeline above 8 GW, 29% of it under construction, and it expects 2026 installs to grow 12% after a 25% drop in 2025. It then sees existing state programs shrinking about 5% a year through 2030. The chart below shows how the market got here.

How do developers turn the tax credit into cash?

Most community solar developers can sell the credit for cash under Section 6418 instead of using it themselves. ITCs averaged $0.913 per dollar in 2026, per Crux. On a $3 million credit, that's about $2.7 million, and the sale proceeds aren't taxable income to the seller.

Smaller developers often can't reach traditional tax equity, so selling the credit matters. Crux's H1 2026 review found that credits subject to prohibited foreign entity (PFE) rules sold about $0.015 below exempt ITCs. Solar's share of the market slipped from 35% to 30%. That makes clean paperwork and credit support worth real money, and our guide to tax credit buyers covers what they check. For the wider funding picture, see commercial solar financing and our commercial solar tax credit guide.

Which states have community solar?

DOE says at least one community solar project operates in 44 states and localities, including Washington, DC. Of those, 24 have passed enabling legislation, and they typically have more projects and open subscriptions. You can only join a project in your utility's service area, so availability varies widely.

Illinois and the Mid-Atlantic should drive 2026 growth, while New York and Maine have slowed, according to Wood Mackenzie. Developers are also lining up projects in proposed programs in Ohio, Iowa, Pennsylvania and Michigan, which could add up to 1.5 GW through 2030 if laws pass. A newer community-scale segment, with projects up to 20 MW connected to the distribution grid, doesn't depend on state legislation in the same way, pv magazine reports.

To find a community solar program as a subscriber, DOE suggests contacting your utility or your state's program website. Check the provider's contract, not just the headline discount. If you're developing a project, the bigger question is how much of the credit you can lock in, and that's where we can help.

Sources

• U.S. Department of Energy, Community Solar Basics

• Wood Mackenzie, US community solar surpasses 10 GW milestone in 2025

• Wood Mackenzie, Cumulative US community solar capacity expected to break 14 GWdc by 2028

• pv magazine USA, U.S. community solar passes 10 GW milestone

• IRS, Clean Electricity Low-Income Communities Bonus Credit Amount Program

• 26 CFR, Section 1.48E(h)-1

• 26 U.S.C., Section 48E and Section 25D

• IRS, Private letter ruling on a community-shared solar panel owner (hosted by CESA)

• Crux, The state of clean energy finance in H1 2026

• Canary Media, What is community solar, and how can you sign up?

• EnergySage, Community solar explained