Today’s homeowners can take advantage of a number of tax incentives to reduce costs related to installing solar energy systems. But exactly how much money can homeowners save by leveraging solar tax credits? Often, it’s less than homeowners are led to believe.
A lawsuit filed in March 2026 by the State of New York reveals that information given to homeowners about those incentives can be very misleading. New York’s Attorney General says the company targeted in the case “told consumers that government ‘incentives’ and ‘programs’ would cover the cost of their installations.” The Attorney General alleges such a sales pitch amounts to “false promises and predatory tactics.”
Unfortunately, the activity that triggered the lawsuit in New York is common. Reports show that the savings that can be gained from solar tax credits is often overstated by salespeople seeking to lock homeowners into costly solar contracts. In 2024, Time Magazine reported that there were hundreds of lawsuits alleging solar energy salesmen “overpromise and underdeliver, often telling people they won’t have an electric bill or that they will get a check from the government if they sign up for solar panels.”
The reality is that homeowners who install solar systems can both benefit from tax incentives and save money on their energy bills. However, understanding the true extent of the savings requires a proper and factual explanation. The following are key factors related to solar tax credits that homeowners should know, along with some of the misrepresentations consumers should watch out for.
Government Programs Provide Credits, Not Rebates
Government programs aimed at reducing the costs of solar energy, such as the Residential Clean Energy Credit offered under the Inflation Reduction Act, generally provide tax credits. That means the amount offered by the program is subtracted from income taxes owed by the homeowner. If homeowners don’t owe any income taxes, then they don’t gain anything from the credit.
Consumers should be aware of companies that represent the benefit as a rebate instead of a tax credit. Any claim that homeowners will receive a “rebate check” from government programs following the installation of a solar system is a misrepresentation.
Consumers should also be wary of sales pitches that claim related costs, such as roof repairs or upgrades to electrical systems, can also be covered by tax credits. Energy tax credit programs are generally very specific, using language that limits their application to costs related to solar energy equipment.
Solar Energy Systems Don’t Necessarily Erase Energy-Related Costs
Solar energy systems allow consumers to tap into free solar energy to power their homes instead of paying their local power company. However, transitioning to a solar energy system doesn’t necessarily do away with all energy-related costs.
Consumers who take out a loan to finance their solar system will continue to have energy-related costs until the loan is paid off. In addition, homeowners may face ongoing costs related to maintaining their system or drawing power from their local power company when weather conditions require it.
It’s critical that consumers receive a complete and honest representation of the costs they will incur before signing a contract. When financing costs are added to a long-term payment or lease contract, consumers can end up paying more per month for their “free” energy than the fees charged by their local power company, even when those consumers are able to claim the maximum tax credit offered by government programs.
– Josie Garcia is the Chief Operating Officer and Vice President of Client Services at Solar Equity Solutions, where she leads operations and client experience with a strong focus on accountability, collaboration, and homeowner advocacy. Originally from San Jose, California, and now based in Houston, she brings a resilient, solutions-driven approach to helping clients navigate complex and often stressful solar contract issues. Josie is known for prioritizing clear communication, transparency, and trust, and she is committed to building client-first systems that deliver clarity, professionalism, and meaningful results in a legally sensitive industry.
Copyright © 2026 California Business Journal. All Rights Reserved.
For California Business Journal Disclaimers, go to /terms-conditions/.
