Although the state does not have a program at this time that provides funding of renewable energy equipment on an individual basis, there are tax exemptions available in certain instances. Texas residents can also check with their local utility providers, as some have energy efficiency programs that offer low cost loans/rebates and advice on renewable energy technologies.

Federal & State Incentives for Renewables and Efficiency
The Database of State Incentives for Renewable Energy (DSIRE) gives information on state and federal efficiency incentives by state, technology type, and incentive type with links to program web sites, legislation, tax credits and deductions, rebates, grants, low-interest loans, property and sales tax exemptions, and bond programs.

USDA Rural Energy for America Program (REAP) - Grants (PDF)
This is a U.S. Department of Agriculture website.

Texas Tax Code Exemptions & Deductions

Texas Tax Code Incentives for Renewable Energy Systems
The page lists property tax exemptions, franchise tax exemptions, and franchise tax deductions. In Texas, the state provides businesses with both a franchise tax deduction and a franchise tax exemption for solar energy devices. In addition, Texas has a property tax exemption for the appraised value of a solar or wind-powered energy device for on-site energy production and distribution.

SEIA Guide to Federal Tax Incentives
To help homeowners take advantage of the federal solar energy tax credits, the Solar Energy Industries Association (SEIA) has published The SEIA Guide to Federal Tax Credits for Solar Energy, a 40-page online manual. Also see this SEIA press release.

Photovoltaic Systems & Solar Water Heating Tax Credits

The Energy Policy Act of 2005 (EPAct) provides incentives for purchasing and using solar equipment. This is the first residential tax credit for solar energy established in 20 years. A tax credit is a dollar-for-dollar reduction of an individual's or business'
tax liability. The tax credits are available for systems "placed in service" from January 1, 2006 through December 31, 2008. The tax credit reverts to 10 percent after that
date.

Commercial Systems
EPAct incentives provide a credit equal to 30 percent of qualifying expenditures for the purchase and use of commercial solar installations, with no cap on the total credit allowed.

Home Photovoltaic Systems
Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirement. The tax credit is for 30 percent of the cost of the system, up to $2,000. This credit is not limited to the $500 home improvement cap.

Home Solar Water Heating
Solar water heating property must be certified for performance by the Solar Rating Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed. At least half the energy used to heat the dwelling's water must be from solar in order for the solar water heating property expenditures to be eligible.

• At least half of the energy generated by the "qualifying property" must come from the sun. Homeowners may only claim spending on the solar water heating system property, not the entire water heating system of the household.
• The credit is not available for swimming pools or hot tubs.
• The water must be used in the dwelling.
• The system must be certified by the Solar Rating and Certification Corporation (SRCC).

A home owner can take both a 30% credit up to the $2,000 cap for a photovoltaics system and a 30% credit up to a separate $2,000 cap for a solar water heating system. The credit is calculated based on the individual's expenditures excluding subsidized energy financing, which is defined as "financing provided under a Federal, State, or local program a principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy." Consumers who receive other incentives are advised to consult with a tax professional regarding how to calculate this federal tax credit.

If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. Expenditures include labor costs for the onsite preparation, assembly, or original installation of the system and for piping or wiring to interconnect the system to the dwelling.

To be eligible for the credit, a system must be "placed in service" or activated on or after January 1, 2006, and on or before December 31, 2008. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is on a new home, the "placed in service" date is the date of occupancy by the homeowner.

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