Colorado Solar Incentives: Tax Credits, Rebates, & Exemptions in 2025

Last updated: March 2025

Colorado residents can save an average of $5,340 through solar incentives and rebates available throughout the state. Colorado offers excellent incentives to go solar and to add battery storage, contributing to the state’s goal of achieving 100% clean energy generation by 2050.

Due to solar-friendly policies that promote incentives, Colorado is considered one of the best states in the country for home solar. If you’re a Colorado homeowner curious about how much you can save on a home solar system installation, here’s the ultimate guide to incentives and rebates offered in the Centennial State.

Overview of Colorado solar incentives and rebates

Colorado offers state, federal, and local incentive programs that make going solar a great deal. The table below gives an overview of what’s available in 2025:

Calculate how much you can save with Colorado incentives

Federal solar tax credit

Tax-paying homeowners in Colorado can file for the 30% federal tax credit when they go solar. This tax incentive equals 30% of the solar panel system installation cost and is applied to federal income liability.

The average solar panel installation in Colorado will earn a federal tax credit of $3,690. Keep in mind the tax credit is not an upfront payment. The solar investment tax credit (ITC) reduces your income tax liability, so you won’t see the benefits of the credit until you file your taxes for the year.

If your liability is less than the value of the federal solar tax credit, you will owe $0, and any remaining credit value will be applied to next year’s taxes. The credit can roll over for five years without an income limit.

Solar tax exemptions in Colorado

Colorado is one of the few states in the U.S. that offers 100% property and sales tax exemptions for a solar installation – avoided costs that help homeowners keep some cash in their pockets.

Colorado solar property tax exemption

According to a study by the experts at SolarReviews, solar can raise your home’s value by 6.8% on average. That’s good news, right? Well, an increase in your home’s property value can mean increased property taxes. 

With the help of Colorado’s 100% property tax exemption, you won’t have to worry about paying any additional property taxes after installing solar! Considering the median home value in Colorado and the state’s average property tax value of 0.48%, the solar property tax exemption can save the average home $177 each year on property tax.

Colorado solar sales and use tax exemption

Colorado offers a 100% sales tax exemption for homeowners who purchase home solar system equipment. This means that Colorado residents don’t have to pay the additional 2.9% state sales tax that gets added to their solar purchase.

The city of Boulder offers a Sales and Use Tax Rebate, which will essentially pay you back the amount of sales tax you originally paid on your solar equipment rather than excluding it from the final sale.

Local solar rebates and incentives in Colorado

In addition to the tax incentives, Colorado utility companies and solar programs for eligible residents offer incentives to lower the upfront cost of your solar project. 

• Xcel Energy Solar*Rewards: Colorado’s largest investor-owned utility offers multiple solar rebate programs to target income-qualified residents. Eligible participants can receive an upfront rebate of $1 per watt of solar installed. If the average solar system in Colorado is about 5 kW, that’s a $5,000 rebate!

• Holy Cross Energy: Customers of Holy Cross Energy receive an upfront rebate for installing solar energy systems. Rates vary with system size, with systems between 0 and 6 kW earning $250 per kilowatt and systems 6 to 25 kW earning $100 per kilowatt.

• EnergySmart Colorado: This nonprofit organization partners with local organizations, utility companies, and local governments to offer rebates for qualifying participants who install solar. You can learn more about EnergySmart Colorado’s incentives through the program’s website.

These incentives can save you thousands of dollars when installing solar panels in Colorado; be sure to check if they’re available in your area.

Find out how much your solar installation will cost after Colorado solar incentives

Net metering Colorado: How it works

Colorado’s state net metering policy requires all utilities and electric cooperatives (excluding small municipal companies) to purchase any excess energy generated from rooftop solar systems.

Utilities must provide a credit on your bill for each kilowatt-hour of solar power you send to the grid. Each credit is worth 1 kWh and fully covers the cost of electricity you use from the grid later in the day when your solar panels aren’t producing electricity. 

If you end up with excess bill credits at the end of a billing cycle, they can be carried over to the next month’s bill. Colorado’s policy states that if the customer’s net electricity production remains above consumption for a year, utilities must reimburse the customers at the end of the year if they don't opt to have those credits rolled over.

This is the best-case scenario for homeowners in terms of savings and can potentially reduce 100% of your energy costs. You’ll want to take advantage of this net metering program while it’s still around.

Does Colorado offer solar battery incentives?

Homeowners can pair their solar systems with solar energy storage to provide backup power during an outage. 

Unlike in other states, a solar battery in Colorado won’t save homeowners any additional money on electricity bills due to the state having full retail net metering. Plus, installing batteries is pricey. Colorado makes up for that with their great incentive programs that help lower the cost of installing solar batteries.

An overview of the battery incentive options in Colorado is listed below:

Colorado installation costs

The average solar installation in Colorado costs about $3.41 per watt, based on the average 4.9 kW system. In total, the installation would cost $17,799 before incentives. After the federal tax credit, the cost falls to $12,459. 

Eligible incentives and rebates in Colorado rely heavily on where you live, your income, and what utility you have. Here’s how you can calculate your installation savings, using a Holy Cross Energy customer as an example:

Holy Cross Energy Rebate: 5 kW x $250 = $1,250

Federal tax credit (after rebate): ($17,799 - $1,250) x 30% = $4,964

Total savings: $4,964 + $1,250 = $6,214

Effective system cost: $17,799 - $6,214 = $11,584

This does not include savings from Colorado’s full retail net metering or other local rebates that might be available in your area.

The total cost of a solar panel installation will depend on a few factors, like how many solar panels you install, the solar company you use, and the characteristics of your roof.

Do incentives make solar worthwhile in Colorado?

Yes! Colorado has some of the best incentive offerings in the country that make going solar worthwhile for the average homeowner. Customers of Xcel Energy, in particular, have access to the best incentive programs, especially low-income solar customers. The average payback period for solar panels in Colorado is about 9 years.

The best way to determine if going solar is right for you is to speak with local solar companies. We recommend getting quotes from at least three solar installers to get the best deal possible without sacrificing a quality installation. 

SolarReviews can connect you with verified solar installers in Colorado, or you can click below to go through our expansive directory of the best solar companies in Colorado based on customer reviews.

Calculate how much you can save with Colorado incentives

Colorado solar incentives: FAQ