Vermont solar rebates and incentives: 2025 guide

Solar panel systems in Vermont are expensive, but incentives from the state and federal governments can help you reduce the upfront cost. Between the federal tax credit and other state-specific incentives, you can save thousands on solar panels, making them well worth the investment. However, the federal solar tax credit will no longer be available for systems installed after December 31, 2025, so you have to go solar this year to claim it. Here's how you can lower the cost of solar if you live in Vermont.

Vermont doesn't have any state-specific tax credits or rebates for solar, but as a Vermont homeowner, you have access to the federal Residential Clean Energy Tax Credit, which can substantially improve your return on investing in solar panels. The state also offers some great incentives for batteries, which we get into more below.

Residential Clean Energy Credit

The Residential Clean Energy Credit, formerly known as the federal investment tax credit (ITC), can reduce your solar panel system's cost by 30%. Your entire system qualifies for this incentive, including equipment, labor, permitting, and sales tax.

However, this credit will no longer be available after December 31, 2025. On July 4, 2025, President Trump signed legislation that eliminates the residential solar tax credit entirely starting January 1, 2026—nearly a decade ahead of its original expiration date. Solar projects typically take several months from consultation to installation, so homeowners considering solar should act quickly to lock in these savings.

When you file your federal income taxes, you can claim this incentive as a credit towards your federal tax bill. Just keep in mind that to qualify for the ITC, you need to purchase your system either with cash or a solar loan–if you lease your system, you won't be eligible. 

You also need a high enough tax bill to use the credit, though you can roll over any remaining credit year-to-year, according to a tax expert EnergySage spoke with. The IRS doesn't specify an end date for credit rollovers, meaning you can theoretically roll over unused credits indefinitely based on current law. However, Tax Form 5695 may no longer exist after 2025, so you likely will no longer be able to use that form. Please speak with a tax professional for specific guidance.

Remember: Your system must be installed by December 31, 2025 to qualify for this credit.

In addition to the great rebates and incentives above, Vermont also offers tax exemptions for solar panel systems. The solar sales tax exemption ensures that you won't have to pay a sales tax on your system, while the solar property tax exemption means you don't need to pay a higher property tax for adding solar panels to your house.

If you connect your solar panel system to the grid, you can benefit from net metering, one of the best solar panel incentives available in Vermont. With net metering, you earn credits when you send excess electricity from your solar panels to the grid. When the sun isn't shining and you need to pull electricity from the grid, your utility will apply the credits to your bill. Net metering makes it so you will owe very little, or even nothing, on your electric bills with solar panels. 

All Vermont utilities have to offer net metering to customers. If your system exports more electricity to the grid than you import within a month, you'll receive credits at the blended residential rate, which is pretty close to the retail rate (what you pay for electricity). The blended residential rate is currently set at $0.18398/kWh.

Any credits that are older than one year will expire, but it's unlikely they'll last that long since you'll always use the oldest ones first. If you installed a solar panel system that's a bit too big for your annual electricity use and are worried that you won't use credits within one year, you can create a group. This means you can allocate a percentage of your bill credits to group members.

Learn more about Vermont's largest utility's net metering program:

In addition to solar incentives, Green Mountain Power (GMP) also offers some battery incentive programs to bring down the price of energy storage. 

BYOD program 

The Bring Your Own Device, or BYOD program provides an incentive for eligible batteries. You can earn a rebate of up to $10,500 by sharing your stored energy during peak times, or when energy demand is high. By sharing energy, you stay connected with backup power and help lower the costs for GMP customers in your area. 

The rebate amount is determined by how much energy you share during peak events, which can happen a few times per month. You earn $850 per kW for a three-hour supply and $950 for a four-hour energy supply. GMP also offers an additional $100 per kW incentive for those adding battery storage to their solar system in areas where it’s most beneficial.

Tesla Powerwall program

GMP also offers a special program to lease two Tesla Powerwalls for 10 years if you give them control of your battery during Peak Events. To participate, you'll pay GMP either $55 per month or a one-time $5,500 upfront payment. For reference, Tesla Powerwalls typically come with a 10-year warranty and two cost $14,731 after the federal tax credit, according to Tesla. 

The biggest thing to keep in mind with the BYOD Backup Only Option and the Tesla Powerwall program is that you're allowing GMP access to your battery when electricity costs the most. If you don't have solar or your solar panels aren't producing enough electricity to meet your consumption during Peak Events, you'll pay more for electricity.

 All batteries above 3 kWh are also eligible for the 30% federal tax credit.