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CT Solar Tax Changes 2026 — What HB05442 Means for Homeowners
Updated July 22, 2026
Bottom line: Connecticut's 2026 solar tax law (HB05442) limits the property tax exemption for residential solar to the first $0 of assessed value increase — but the sales tax exemption (6.35%) still applies. Combined with the Eversource 18% rate hike filed July 15, 2026, solar's long-term rate-lock value just increased significantly.
What HB05442 Changed
Signed into law and effective July 1, 2026, HB05442 modified how Connecticut taxes solar energy systems:
- Residential solar property tax exemption: Capped at $0 — meaning any value increase from solar installation is no longer exempt from property tax for systems installed after July 1, 2026
- Uniform Capacity Tax (UCT): Solar projects are now subject to the UCT starting in 2026 for a 19-year period (vs. 20 years for projects that commenced operations in 2025)
- Sales tax on solar equipment: The 6.35% Connecticut sales tax exemption for solar energy systems remains in place
Important distinction: If you installed solar before July 1, 2026, your property tax exemption status is governed by prior law. The HB05442 changes apply to systems installed on or after July 1, 2026.
2026 vs. Prior Years — Tax Comparison
| Tax Category | 2025 and earlier | 2026 (HB05442) |
|---|
| Property Tax Exemption |
Full exemption on assessed value increase from solar |
Capped at $0 — no exemption on solar-added value |
| Sales Tax (6.35%) |
Exempt |
Exempt ✅ |
| Uniform Capacity Tax |
20-year term |
19-year term (systems commencing 2026) |
| ITC Federal Tax Credit |
30% (Section 25C) |
EXPIRED Jan 1, 2026 — no federal residential credit |
Why Solar Still Makes Sense in 2026
Even with the property tax exemption capped, Connecticut solar delivers for homeowners:
- Eversource rate hike pending: Filed July 15, 2026 — an 18% increase could add ~$30–$50/month to your electric bill starting 2027 if PURA approves it. Solar locks in today's rate.
- PURA 2026 rates: Eversource at 8.34¢/kWh and UI at 8.795¢/kWh (effective July 1, 2026) — still among the highest in the Northeast
- CT RRES Program: $0.40/W upfront rebate and $0.3289/kWh Buy-All Tariff (20-year locked rate) for residential solar customers
- HB5340 plug-in solar: Systems up to 1,200W now legal without utility approval — more flexibility for homeowners
- Sales tax still exempt: 6.35% Connecticut sales tax on equipment still waived
What This Means for Your Solar Decision
The math has shifted slightly: while the property tax savings are now reduced, the rate-stabilization value of solar is higher than ever. With Eversource pursuing an 18% rate increase and PURA rates at 15-year highs, locking in generation costs with solar provides more predictable monthly bills.
For a typical Connecticut homeowner:
- A 7.2kW system (~20 panels) costs approximately $19,000–$23,000 after the sales tax exemption
- RRES rebate of $2,880 (at $0.40/W) offsets upfront cost
- Monthly savings depend on usage — but with Eversource rates rising, payback periods are improving vs. staying on the grid
- No property tax savings = lower total benefit, but still positive ROI with current utility rates
Key 2026 Connecticut Solar Policy Reference
| Policy | Status | Details |
|---|
| PURA Utility Rates | Active | Eversource 8.34¢/kWh; UI 8.795¢/kWh (July 1, 2026) |
| Eversource Rate Hike | Filed July 15, 2026 | 18% increase proposed; PURA decision pending; effective 2027 |
| RRES Rebate | Active | $0.40/W for residential solar applicants |
| RRES Buy-All Tariff | Active | $0.3289/kWh — 20-year locked rate |
| Sales Tax Exemption | Active | 6.35% CT sales tax still exempt for solar |
| Property Tax Exemption | Modified July 1, 2026 | Capped at $0 under HB05442 |
| HB5340 Plug-In Solar | Active May 1, 2026 | Up to 1,200W without utility approval |
| ITC Section 25C | EXPIRED Jan 1, 2026 | No federal residential solar tax credit in 2026 |
| EV Credit 30C | EXPIRED June 30, 2026 | EV charging equipment credit no longer available |
| FERC AI Ruling | Active June 18, 2026 | Utilities cannot spread AI infrastructure costs to ratepayers |
Get a Free Connecticut Solar Quote
With Eversource rates rising and PURA rates at their highest in years, now is the time to understand your solar options. Connecticut homeowners can get quotes from vetted local installers — start with our town guides or search by your city above.
All quotes include current PURA rates, RRES eligibility check, and a full cost/benefit analysis for your specific home.
Last updated: July 22, 2026. Tax information is provided for general reference. Consult a qualified tax professional for advice specific to your situation.