Currently, the Federal government offers a 30% tax credit to homes and businesses that install a solar hot water system (through the end of 2008.)

Several state and local incentives also exist throughout the U.S. to encourage renewable energy. In California for example, Proposition AB 1470 was recently passed by Gov. Scharzeneggar, which will offer homeowners a cash rebate of up to $1,500 for installing a solar hot water system. On average, the cost of installing a solar hot water system is reduced by approximately 30% after government rebates & incentives.

The following link will direct you to the Database of State Incentives for Renewables & Efficiency (DSIRE). DSIRE is a comprehensive source of information on state, local, utility, and federal incentives that promote renewable energy and energy efficiency: http://www.dsireusa.org/