Federal, state and local governments often increase solar energy tax rebates and credit on grid power, in an effort to encourage homeowners to switch to alternative renewable energy. The federal government provides a solar tax credit, known as the investment tax credit (ITC) that allows businesses and homeowners to deduct a portion of their solar costs from their overall taxes. Other states offer state tax credit for households that install solar systems. It is also possible to receive a cash rebate from your municipality, utility company or state for promoting alternative energy through solar. Additionally, some states are now offering performance based incentives by paying solar system owners a per kilowatt-hour credit for electricity that their systems produce.