Is there a solar tax credit in 2026? Not if you buy the system yourself. The 30% federal Residential Clean Energy Credit (Section 25D) ended for solar installed after 31 December 2025, so a 2026 cash or loan purchase gets $0 in federal tax credit. The only federal solar credit still in play in 2026 is Section 48E, which is claimed by the company that owns a leased or PPA system – not by the homeowner – and it closes to most new solar after 2027.
Last updated: 30 October 2026. Below: who still gets what in 2026, what replaced the credit, how 48E differs from the old homeowner credit, and the state incentives that are still worth real money. The credit was repealed by the One Big Beautiful Bill Act, signed 4 July 2025.
Who Gets What in 2026
| Your situation | Federal credit | What it means |
|---|---|---|
| Bought with cash or a solar loan in 2026 | $0 | You pay the full installed price. State and utility incentives still apply. |
| Lease or PPA signed in 2026 | Indirect only | The system owner claims Section 48E. You may see it passed back as a lower rate – or you may not. |
| Installed and paid in 2025 or earlier | 30% | You keep it. Claim it on the tax return for the year the expenditure was made. |
| Buying in 2028 or later | $0 | Section 48E also ends for solar placed in service after 31 December 2027. |
What Actually Changed
Section 25D was the credit homeowners used. It was worth 30% of the total system cost – panels, inverters, labor, and paired battery storage – with no dollar cap, claimed against your federal tax bill. The Inflation Reduction Act had extended it through 2032, which is why so much solar content still says “30% through 2032”. That extension was repealed. The operative date is the expenditure date, not the contract date: spend after 31 December 2025 and the credit does not apply.
I Installed in 2025 – Did I Lose It?
No. If your qualifying expenditure was made on or before 31 December 2025, the credit is yours and you claim it on your 2025 return using IRS Form 5695. Nothing about the repeal is retroactive. If you have unused credit carrying forward from an earlier year, that carryforward is also unaffected.
The Only Federal Credit Left: Section 48E, and Its Catch
Section 48E is the business-side clean electricity investment credit. When a third party owns the system on your roof – a lease or a power purchase agreement – that company is running a business asset and can claim 48E. Solar placed in service by 31 December 2027 can qualify.
Be clear-eyed about what this does and does not do for you:
- You do not claim it. It never appears on your tax return. There is nothing for you to file.
- The pass-through is a sales decision, not a rule. The owner may price your lease or PPA lower because of the credit. Nothing obliges them to, and nothing shows you how much was passed on.
- You do not own the asset. No equity, and the contract follows your house – which can complicate a sale.
- Escalators. Many lease and PPA contracts raise your rate 1% to 3% a year. Over 20 years that can erase the headline discount. Read the escalator before the price.
A lease or PPA can still be the right answer, particularly if you have no tax appetite or no cash. It is simply no longer competing against a 30% discount on ownership. Compare them properly: Loan vs. Lease vs. PPA.
State Incentives Are Untouched
This was a federal change, and it did nothing to state and utility programs. State tax credits, up-front rebates, SREC and performance-payment markets, sales and property tax exemptions, and net metering all continue on their own timelines. In several states those programs are now the majority of the incentive value available to you. Find yours: Solar Incentives by State. Two of the most-asked: does New Jersey have a solar tax credit? and what a Pennsylvania SREC is worth in 2026.
Redo Your Payback Math
A $21,000 system that netted $14,700 after the credit now costs $21,000. On typical savings of about $1,700 a year, that moves simple payback from roughly 9 years to roughly 12. Solar still pays back well inside a 25-year panel warranty in most high-rate states – but the honest range is longer than nearly every calculator online is still showing, including ours until we fixed it. Run your own numbers on the cost breakdown page.
How to Spot a Quote You Should Not Trust
A lot of the industry has not updated its sales material. If a 2026 proposal for a cash or loan purchase still shows a 30% federal tax credit line, the quote is wrong. That is worth more than the arithmetic: it tells you the company is either not tracking the rules that govern its own product, or is counting on you not to. Ask them to reissue it without the credit, and compare that number against everyone else.
Get Current Numbers for Your Home
Pricing has moved since the credit ended, and it varies more by installer than it used to. Compare a few quotes on the same terms – cash price, no phantom credit, escalator disclosed.
Solar Tax Credit 2026: Frequently Asked Questions
When did the federal solar tax credit end?
On 31 December 2025. The One Big Beautiful Bill Act, signed 4 July 2025, ended the Section 25D residential credit for expenditures made after that date, and for a home system the expenditure counts as made when installation is complete. Before that law, the Inflation Reduction Act had scheduled the credit to run through 2032.
Is there a solar tax credit in 2026?
Not for homeowners who buy. The Section 25D Residential Clean Energy Credit ended for solar expenditures made after 31 December 2025, and for a home solar system the expenditure counts as made when installation is complete. A system bought with cash or a loan and installed in 2026 gets no federal tax credit. Your state may still offer its own credit, rebate or SREC income – see solar incentives by state.
What replaced the federal solar tax credit?
Nothing on the homeowner side. Congress did not create a replacement residential credit. What remains is the business-side Section 48E credit (used by leasing and PPA companies) plus state and utility programs: state tax credits (New York, for example), up-front rebates, SREC markets (New Jersey, Pennsylvania, Massachusetts and others), property and sales tax exemptions, and net metering.
How much is the federal solar tax credit in 2026?
For a homeowner buying a system: $0. For the owner of a leased or PPA system: Section 48E can still be worth 30% or more of the system cost for qualifying projects, but that value goes to the leasing company, not to you.
What is the difference between 25D and 48E?
Section 25D was the residential credit: you owned the panels and claimed 30% on your own tax return (IRS Form 5695). Section 48E is a commercial clean electricity investment credit for businesses that own generating equipment. When a solar company owns the panels on your roof under a lease or PPA, it can claim 48E. You cannot claim 48E as a homeowner who owns your own system.
Can I still get the credit with a solar lease or PPA in 2026?
Indirectly. The leasing or PPA company claims 48E and may pass some of it to you as a lower monthly payment or lower rate per kWh – nothing requires it to. Under the 2025 law, solar projects that start construction after 4 July 2026 generally must be placed in service by 31 December 2027 to qualify, and new foreign-entity sourcing rules apply, so expect lease and PPA offers to change through 2027. Compare the rate, the escalator and the term, not the headline. More: loan vs. lease vs. PPA.
Can a business still claim a solar tax credit in 2026?
Generally yes, through Section 48E (or the 45Y production credit), subject to the 2025 law’s construction-start and placed-in-service deadlines and the foreign-entity rules. Commercial projects have different rules from home systems, so talk to a tax advisor before you sign.
I installed solar in 2025. Can I still claim the 30% credit?
Yes. If the installation was complete by 31 December 2025, claim the credit on your 2025 federal return with IRS Form 5695. Unused credit carries forward to later years. The repeal is not retroactive.
I signed in 2025 but the install finished in 2026. Do I qualify?
Probably not. The IRS treats a home solar expenditure as made when installation is complete, not when you sign or pay a deposit. If your system was finished in 2026, assume no federal credit and confirm with a tax professional.
Does the credit still cover batteries?
No. Home batteries were covered by 25D, which ended with the solar credit. A battery bought in 2026 carries its full cost unless a state or utility storage rebate applies.
Which solar incentives still exist in 2026?
Plenty, at state level: the New York state solar tax credit and NY-Sun incentives, SREC income in New Jersey, Pennsylvania and Massachusetts, the California property-tax exclusion for systems finished before 1 January 2027, and sales or property tax exemptions in many states. Start at solar incentives by state.
Will the solar tax credit come back?
There is no enacted legislation restoring it as of October 2026. Plan on the rules as they are, not on a reversal.
Related Guides
- Solar Incentives by State (2026)
- California solar incentives – property-tax exclusion ends for systems finished after 2026
- New York solar incentives – state tax credit + NY-Sun
- New Jersey solar incentives
- Massachusetts solar incentives
- Pennsylvania solar incentives – SRECs + net metering
- Texas, Florida, Arizona, Colorado, Illinois
- Solar Panel Cost in 2026
- Loan vs. Lease vs. PPA
- Is Solar Worth It in 2026?
This page is general information, not tax advice. Confirm your own situation with a qualified tax professional. Sources: Congressional Research Service IN12611; Rewiring America, 25D Rooftop Solar Tax Credit.