Last updated: September 2026. Short answer: the 30% federal solar tax credit for homeowners is gone. It did not shrink or step down – it ended. The One Big Beautiful Bill, signed on 4 July 2025, terminated the Section 25D Residential Clean Energy Credit for any expenditure made after 31 December 2025. If you buy solar with cash or a loan in 2026, there is no federal tax credit for you. This page explains exactly what changed, what is still available, and how to redo your numbers.
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 That extension was repealed.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.
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.
Frequently Asked Questions
Is the federal solar tax credit really gone?
Yes. The One Big Beautiful Bill terminated Section 25D for expenditures made after 31 December 2025. There is no residential federal solar tax credit in 2026.
How much is the solar tax credit in 2026?
For a homeowner buying a system: nothing. For a third-party owner under a lease or PPA: 30% via Section 48E, through the end of 2027.
Does the credit still cover battery storage?
Not for you. Batteries were covered under Section 25D, which expired. A battery bought in 2026 carries its full cost unless a state or utility storage rebate applies.
Can I still claim it if I signed a contract in 2025 but the install finished in 2026?
It depends on when the expenditure was made, not when you signed. This is exactly the case to take to a tax professional rather than an installer.
Will the credit come back?
There is no legislation restoring it. Plan on the rules as they are, not on a reversal.
Related Guides
- Solar Panel Cost in 2026
- Solar Incentives by State
- 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.