The Federal Solar Tax Credit Ended in 2025 — What Homeowners Need to Know in 2026
What changed
The Inflation Reduction Act (2022) had set the residential credit at 30% through 2032, stepping down to 26% in 2033 and 22% in 2034. Public Law 119-21 — commonly called the One Big Beautiful Bill Act — replaced that schedule with a hard stop: no credit for expenditures made after December 31, 2025. There was no phase-down.
That applies to everything Section 25D covered: rooftop solar PV, solar water heating, battery storage (3 kWh+), small wind, geothermal heat pumps and fuel cells.
| Your situation | Federal homeowner credit |
|---|---|
| Installation completed on or before Dec 31, 2025 | 30% of qualified cost — claim on your 2025 return |
| Paid or signed in 2025, but installation completed in 2026 | $0 — the IRS uses the completion date |
| Installation in 2026 or later | $0 |
| Unused credit from a qualifying 2025 (or earlier) install | Still carries forward to future years |
"I installed in 2025 — can I still claim it?"
Yes. If the original installation was completed by December 31, 2025, claim the 30% credit on IRS Form 5695 with your 2025 federal return. If you already filed without it, talk to a tax professional about filing an amended return (Form 1040-X).
Qualified costs included panels, inverters, racking, wiring, permits, labor, sales tax in most cases, and battery storage of 3 kWh or more. Financing fees and loan dealer fees did not count toward the credit — only the cash-equivalent system price.
The credit is non-refundable: it can only reduce the tax you owe. Any unused portion carries forward to later tax years. Our calculator shows a year-by-year carryforward schedule.
"My installation finished in 2026 — what now?"
Unfortunately there is no federal homeowner credit for your system, even if you signed the contract or paid a deposit in 2025. If a salesperson promised you a 30% federal credit on a 2026 installation, ask them to put that in writing and have a tax professional review it — under current IRS guidance it does not apply.
What can still lower your cost:
- State income tax credits. A few states still offer their own: New York (25%, up to $5,000), South Carolina (25%, up to $3,500 per year), Hawaii (35%, up to $5,000), Massachusetts (15%, up to $1,000), and New Mexico (10%, up to $6,000). Rules change — confirm on DSIRE or your state revenue department.
- Utility rebates and battery incentive programs. Many utilities pay for batteries that join a demand-response or "virtual power plant" program.
- Property and sales tax exemptions for solar equipment in many states.
- Net metering — how your utility credits exported power is now the biggest single driver of payback. See our net metering by state guide.
What about leases and PPAs?
Homeowners who lease or sign a power purchase agreement never claimed Section 25D — the system owner (the leasing company) claims a commercial credit instead. Under the new law, those companies can still claim the commercial clean-electricity credit (Section 48E) for projects that begin construction by July 4, 2026 or are placed in service by December 31, 2027, subject to additional sourcing rules. Some of that value may show up as a lower lease or PPA rate. Get the rate and escalator in writing, and compare the total 20–25-year cost against buying with cash or a loan.
Our payback calculator now defaults to $0 federal credit. Plug in your real quote and utility rate to see your break-even year.
Open Payback Calculator →Does solar still make sense without the 30% credit?
Sometimes. Losing the credit raises the net cost of a typical $25,000 system from about $17,500 to the full $25,000, which stretches payback by roughly 40%. Solar still tends to pencil out where electricity is expensive (Hawaii, California, the Northeast), where net metering pays full retail, or where state incentives are strong. In low-rate states with weak export credit, payback can now run past 15 years. Run your own numbers rather than relying on a national average.
FAQ
Is there a federal solar tax credit in 2026?
Not for homeowners buying their own system. The Section 25D credit ended for expenditures made after December 31, 2025.
Does it matter when I paid?
No. The IRS treats the expenditure as made when the original installation is completed. A 2025 payment for a system completed in 2026 does not qualify.
Can I still use a carryforward from an earlier install?
Yes. Unused credit from a qualifying installation completed by December 31, 2025 can still be carried forward and claimed in later years on Form 5695.
Is the battery storage credit gone too?
Yes, for homeowners. Battery storage was covered by the same Section 25D credit, which ended after 2025. Check your utility for battery rebates or virtual-power-plant payments.
Did the EV tax credit end too?
Yes. The federal new and used clean vehicle credits ended for vehicles acquired after September 30, 2025, under the same law.
Enter your installation date, system size and state. We'll tell you whether any federal credit applies, stack available state credits, and show carryforward if you installed in 2025.
Open Tax Credit Calculator →Primary sources
- IRS — FAQs on the OBBB changes to Sections 25C, 25D, 30D and more
- IRS — Residential Clean Energy Credit
- IRS Form 5695 — Residential Energy Credits
- SEIA — Clean energy provisions in the One Big Beautiful Bill
- DSIRE — Database of State Incentives
Disclaimer: This article is general information, not tax advice. Tax law changes; consult a CPA or tax professional about your specific situation.