If you’ve seen a solar quote, calculator, or sales pitch in 2026 that subtracts 30% for a «federal tax credit,» it’s working from outdated information. This is one of the most important — and most commonly misunderstood — changes in residential solar this year, and getting it wrong can mean budgeting thousands of dollars that simply aren’t there anymore.
What Actually Happened
The Residential Clean Energy Credit (Section 25D) — the 30% federal tax credit homeowners have claimed on solar and battery purchases for over a decade — expired for any system placed in service after December 31, 2025. This came from the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, which moved the credit’s original 2034 phase-out schedule up by roughly seven years, with no partial credit and no phase-down period. It simply ended.
In plain terms: if you buy or finance a residential solar system with cash or a loan in 2026, you receive $0 in federal tax credit — a dramatic shift from the 30% homeowners could claim as recently as 2025.
What Determines Whether You Still Qualify
Eligibility is based on installation completion date («placed in service»), not when you signed a contract or made a deposit:
- System fully installed and operational by December 31, 2025: you can still claim the full 30% credit on your 2025 tax return (IRS Form 5695, Part I), even if you’re filing in 2026
- System installed in 2026 or later: no federal residential credit applies, regardless of when the contract was signed
If you completed a system in 2025 but haven’t filed yet, this is worth confirming with your tax preparer — unused credit amounts can also be carried forward to future tax years under current rules.
The One Real Federal Path That Survives: Leases and PPAs
There’s a genuine, if indirect, exception. Solar leases and power purchase agreements (PPAs) — where a company owns the system installed on your roof rather than you — can still pass along federal savings. This works because the commercial clean energy credit (Section 48E) remains available to companies that own and operate solar systems, including the leasing and PPA companies behind third-party-owned residential solar. These companies can still claim a federal credit for projects that begin construction before July 2026 or reach service by 2027-2028 under current rules, and they typically pass some of that value through to homeowners as lower monthly lease or PPA payments.
The trade-off: with a lease or PPA, you don’t own the system, which changes the long-term economics compared to owning it outright — worth weighing carefully rather than choosing purely to access the indirect federal benefit.
What Else Expired Alongside It
The Residential Clean Energy Credit wasn’t alone. The Energy Efficient Home Improvement Credit (Section 25C) — which covered insulation, windows, doors, HVAC systems, and home energy audits — also expired after December 31, 2025. Improvements in these categories are no longer federally eligible unless they were placed in service by that date. If you’re planning both solar and broader home efficiency upgrades in 2026, know that neither category carries the federal incentive it did in 2025.
One separate credit still active: the federal EV charger credit (Section 30C) remains available for qualifying home charging equipment installations through June 30, 2026 — a distinct program from the solar credit, worth checking if you’re also considering EV charging infrastructure.
What This Means for Your 2026 Solar Math
With the federal credit gone, a new residential solar installation’s economics now depend much more heavily on:
- Your local electricity rate — higher rates mean faster payback even without the federal credit
- State and utility-level incentives — several states have significantly stronger programs that partially offset the federal credit’s absence (see our full guide on whether solar is worth it in 2026 for state-by-state payback data)
- Your specific system cost and financing terms
- Net metering policy in your area — how much credit you get for excess solar sent back to the grid
How to Avoid Outdated Sales Pitches
Given how recently this changed, a genuinely large amount of solar marketing material, online calculators, and even some sales conversations still reference the old 30% federal credit as if it applies to a 2026 purchase. Before accepting any quote or estimate, confirm explicitly whether the number you’re being shown already accounts for the credit’s expiration — a solar company that hasn’t updated its math (or worse, hasn’t updated its pitch) is a red flag worth taking seriously.
The Bottom Line
The 30% federal Residential Clean Energy Credit is gone for homeowner-owned systems installed in 2026 or later — a major, no-phase-down change from the OBBBA signed in July 2025. If your system was completed and placed in service by December 31, 2025, you can still claim it on your 2025 return; anything installed in 2026 does not qualify. The one indirect path that survives is a solar lease or PPA, where a third-party owner can still access a separate commercial credit and pass some savings through. Whatever route you’re considering, verify that any quote or calculator you’re looking at reflects this change — a genuinely large amount of solar marketing hasn’t caught up to it yet.