- The 30% homeowner solar credit (Section 25D) is gone for any system whose installation was completed after December 31, 2025.
- Paying or signing in 2025 doesn’t count. The IRS looks at when installation was completed.
- If your system was finished in 2025, you can still claim it on your 2025 return and carry unused credit forward.
- Leases and PPAs can still pass on a business credit (Section 48E), but only for systems placed in service by the end of 2027 unless construction began by July 4, 2026.
The solar tax credit 2026 looks very different from the one in older guides. Some quotes, calculators and sales pitches still subtract 30% for a “federal tax credit.” For a homeowner buying a system in 2026, that money isn’t there. This guide explains what changed, who still qualifies, and how to check a quote, with a tool to see if you qualify.
Solar Tax Credit 2026: What Actually Happened
The Residential Clean Energy Credit (Section 25D) gave homeowners 30% back on solar panels, solar water heaters and batteries of 3 kWh or more. Under the old law it was set to stay at 30% through 2032 before stepping down. The One Big Beautiful Bill Act, signed on July 4, 2025, ended it instead: the IRS says the credit isn’t allowed for expenditures made after December 31, 2025.
The key detail is what “made” means. Under the tax code, an expenditure counts as made when the original installation is completed. So a homeowner who signed and paid in November 2025 but whose crew finished in January 2026 gets nothing. On the other hand, the utility’s permission to operate doesn’t have to come before the deadline: what matters is that installation was complete.
Do You Still Qualify? A Rough Guide (Not Tax Advice)
Answer two questions. This is general information, not tax advice: confirm with a tax preparer.
This is an orientation tool, not tax advice. It only checks ownership and the installation date; it does not check every IRS rule (for example, that it is your home in the United States). Unused 25D credit carries forward to later years (claimed on Form 5695). State and utility incentives are separate and may still apply. Confirm with the IRS or a tax professional.
The One Federal Path That Survives: Leases and PPAs
With a solar lease or power purchase agreement (PPA), a company owns the panels on your roof. Companies can still claim the business clean electricity credit (Section 48E) and may pass part of it on through lower payments. For solar, projects that began construction by July 4, 2026 keep a longer window; projects starting after that must be placed in service by December 31, 2027 (Solar Power World explains the timing).
| Buy (cash or loan) | Lease or PPA | |
|---|---|---|
| Federal credit in 2026 | None | The company may claim 48E |
| Who owns the system | You | The company |
| Upfront cost | High | Often low or none |
| Long-term savings | Usually higher | Usually lower; watch yearly escalators |
| Selling your home | Panels add value | Buyer must take over the contract or you buy it out |
Don’t choose a lease just to reach the federal benefit. Compare the total you’d pay over the contract with buying.
What Else Ended
- Energy Efficient Home Improvement Credit (25C): insulation, windows, doors, heat pumps, water heaters and energy audits. Not allowed for property placed in service after December 31, 2025.
- EV charger credit (30C): not allowed for property placed in service after June 30, 2026.
State tax credits, rebates and utility incentives are separate and still exist in many places. Check your state energy office and utility before you buy.
How to Check a Solar Quote in 2026
- Look for any line that subtracts a “30% federal tax credit” from a purchase. If it’s there, ask for the numbers without it.
- Ask which state and utility incentives are included, and get the program names so you can verify them.
- For a lease or PPA, ask for the payment schedule over the whole term, including any yearly increase.
- Run the quote through our solar payback calculator.
What Real Homeowners Say
These are individual experiences, summarized in our own words.
A Maryland homeowner said on Reddit that the company handling their project missed the end-of-2025 deadline, even though the install was described as guaranteed, wiping out the 30% credit they had counted on. Other commenters noted that some installers had offered to refund the 30% if they didn’t finish in time.
Source: The Cool Down (Reddit report)Homeowners behind an online petition said they had signed solar contracts expecting the credit to last until 2032. After the 2025 law change, they faced a much shorter window, and some installations weren’t finished in time.
Source: Change.org petition- IRS Energy Credit FAQs and fact sheet FS-2025-05
- Form 5695 instructions on carryforward
- Congressional Research Service analysis of the repeal
- Industry reporting on Section 48E timing for leases and PPAs
This is general information, not tax advice. We don’t sell solar, and no installer paid to be included.
When This Credit Talk Doesn’t Matter
- You’re buying in 2026: there’s no federal homeowner credit, so judge the system on payback without it.
- You had little or no federal tax: the credit was never refundable, so it only helps as you have tax to offset in later years.
- A salesperson promises a 2026 credit for a purchase: that’s outdated. Ask for it in writing and check it with a tax preparer.
Frequently Asked Questions
Is there a federal solar tax credit in 2026?
Not for homeowners who buy. Section 25D ended for expenditures made after December 31, 2025, which the IRS ties to installation completion. Companies that own leased or PPA systems may still use Section 48E.
I paid in 2025 but installation finished in 2026. Can I claim it?
No. The IRS treats the expenditure as made when installation is completed.
Do I need permission to operate by December 31, 2025?
Not according to how the rule is written: completion of installation is what counts. Ask your tax preparer to confirm for your case.
Can I carry forward unused credit?
Yes. Unused 25D credit from a 2025 or earlier installation carries forward to later years on Form 5695.
Do batteries still get a federal credit?
Only if installation was completed by December 31, 2025 and the battery holds at least 3 kWh.
Our Verdict
The solar tax credit 2026 is simple to sum up: homeowners who buy get no federal credit, unless their installation was completed by the end of 2025. Claim it and carry it forward if that’s you. If you’re buying now, judge solar on its payback without the credit, and treat any quote that still subtracts 30% as a red flag.
Keep reading
- Solar Payback Period in 2026: How Much You Save and How Long It Takes: how long solar takes to pay for itself.
- Are Solar Panels Worth It in Texas? 2026 Costs, Buyback Plans and Payback: solar costs and buyback plans in Texas.
- Best Home Battery Systems in 2026: Powerwall 3 vs Enphase vs FranklinWH: whole-home battery backup compared.