- The 30% federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025 [IRS, as of 2026].
- A homeowner who buys and installs a system in 2026 cannot claim that 30% credit; the deadline turns on when the system is placed in service [IRS OBBBA FAQ, as of 2026].
- The change came from the One Big Beautiful Bill Act (Public Law 119-21), signed July 4, 2025, which scrapped the old 2034 step-down schedule [NAHB, as of 2025].
- State rebates, net metering, SRECs, and sales- and property-tax exemptions are still available in 2026 and vary by state and utility [DSIRE, as of 2026].
- Your electricity rate still drives the math: the U.S. average residential price was about 18.8 cents per kWh (March 2026, EIA preliminary), and high-cost states sit at or above 30 cents [EIA Electric Power Monthly, March 2026].
If you are researching the federal solar tax credit, here is the headline first. The 30% Residential Clean Energy Credit under Section 25D ended for any expenditures made after December 31, 2025. A homeowner who buys a system and has it installed in 2026 cannot claim that 30% credit. (IRS Residential Clean Energy Credit, as of 2026)
For a full breakdown of the state and federal incentives a New Jersey homeowner can actually use, see New Jersey solar tax credits in 2026.
This page explains what the federal solar tax credit was, exactly what changed, who is affected, and the state and local solar incentives that still exist for homeowners in 2026. The short version is that the residential 25D credit ended December 31, 2025. If you want the deeper background on how solar pays back without it, our explainer on whether solar panels are worth it walks through the full math.
What the federal solar tax credit was
For years, the federal solar tax credit let homeowners subtract a percentage of their solar costs from their federal income taxes. Under the Inflation Reduction Act, the Section 25D Residential Clean Energy Credit was worth 30% of the cost of a qualifying home solar system, and it was scheduled to run through 2034 before stepping down. That timeline was cut short. The 30% credit ended for expenditures made after December 31, 2025. (IRS Residential Clean Energy Credit, as of 2026)
What changed: the One Big Beautiful Bill Act
The change came from the One Big Beautiful Bill Act (Public Law 119-21), signed July 4, 2025. It moved up the end date for several home energy credits. For the residential solar credit, the IRS states that the Section 25D credit “will not be allowed for any expenditures made after December 31, 2025,” which means the 25D credit ended at the close of 2025. The earlier 2034 schedule is gone. (IRS, Public Law 119-21 / OBBBA FAQ, as of 2026)
2025 vs 2026: what changed for the homeowner credit
Here is the before-and-after in one view. The residential 25D credit ended on December 31, 2025, so the 2026 column reflects a world without it.
| What you are comparing | Through Dec 31, 2025 | 2026 onward |
|---|---|---|
| Federal 25D residential credit | 30% of a qualifying home solar system | Ended; not available for systems placed in service after 12/31/2025 |
| What sets the deadline | When the system is placed in service, not when you sign | Same rule; a 2026 install does not qualify even on a 2025 contract |
| Old step-down schedule | 30% through 2032, then stepping down to 2034 | Repealed by the OBBBA; the 2034 timeline no longer applies |
| State + utility incentives | Available, varying by state | Still available in 2026, varying by state and utility |
Sources: IRS OBBBA FAQ and NAHB, as of 2026. MySolarFY does not provide tax advice.
How the credit worked before it ended
The residential 25D credit ended for expenditures made after December 31, 2025, but the rules that applied while it existed still matter to anyone who placed a system in service in 2025. During its lifetime it was worth 30% of qualifying costs, with no annual or lifetime dollar cap for solar electric property, covering the panels, inverters, mounting hardware, wiring, and on-site installation labor, plus qualifying battery storage of at least 3 kilowatt-hours. It was a nonrefundable credit, so it could reduce a homeowner’s federal income tax to zero, and any unused amount could generally be carried forward to a future tax year. The credit has since ended for 2026 buyers. (IRS Residential Clean Energy Credit, as of 2026)
That history is the reason the “placed in service” date is the whole ballgame. The residential 25D credit ended for expenditures made after December 31, 2025, so the dividing line is whether the system was operating by the end of 2025, not whether you had signed a contract or paid a deposit. If yours was placed in service in 2025, keep your final invoice, the proof of payment, and the permission-to-operate or inspection documentation, because that is what supports the credit on your 2025 return. As always, MySolarFY does not provide tax advice, so confirm how to handle it with a tax professional. (IRS, Public Law 119-21 / OBBBA FAQ, as of 2026)
Who is affected, and the one indirect exception
The deadline turns on when your system is installed and placed in service, not when you sign a contract or pay a deposit. Because the 25D credit ended on December 31, 2025, a system whose installation is completed in 2026 does not qualify, even if you signed your contract in 2025. The IRS has not published a transition rule for projects that start in 2025 and finish later. (IRS, Public Law 119-21 / OBBBA FAQ, as of 2026) Because that timing hinges on when the work is actually finished, it helps to know how long a solar installation takes, from contract to Permission to Operate.
There is one indirect exception worth understanding. Some companies install solar through a lease or power purchase agreement (PPA), where the company owns the equipment on your roof. The system owner, not you, may be able to claim a separate federal commercial credit (Section 48E), and may reflect part of that value in the price they offer. This is a business credit claimed by the system owner, not the homeowner 25D credit, which ended in 2025, and any benefit depends on the owner’s own eligibility and the terms of the deal. (NAHB, expiring energy tax credits, as of 2025)
If an installer’s 2026 quote shows a line for “the 30% federal tax credit,” ask them to put the basis in writing. The residential 25D credit ended on December 31, 2025, so it is not available to homeowner-buyers in 2026. A lease or PPA provider may instead be pricing in their own commercial Section 48E credit, which they claim, not you. MySolarFY does not provide tax advice; confirm any tax figure with a tax professional.
What solar incentives are still available in 2026
The federal residential credit ended on December 31, 2025, but several other solar incentives remain for homeowners in 2026. They are set by states and utilities, not the federal government, so what you get depends on where you live and who delivers your power. For a worked state example, see how New York stacks its 25% state credit, the New York City abatement, and its tax exemptions in New York solar tax credits in 2026.
| Incentive | What it does | Set by |
|---|---|---|
| State solar incentives | Rebates, performance payments, or income-tax credits for home solar and battery storage; often budget-limited or income-qualified | State / agency |
| Net metering or net billing | Credits the excess power your panels send to the grid, at full retail, partial retail, or a lower net-billing rate | State / utility |
| SRECs | In some states you can earn and sell solar renewable energy certificates for the power you generate, separate from bill savings | State market |
| Sales-tax exemption | Some states exempt solar equipment from state sales tax, lowering your up-front cost | State |
| Property-tax exemption | Many states exclude the added home value from a solar system from your property-tax assessment | State / local |
The best single place to look up what applies where you live is DSIRE, the Database of State Incentives for Renewables and Efficiency, run by the NC Clean Energy Technology Center. (DSIRE, as of 2026) The U.S. Department of Energy also points homeowners to DSIRE for current programs. (DOE Energy Saver, as of 2026) Net metering is usually the largest of these for most homeowners, and our guide to understanding net metering explains how those bill credits actually work.
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Why your electricity rate still drives the math
The biggest driver of solar savings is what you actually pay for grid power, measured in cents per kWh. The higher your local rate, the more each kWh your panels produce is worth, because it offsets a more expensive grid kWh. The U.S. average residential price was about 18.8 cents per kWh (March 2026, EIA preliminary), while homeowners in the highest-cost states pay at or above 30 cents per kWh, so the same system delivers far more bill offset in an expensive market. (EIA Electric Power Monthly, residential price, March 2026) Net-metering rules and time-of-use pricing also change how much your exported power is worth.
How the same rooftop pays back differently by state
To make the rate point concrete, here is what one offset kWh is worth across a few states, using EIA residential prices for March 2026. This is illustrative of bill-offset value, not a full savings estimate, and your own rate, usage, and net-metering rules decide the result.
| Where you live | Residential price (March 2026) | Relative bill-offset value |
|---|---|---|
| U.S. average | about 18.8 cents/kWh | Baseline |
| Massachusetts | about 30.2 cents/kWh | Roughly 1.6x the U.S. average |
| California | about 33.4 cents/kWh | Roughly 1.8x the U.S. average |
| Hawaii | about 42.2 cents/kWh | Roughly 2.2x the U.S. average |
Source: EIA Electric Power Monthly, average residential retail price by state, March 2026 (preliminary). Rates change monthly; check your own utility’s current price.
How to choose an installer now that the credit is gone
With the 25D federal credit ended as of December 31, 2025, the price an installer quotes carries more weight, so screen on criteria rather than on who claims to be the “best.” Look for the things that protect a 20-to-25-year decision: a NABCEP-certified team, a current state home-improvement or electrical-contractor license, clear product and workmanship warranties, a local track record, and an itemized quote you can compare against others. If a 2026 quote still shows a 30% federal credit line, treat that as a red flag and ask for the written basis. Our list of questions to ask a solar installer gives you a script to vet anyone you talk to.
How to find out what you qualify for
Because incentives, net-metering rules, and electricity rates change by state and utility, the fastest way to see what applies to your home is to check your address. Enter your ZIP and MySolarFY matches you with licensed installers who serve your area, with no obligation and no up-front cost to get matched. If you have more general questions about how the matching service works, our homeowner FAQ covers the basics.
Check which solar programs are available at your address →
What to do next in 2026
The federal credit is no longer part of the decision, so anchor your 2026 plan on the savings that are still real. Here is a practical order of operations for a homeowner weighing solar this year:
- Start with your electricity rate. Find your current price per kWh on a recent bill and compare it to the U.S. average of about 18.8 cents (March 2026, EIA preliminary). The further above average you are, the more each solar kWh is worth. (EIA, March 2026)
- Look up your state and utility incentives on DSIRE. State rebates, net metering or net billing, SRECs, and tax exemptions are set locally and are still available in 2026. (DSIRE, as of 2026)
- Confirm your net-metering terms. How your utility credits exported power is often the single biggest ongoing factor, and several states have shifted from full-retail to lower net-billing rates.
- Get more than one itemized quote and screen the installer on criteria. NABCEP certification, a current state license, written warranties, and local references protect a 20-to-25-year decision.
- Treat any “30% federal credit” line on a 2026 quote as a red flag. The residential 25D credit ended December 31, 2025, so ask for the written basis before you sign.
Do those five things in order and you will have a clear, current picture of what solar costs and saves at your address, without relying on a federal credit that ended on December 31, 2025.
Frequently asked questions, answered
Is the 30% solar tax credit gone? Yes. The federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025, so homeowners who install in 2026 cannot claim it. The change came from the One Big Beautiful Bill Act (Public Law 119-21), which repealed the older schedule that would have run the 30% credit through 2032 before stepping down. If you placed a system in service on or before December 31, 2025, you may still be able to claim the credit for that tax year, so keep your documentation and confirm with a tax professional. (IRS, as of 2026)
What is the current federal tax credit for solar in 2026? For homeowner-owned systems there is no federal tax credit in 2026, because the 30% Section 25D credit ended on December 31, 2025. Third-party-owned lease or PPA systems may involve the commercial Section 48E credit, which the system owner claims, not you, and which may be reflected in the price they offer. State incentives, net metering, SRECs, and sales- or property-tax exemptions can still apply in 2026, depending on your state and utility. Look up your area on DSIRE for current programs. (DSIRE, as of 2026)
If I install solar in 2026, do I get the federal tax credit? No. The 25D residential credit ended on December 31, 2025, so a system placed in service in 2026 does not qualify, even if you signed your contract in 2025. The deadline is based on when the system is placed in service, not when you sign or pay a deposit, and the IRS has not published a transition rule for projects that start in 2025 and finish later. Confirm your specific situation with a tax professional. (IRS OBBBA FAQ, as of 2026)
Will the federal solar tax credit come back? There is no law restoring it for 2026. The 25D credit ended on December 31, 2025, and any future change would require new federal legislation, which we cannot predict. Rather than waiting on a credit that does not exist today, most homeowners focus on the incentives that are real now: state programs, net metering, and a competitive installer quote. MySolarFY does not provide tax advice; confirm your situation with a tax professional. (NAHB, as of 2025)
Does solar still make financial sense in 2026 without the credit? It can, but the math now leans on your electricity rate and your state incentives rather than a federal credit, because 25D ended on December 31, 2025. The U.S. average residential price was about 18.8 cents per kWh in March 2026, and homeowners in high-cost states pay at or above 30 cents, so the bill offset is larger where power is expensive. Net metering, state rebates, and a competitive quote do the heavy lifting now. Our financial analysis of whether solar is worth it works through the numbers. (EIA, March 2026)
What does “$0 up-front” or “no up-front cost” solar mean if the credit is gone? It refers to lease or PPA financing, where a provider owns the system and you pay for the power or rent the equipment instead of buying it outright, where you qualify and where it is available. It is not “free solar,” and solar panels are not free; these agreements typically run 20 to 25 years, may include an annual price escalator, and total payments may exceed the cost of a cash purchase. The federal 25D credit ended on December 31, 2025, so any tax benefit on a leased system would belong to the owner, not you. MySolarFY does not provide tax advice. (DOE Energy Saver, as of 2026)
About this guide. Written and maintained by the MySolarFY content team and reviewed for compliance against primary sources (IRS, EIA, DOE, DSIRE, NAHB). Data and figures are current as of June 2026; the federal residential solar tax credit (Section 25D) ended December 31, 2025. We update this page as the underlying programs and rates change.
MySolarFY is a free service that matches homeowners with licensed solar installers. We are not an installer, financing company, tax advisor, or government program, and we do not provide tax advice. The federal residential solar tax credit (Section 25D) ended for expenditures made after December 31, 2025, and most homeowners who install in 2026 cannot claim it, so confirm your tax situation with a professional. “No up-front cost” refers to qualifying lease or PPA financing where eligible; these agreements typically run 20 to 25 years, may include an annual price escalator, and total payments may exceed the cost of a cash purchase. Solar panels are not free. Incentives, savings, and rates vary, change over time, and are not guaranteed. See our full disclaimer.
