Last updated July 12, 2026. This is a truth page. We re-date it whenever the federal, state, or utility rules behind these numbers change.
If you are researching solar without the federal tax credit in 2026, start here, because most of the internet is still wrong about it. Pages that tell you to “claim your 30% federal solar tax credit” are describing a rule that ended on December 31, 2025. This guide lays out exactly what changed, what it means for a 2026 install, and the incentives that genuinely still lower your cost, every figure dated and sourced to a primary record like the IRS, the electricity data from the U.S. Energy Information Administration, and production modeled in NREL’s PVWatts.
The numbers that matter most (July 2026)
- The credit is gone: the 30% federal Residential Clean Energy Credit (Section 25D) is “not available for any property placed in service after December 31, 2025” (IRS).
- What it was worth: about $6,300 on a representative 8 kW system at a roughly $2.60-per-watt installed price of about $21,000, a one-time 30% cut that a 2026 cash or loan buyer no longer gets (MySolarFY calculation, July 2026, from EnergySage cost data).
- How payback shifts: for the same system, simple payback runs about 43% longer without the credit, because the net price rises by 30% while annual savings stay the same (MySolarFY calculation, July 2026).
- The one federal credit left, and it is not yours: the 30% homeowner 25D credit ended December 31, 2025, but on a lease or power purchase agreement, the company that owns the panels may claim the commercial Section 48E credit, not you (SEIA).
- What still pays homeowners: state incentives such as New Jersey’s SuSI (SREC-II) and Massachusetts SMART, net metering, and property and sales tax exemptions, none of which the federal change touched (DSIRE).
What changed: the 30% federal solar tax credit ended
The federal residential solar credit ended for any system placed in service after December 31, 2025. For years, Section 25D, the Residential Clean Energy Credit, let a homeowner subtract 30% of the cost of a qualifying home solar system from their federal income taxes, and under the Inflation Reduction Act it was scheduled to run through 2034 before stepping down. The One Big Beautiful Bill Act (Public Law 119-21), signed July 4, 2025, cut that short. The IRS now states plainly that the credit “is not available for any property placed in service after December 31, 2025” (IRS Residential Clean Energy Credit), and in its Public Law 119-21 guidance that “the credit will not be allowed for any expenditures made after December 31, 2025,” with a 25D expenditure treated as made when installation is completed (IRS, Public Law 119-21 FAQ). The Solar Energy Industries Association confirms the 25D credit “is being terminated as of December 31, 2025” and that “systems must be installed on or before this date to receive the 25D credit” (SEIA).
Heads up: The battery credit went with it. The same Section 25D credit that covered panels also covered qualifying home battery storage of 3 kWh or more, and it ended December 31, 2025, so a standalone 2026 home battery bought by a homeowner also no longer qualifies for the 30% federal credit (IRS). Some state and utility battery programs still pay, which is a separate thing covered below. MySolarFY does not provide tax advice; confirm your situation with a tax professional.
Who is affected, and the lease and PPA exception
The deadline turns on when your system is placed in service, not when you signed a contract. Because the 25D credit ended at the close of 2025, a homeowner-owned system whose installation is completed in 2026 does not qualify, even if the contract was signed or a deposit was paid in 2025 (IRS, Public Law 119-21 FAQ). This is the single most common mistake we see repeated online, where a page from 2024 or 2025 still tells 2026 buyers to claim the 30% credit.
Who claims the federal credit on a solar lease or PPA?
The company that owns the panels claims it, not you. On a solar lease or power purchase agreement, a third party owns the equipment on your roof, and that owner (a business) may be able to claim the commercial Section 48E clean-electricity investment credit rather than the residential 25D credit. That is not your credit, and you do not file for it. What it can mean for you is that the owner may reflect part of that value in the lease payment or PPA rate they offer. Any benefit depends entirely on the owner’s own eligibility and the terms of your deal (SEIA). This is why, as national coverage has noted, many installers shifted toward leases after the homeowner credit ended (NPR).
Note: A lease or PPA is not free solar, and the 48E credit is the owner’s, not yours. Solar panels are not free. On a lease or PPA you make monthly payments, terms typically run 20 to 25 years, and total payments may exceed the cost of a cash purchase. Compare the offer on its own numbers, not on the 25D federal credit that ended December 31, 2025 and that you will not receive. For a plain-language breakdown of the credit rules, see what the federal solar tax credit change means in 2026.
What the payback math looks like without the credit
Here is the part no one recomputes for you, worked transparently so you can follow it. The 30% credit was a one-time reduction of your net price. Take it away and your annual electricity savings do not change, but the amount you have to pay back goes up by 30% of the gross cost, so simple payback stretches by the same ratio everywhere: about 43% longer for the identical system. What differs by market is the number of years, because a higher electricity rate means each kilowatt-hour your roof makes is worth more.
The table below is our own calculation for a representative 8 kW system across four Northeast markets. We multiply the system’s modeled first-year production (NREL PVWatts) by the state’s all-in residential rate (EIA) to get annual bill savings, then compare payback at the old credit-reduced net price against the 2026 no-credit price, using a national-average installed cost of about $2.60 per watt (roughly $21,000 gross for 8 kW, per EnergySage 2026 marketplace data).
| Market (8 kW system) | All-in rate (EIA) | Est. year-one production (PVWatts) | Est. annual bill savings | Payback WITH old 30% credit | Payback in 2026, NO credit |
|---|---|---|---|---|---|
| Massachusetts (Boston) | 30.21 cents/kWh | about 10,400 kWh | about $3,150 | about 4.7 years | about 6.7 years |
| New York (Albany) | 28.55 cents/kWh | about 9,800 kWh | about $2,800 | about 5.3 years | about 7.5 years |
| New Jersey (Newark) | 23.49 cents/kWh | about 10,400 kWh | about $2,450 | about 6.0 years | about 8.6 years |
| Pennsylvania (Philadelphia) | 20.92 cents/kWh | about 10,900 kWh | about $2,270 | about 6.5 years | about 9.3 years |
MySolarFY estimate (July 2026). Production is NREL PVWatts v8 modeling for a representative 8 kW system by ZIP; rates are EIA state residential averages (period March 2026). Annual savings equal production times rate. “With old 30% credit” uses a net price of about $14,700 (a 2025 buyer’s number, shown for comparison only); the 2026 no-credit column uses the full ~$21,000 at about $2.60 per watt (EnergySage, 2026). Bill savings only, before state incentives, which shorten these further. Simplified estimate that holds today’s rate flat and ignores financing; a written quote for your roof beats any table. Inputs: EIA rates, NREL PVWatts production.
Two honest takeaways from that math. First, the gap is real: losing the credit adds about 2.0 years of payback in Massachusetts and about 2.8 years in Pennsylvania, depending on your rate. Second, the credit stretch is longer where power is cheaper, because lower annual savings take longer to absorb the extra 30% of net cost, which is why a high-rate Northeast market still pays back faster in 2026 than a cheap-power state did with the credit. And this table deliberately leaves out state incentives, which is where the picture gets better.
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What still pays in 2026
The federal credit ended, but the rest of the solar economics did not move. Several incentives still lower a homeowner’s cost in 2026, and they vary by state and utility. The single best place to look up what applies where you live is DSIRE, the Database of State Incentives for Renewables and Efficiency, run by NC State University (DSIRE).
State performance incentives
New Jersey’s Successor Solar Incentive (SuSI) pays homeowners for the power their system generates through SREC-II certificates, and it is still open in 2026, though the residential SREC-II value steps down for registrations on or after July 27, 2026 (NJ Clean Energy). Massachusetts runs the SMART program, now SMART 3.0, active and accepting residential applications in 2026 (Mass.gov).
Net metering
Most Northeast utilities still credit you on your bill for the excess power your panels send to the grid, from Eversource in Massachusetts and Connecticut to PSE&G in New Jersey, National Grid in upstate New York, and PECO in Pennsylvania. The terms vary by state: Massachusetts still offers near-retail net metering, while Connecticut has moved new residential solar to a state-designed successor tariff, so the value depends on your utility. See how net metering credits your solar exports.
Property and sales tax exemptions
Many states exempt the added home value from a solar system from your property-tax assessment and exempt the equipment from state sales tax, lowering your up-front and ongoing cost (DSIRE).
How the still-active incentives compare to the credit that ended
It helps to see, side by side, what changed and what did not. The federal 25D credit ended December 31, 2025; it was a one-time 30% cut of your net price, and the programs below work differently, paying out over years as your system produces power.
| Incentive | Who it is for | Status for 2026 | How it pays |
|---|---|---|---|
| Federal 25D residential credit | Homeowner who buys the system | Ended December 31, 2025 | Was a one-time 30% income-tax credit; not available for 2026 installs (IRS) |
| Federal 48E commercial credit | The lease or PPA owner, not you | Goes to the owner, not the homeowner; new domestic-content and foreign-entity rules apply to 2026-construction projects | Claimed by the business that owns the panels and may be reflected in your payment; this is separate from the 25D homeowner credit that ended December 31, 2025 (SEIA) |
| State performance incentive (SuSI/SREC-II, SMART 3.0) | Homeowner who owns the system | Active in 2026 | Pays per unit of power produced, over years (NJ Clean Energy, Mass.gov) |
| Net metering / successor credit | Homeowner with grid-tied solar | Active, set by state and utility | Bill credit for exported power (explainer) |
| Property and sales tax exemptions | Homeowner who owns the system | Active in many states | Lowers up-front and ongoing cost (DSIRE) |
Program availability and values change and are set at the state and utility level. Confirm current terms with your state energy office or the primary sources linked. MySolarFY does not provide tax advice.
Because the state and utility rules are where the money now is, start with your state’s guide: solar costs and incentives in Massachusetts, solar costs and incentives in New Jersey, solar costs and incentives in New York, solar costs and incentives in Connecticut, and solar costs and incentives in Pennsylvania. For the incentives that still apply nationally, see the solar incentives that still apply in 2026.
Is solar still worth it without the federal credit?
For many Northeast homeowners, yes, though the honest answer is that it depends more on your electricity rate and state incentives than it used to. The federal credit, which ended December 31, 2025, made the decision easier by knocking 30% off up front; without it, the case now rests on how expensive your grid power is and what your state pays. In high-rate states like Massachusetts, New York, and Connecticut, where power runs 28 to 30 cents per kWh (EIA), each kilowatt-hour your roof produces offsets an expensive grid kWh, so even at the full no-credit price the payback in our table lands in the seven to nine year range before any state incentive. Add SuSI, SMART, or a state performance payment and it improves from there. To weigh the full cost against the savings, see the financial case for whether solar panels are worth it and how solar lowers your electricity bill.
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Frequently asked questions
Reviewed by the MySolarFY editorial team, July 2026. The federal tax-credit facts on this page were verified against primary sources (the IRS Residential Clean Energy Credit page, the IRS Public Law 119-21 FAQ, and SEIA) as of July 12, 2026, confirming that the Section 25D residential credit ended December 31, 2025. State incentive programs change and are set at the state and utility level, so confirm current terms with your state energy office before you act. Learn more about how MySolarFY works and our data and methodology.
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 property placed in service after December 31, 2025, and most homeowners who install in 2026 cannot claim it, so confirm your tax situation with a professional. On a lease or PPA, the federal tax benefit goes to the company that owns the system, not the homeowner. “No up-front cost” refers to qualifying lease or PPA financing, where eligible homeowners may have no out-of-pocket cost at installation; 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 and monthly payments apply. Incentives, savings, and rates vary, change over time, and are not guaranteed. See our full disclaimer.
