The federal solar tax credit in 2026: it is gone
There is no federal solar tax credit for homeowners in 2026: the 30% residential clean energy credit under IRC Sec. 25D ended for property placed in service after December 31, 2025, so a system installed today claims $0 federally, and the only money left is state, local and utility programs that vary by address.
Reviewed August 29, 2026. If a page you are reading still says 30% and carries an older date, that is the reason it disagrees with this one.
What actually changed
For years, a homeowner who bought a solar system could claim 30% of the installed cost — hardware, labour, permitting, a battery — as a credit against federal income tax, under Section 25D of the Internal Revenue Code. Not a rebate cheque. A credit, capped by the tax you actually owed, with the remainder carried forward.
That credit no longer applies to property placed in service after December 31, 2025. The residential credit was terminated ahead of its previous schedule, which had run to 2032 with a step-down after that. So a large amount of the solar content on the internet — including pages still ranking on the first page for this exact question — was written against a rule that has since been repealed and has not been rewritten.
Nothing here is a state-level change. Section 25D is federal. It applies the same way in every state, and no installer, county or utility can restore it.
“Placed in service” is the test, and it is not your contract date
This is where people are going to get hurt, so it is worth being blunt. Section 25D keys off when the property is placed in service — installed, complete, and in a condition and state of readiness to do its job. It does not key off when you signed, when you paid a deposit, when the panels arrived, or when the permit was pulled.
A contract signed in October 2025 for a system energised in March 2026 is a 2026 system. It gets nothing. That is an unpleasant sentence for anyone holding a signed contract and a delayed install, and it is still the sentence.
| Event | Date it happened | Does it qualify you? |
|---|---|---|
| Proposal signed | 2025 | No |
| Deposit paid | 2025 | No |
| Equipment delivered | 2025 | No |
| Permit issued | 2025 | No |
| System installed and ready to operate | 2025 | Yes |
| System installed and ready to operate | 2026 | No |
If you are mid-project, get the date in writing. Ask your installer, in an email you keep, for the date the system was or will be placed in service, and take that email to whoever prepares your taxes. Do not take a salesperson’s word on a tax position that only you sign for.
Why lease and PPA salespeople still say “tax credit”
Because at the business level, they are not entirely making it up — and that is exactly what makes it effective.
In a lease or a power purchase agreement you do not own the system. A third party does. Whatever tax treatment that owner qualifies for sits with them, under a different part of the code, at the business level. It is not a homeowner credit. You do not claim it, you do not file for it, and you cannot verify what it was worth.
What reaches you is whatever the company decided to price into your monthly payment. That might be a lot. It might be nothing. The only way to know is to compare the total you will pay over the term against what the same system costs in cash — which is arithmetic you can do, and which is the whole reason a pitch prefers to talk about a credit instead.
Watch for the phrasing. “The tax credit is included” and “we take the credit and pass the savings to you” are describing someone else’s tax return. If a proposal shows a line reading −30% federal credit on a system you are being asked to buy in 2026, that proposal is wrong, and you should ask which statute they are citing.
What this does to payback
Losing a subsidy worth 30% of the price stretches payback by roughly 30%. A system that paid back in eight years now takes closer to eleven. Below is the same modelled 8 kW system in six states, priced the way it would have been under the credit and the way it is priced now.
| State | Rate | Gross cost | Old net (with 25D) | Net now | Old payback | Payback now |
|---|---|---|---|---|---|---|
| California | 31.8¢ | $26,400 | $18,480 | $26,400 | 4.5 yrs | 6.5 yrs |
| Texas | 15¢ | $20,400 | $14,280 | $20,400 | 8.0 yrs | 11.4 yrs |
| Florida | 15.3¢ | $19,600 | $13,720 | $19,600 | 7.4 yrs | 10.5 yrs |
| Arizona | 14.5¢ | $20,000 | $13,000 | $19,000 | 6.4 yrs | 9.3 yrs |
| New York | 24.5¢ | $27,200 | $14,540 | $22,700 | 6.4 yrs | 9.9 yrs |
| Ohio | 15.5¢ | $22,400 | $15,680 | $22,400 | 10.6 yrs | 15.1 yrs |
The honest reading of that table is that the credit was never what made solar work. It changed how much you prepaid. What decides the deal is the second column: the price of the electricity you would otherwise keep buying, and how fast it is climbing. In a high-rate state the arithmetic survives without any subsidy at all. In a cheap-power state the credit was doing the heavy lifting, and the answer now is often no.
Two second-order effects to expect. Cash prices should soften as demand does — installers who priced against a subsidised buyer have to reprice for an unsubsidised one, so it is a reasonable time to negotiate. And lease and PPA pitches will get louder, because the business-side treatment is still alive and the residential one is not.
What incentives survive
Everything that was never federal. That list is short, local, and worth actually checking, because it is now the entire subsidy:
State income tax credits
A handful of states run their own credit with its own cap. Arizona, New York and South Carolina are examples; most states run nothing.
State and utility rebates
Up-front money, usually per watt, usually paid through the installer, and usually funded from an annual budget that has run dry mid-year before.
SREC markets
In states with a solar carve-out, your system's generation earns tradable certificates. Prices move; the District of Columbia and New Jersey have historically been the strong markets.
Property tax exemptions
Many states exclude the added home value from your assessment, so the system does not raise your property tax bill.
Sales tax exemptions
Some states waive sales tax on the equipment, which is a real few percent off the gross.
Net metering rules
Not an incentive on paper, but it decides what every exported kWh is worth, which moves payback more than most rebates do.
What is open where you live is a state-and-utility question, not a national one. The state pages below carry the program that is currently modelled for each state, its cap, and whether it is budget-limited. If your state is not listed as having one, it does not have one worth the name — but individual utilities run small rebates that never reach the statewide lists, so it is worth searching DSIRE by the name at the top of your bill.
Questions people are asking about the 2026 credit
Is there a federal solar tax credit in 2026?
No. The residential clean energy credit under IRC Sec. 25D — the 30% credit homeowners claimed on Form 5695 — ended for property placed in service after December 31, 2025. A system that goes on your roof in 2026 claims $0 of it. State, local and utility programs are separate and some of them are still open.
I signed a contract in 2025. Can I still claim the 30%?
Signing is not the test. IRC Sec. 25D turns on when the property is placed in service, which for a rooftop system means installed and ready to operate, not contracted, not paid for, not delivered to your driveway. A deposit in November 2025 on a system energised in 2026 does not qualify. If your installer told you otherwise, ask them to put the statutory basis in writing and take it to your own tax preparer.
What does 'placed in service' mean for solar panels?
It means the system is installed, complete and in a condition to do its job. Contract date, deposit date, permit date and equipment delivery date are all irrelevant to the test. Utility permission to operate is not itself the statutory standard, but a system that has not passed inspection is difficult to argue was ready to operate.
Do solar leases and PPAs still get the tax credit?
The homeowner does not. In a lease or power purchase agreement the system is owned by a third party, so whatever tax treatment applies sits with that owner at the business level under a different part of the code. Any benefit reaches you only as whatever the company chose to price into your monthly payment. That is a contract term, not a credit you claim.
What incentives are left after the federal credit ended?
State income tax credits and rebates where they exist, utility rebates, SREC markets in the states that run them, property and sales tax exemptions, and net metering rules that decide what your exported power is worth. These vary enormously by state and by utility, and several are funded from annual budgets that run out mid-year.
Does the end of the credit make solar a bad deal?
It makes it a slower one. Losing a subsidy worth 30% of the cost stretches payback by roughly 30%. Nothing else moved: the panels produce the same power and your electricity rate did not fall. Where retail rates are high, the case survives. Where rates are low, the credit was carrying the deal and the honest answer is now often no.
Where to look next
Corrections: hello@killmyenergybill.com. If we have a date or a statute wrong, we want to know before you do.