Update for 2026: Federal solar incentives changed significantly at the end of 2025. The credit most people think of when they hear federal solar incentive, the 30% Residential Clean Energy Credit under Section 25D, is no longer available for solar systems you buy and install starting January 1, 2026.
Here’s a current, accurate rundown of what federal and other incentives actually remain.
The Credit That Ended
The One Big Beautiful Bill Act, signed July 4, 2025, ended Section 25D for any residential system placed in service after December 31, 2025. Before that date, homeowners who purchased their system outright or with a loan could claim 30% of the cost on their federal taxes, with no dollar cap and no income limit, using IRS Form 5695. Systems installed and placed in service on or before December 31, 2025 can still claim that credit when filing.
What Still Qualifies
- Third party owned systems (Section 48E): If you lease your system or sign a power purchase agreement, the company that owns the equipment can claim a federal credit and usually passes part of that savings on to you. This applies through the end of 2027 and can cover qualifying battery storage too.
- State tax credits and rebates: Many states run their own solar incentive programs independent of the federal credit. These vary a lot by state, so check your state energy office before writing off solar as too expensive.
- Net metering: Utility net metering programs, where you get credited for excess power your panels send back to the grid, are a state and utility level policy, not a federal tax credit, and most were not touched by this change.
What No Longer Qualifies
- A solar system you buy with cash or a loan, installed January 1, 2026 or later, no longer gets the federal 25D credit.
- A standalone home battery you purchase outright lost the same credit on the same date.
What This Means for Your Decision
Going solar without the federal purchase credit usually means a longer payback period, often in the 10 to 13 year range instead of 8 to 10. For a lot of households, a lease or PPA now makes more financial sense than it used to, since that path still carries a federal incentive through 2027. The right call depends on your state’s incentives, your electricity rates, and how long you plan to stay in your home.
Compare Current Solar Options
See today’s pricing on complete solar kits and backup power systems before you decide what fits your budget.
