Federal policy · updated July 2026

Is the federal solar tax credit gone in 2026?

Yes. The 30% Residential Clean Energy Credit was repealed nine years early. This page explains what actually changed, what it costs you in payback years, the timing trap that is catching people out right now, and the one federal route that is still open — with links to the primary sources so you can check all of it.

The short answer. If your solar installation is completed on or after 1 January 2026 and you are buying the system with cash or a loan, your federal tax credit is $0. Not reduced — gone. Any page still telling you to subtract 30% is out of date, and on a typical $24,000 system that is a $7,200 error in your favour.

What changed

A nine-year extension, cancelled in one bill

The credit, and how it ended

The Residential Clean Energy Credit under IRC §25D gave homeowners a 30% non-refundable federal credit on the installed cost of a purchased solar system, with no dollar cap. The Inflation Reduction Act had extended it through 2032, with a step-down in 2033 and 2034.

The One Big Beautiful Bill Act (P.L. 119-21), signed 4 July 2025, terminated it. The statute allows no §25D credit for expenditures made after 31 December 2025. There is no phase-down and no transition period for homeowners — it simply stops.

What was not changed

Three things survived, and they matter:

The carryforward rules for credits already earned.
The commercial credit, §48E, which is what makes leases and PPAs still work — on a clock of its own.
Every state, utility and local program. Federal law does not touch these.

The expensive misunderstanding

“Installed” beats “paid” — and it is catching people out

This is the single most common and most costly mistake being made right now.

Under §25D(e)(8)(A), an expenditure is treated as made when the original installation is completed — not when the money left your account. Deposits, progress payments and paid-in-full invoices do not fix your eligibility to the year you paid.

So the December-2025 rush to “lock in the credit” by paying early protected nobody whose system was commissioned in 2026:

Contract signed and paid in full, November 2025. Panels energised February 2026. Credit: $0.
Contract signed October 2025, installation completed 28 December 2025, final payment made January 2026. Credit: 30%, claimed on the 2025 return.

If an installer told you that paying in 2025 was enough, they were wrong, and the loss lands on you rather than on them. If you are in that position, the completion date on your permit sign-off or utility interconnection approval is the document that decides it — and it is worth taking to a tax professional before you file.

If you installed in 2025 or earlier

Credits already earned are not lost

Unused credit carries forward

§25D is non-refundable: it can only reduce federal income tax you actually owe. If your 2025 liability was smaller than your credit, the Act did not take the remainder away. The unused portion carries forward to later tax years until it is used up.

Track it on IRS Form 5695. A repealed credit still gets claimed and carried on the return for the year the installation completed.

Model the past case honestly

Our solar payback calculator has an installation-date toggle. Select “on or before 31 Dec 2025” and it restores the 30% credit so you can see what a completed 2025 installation actually returns.

It defaults to 0%, because that is the correct answer for anyone buying today.

The number that matters

Losing the credit added three years to payback

Same system, same roof, same utility rate — only the installation date differs. These figures come from this site’s own calculator on its default scenario: an 8 kW system at $3.00 per watt, 1,400 kWh per installed kW per year, 18¢/kWh with 2.5% annual escalation.

Default scenario, run both ways. Your own inputs will move every row.
	Completed by 31 Dec 2025	Completed 2026 or later
Gross system cost	$24,000	$24,000
Federal tax credit	−$7,200	$0
Net cost	$16,800	$24,000
Payback period	7.8 years	10.8 years
25-year net savings	$47,670	$40,470
Simple ROI	+284%	+169%

Read the table honestly in both directions. Three extra years of payback is a real hit, and anyone who tells you nothing changed is selling something. But the 25-year position is still positive — roughly $40,000 of net savings on this scenario — because the credit was never what made solar work. Retail electricity rates are.

Run your own numbers →

What is still available

The routes that still reach real money

Leases and PPAs — with a 2027 cliff

Under a lease or power-purchase agreement the installer owns the system on your roof and claims the commercial §48E credit, which they may pass through to you as a lower rate. This is now the main way federal money still reaches a residential rooftop, and third-party ownership was not banned by the Act.

But §48E has its own deadline, and one of its two doors has already shut. Projects that had begun construction on or before 4 July 2026 kept a longer runway — that safe harbour is now closed. For anything signed today, the system must be placed in service by 31 December 2027. Ask any installer quoting you a lease or PPA to put the expected commissioning date in writing. The Act also added foreign-entity sourcing restrictions that can disqualify a given installer’s equipment.

The trade-off is ownership: you claim nothing yourself, you do not own the asset, and you generally do not capture the full home-value benefit. Get the total 20–25 year cost in writing and compare it against buying outright, not against your current bill alone.

State, utility and local programs

Federal law did not touch these. Depending on where you live, some combination of the following may still be available — and in a handful of states they add up to more than the old federal credit did:

State income-tax credits and up-front rebates
Utility rebates and performance payments
SREC markets
Property-tax and sales-tax exemptions
Net metering, which is often worth more than any rebate

Look yours up in the DSIRE database, then enter the total in the incentives field of the calculator.

Reader defence

How to tell whether solar advice is current

A great deal of what is published on this subject — including pages that rank well — still assumes a credit that no longer exists. Four checks:

Look for a review date, not a publication date. An article from 2024 describing “the 30% credit through 2032” was correct when written and is wrong now. No visible date is itself a warning.
Check who benefits. Much of the top-ranking material on solar incentives is published by panel manufacturers, installers and lead brokers. That does not make it false, but they are not neutral about whether you buy.
Look for the statute, not just a summary. A page that cites §25D, P.L. 119-21 or IRS guidance you can open and read is accountable. One that says “experts say” is not.
Be suspicious of a calculator that wants your phone number first. If an estimate is gated behind contact details, the product is your contact details. Estimates should be free and instant — ours run entirely in your browser and nothing you type is transmitted anywhere.

Straight answers

Questions people are actually asking

Is the federal solar tax credit still available in 2026?

No. The 30% Residential Clean Energy Credit under IRC §25D does not apply to expenditures made after 31 December 2025, following the One Big Beautiful Bill Act (P.L. 119-21). If you buy a system with cash or a loan in 2026, there is no federal credit for you to claim.

I paid in 2025 but installation finished in 2026. Can I still claim it?

No. §25D(e)(8)(A) treats the expenditure as made when the original installation is completed, not when you paid. If installation finished after 31 December 2025 the credit is unavailable regardless of when money changed hands.

I installed in 2025 but could not use the whole credit. Is the rest lost?

No. The carryforward rules were not changed. Unused §25D credit from a qualifying pre-2026 installation carries forward to later tax years until it is fully used. Track it on IRS Form 5695.

Is a solar lease or PPA a good idea now that the credit is gone?

It is now the main route by which federal money still reaches a residential roof, because the installer claims the commercial §48E credit. Whether it is a good deal depends entirely on the contract. Ask for the total cost over the full term including every escalator, compare it against buying outright and against doing nothing, and check what happens if you sell the house.

Is solar still worth buying without the tax credit?

Often, but the margin is thinner and it depends more on your electricity rate than on anything else. Above roughly 18¢/kWh with full retail net metering the arithmetic usually still works; below about 12¢/kWh payback commonly runs past 15 years. Run your own rate through the calculator rather than trusting a national average.

Could the solar tax credit come back?

It would take an act of Congress, and no such bill has been enacted. Reinstatement is possible in principle but it is not something to plan a purchase around. Decide on the rules as they are, and treat any future credit as upside rather than as part of your payback model.

Check our work

Primary sources

26 U.S.C. §25D — the statute, including the “when installation is completed” rule at (e)(8)(A).
CRS IN12611 — Congressional Research Service summary of the residential energy credit changes.
IRS OBBB FAQ — the Service’s own guidance on the modified sections.
IRS Form 5695 instructions — how the credit and its carryforward are claimed.
DSIRE — state and utility incentive database, maintained at NC State.

Reviewed July 2026. Tax law changes; this page states the position as we understand it on that date.

This is general information, not tax advice. Eligibility turns on facts specific to you — your installation completion date, your federal tax liability, your filing position and your state’s rules. Confirm with a qualified tax professional before filing or before committing to a purchase.