Is There a Solar Tax Credit in 2026? What Changed and What's Left
The short answer
- Is there a federal solar tax credit in 2026? For homeowners who buy their system — no. The 30% residential credit (Section 25D) expired December 31, 2025 (IRS, 2025).
- Can I still get any federal credit? Only through a lease or PPA, where the solar company owns the system and passes the benefit through as lower payments — and for new projects, only if the system is in service by December 31, 2027 (Section 48E; Pub. L. 119-21).
- Is solar still worth it without it? Often yes — state incentives, net metering, and high electric bills still drive the math, but the payback is longer than in 2025.
Wondering what you still qualify for? Remaining benefits depend on your state, utility, and how you finance. Get a free, no-obligation solar quote →
Key takeaways
- The 30% federal residential solar tax credit (Section 25D) expired December 31, 2025 — with no phase-out (Pub. L. 119-21). Cash and loan purchases in 2026 get $0 federal credit.
- Your system had to be fully installed by December 31, 2025 to qualify — a deposit or signed contract wasn't enough (IRS OBBB FAQ, 2025).
- A federal credit still exists through leases and PPAs: the solar company owns the system, claims the commercial credit (Section 48E), and passes savings through as lower payments.
- The July 4, 2026 begin-construction deadline has passed. New lease/PPA systems now earn the federal credit only if they're placed in service by December 31, 2027 (Pub. L. 119-21).
- State tax credits, utility rebates, net metering, and property/sales tax exemptions are unaffected by the federal change (DSIRE, 2026).
What you can and can't claim in 2026, at a glance
| Incentive | Status in 2026 | Who it applies to | Key detail |
|---|---|---|---|
| Federal 30% residential credit (Section 25D) | Expired | Homeowners who buy (cash or loan) | Ended Dec 31, 2025; system had to be fully installed by then (IRS) |
| Federal commercial credit (Section 48E) | Active | Lease / PPA customers (system is third-party owned) | Passed through as lower payments; new projects must be placed in service by Dec 31, 2027 (Pub. L. 119-21) |
| State tax credits | Varies by state | Homeowners in states that offer them | e.g. NY 25% up to $5,000; SC 25%; AZ 25% up to $1,000 (state revenue depts.) |
| Utility & state rebates | Varies | Homeowners in participating service areas | Lowers installed cost directly (DSIRE) |
| Net metering | Active in most states | Grid-connected homeowners | Credits excess power sent to the grid; export rates vary (DSIRE) |
| Property & sales tax exemptions | Active in many states | Homeowners in exempting states | CA, FL, NY, MA, NJ, MD, AZ, CO, NV and others (DSIRE) |
Federal deadlines re-verified October 25, 2026; state incentives verified October 9, 2026 against IRS, DSIRE, and state revenue sources. See Sources & verification below.
"The 30% credit" vs. Section 25D vs. Section 48E — what the terms mean
A lot of 2026 confusion comes from three terms being used as if they're the same thing. They aren't:
- The 30% credit / Section 25D (Residential Clean Energy Credit): the credit homeowners claimed when they bought a system. This is the one that expired December 31, 2025 (IRS, 2025).
- Section 48E (Clean Electricity Investment Credit): a commercial credit that is still active. It applies when a business owns the system — which is how leases and PPAs qualify (IRS/Treasury, 2025).
- "The federal tax credit" in a sales pitch: if it's being quoted on a cash or loan purchase in 2026, it no longer exists. Only a lease/PPA can carry a federal benefit now.
What exactly changed on January 1, 2026
For nearly two decades, homeowners who bought a solar system could claim a federal tax credit — most recently 30% of the total cost, worth $6,000–$9,000 on a typical system (30% of a $20,000–$30,000 system). That was Section 25D, the Residential Clean Energy Credit. The One Big Beautiful Bill Act, signed July 4, 2025, ended it abruptly (Pub. L. 119-21):
- No step-down. Earlier law would have phased it out gradually through 2034 (Inflation Reduction Act, 2022). Instead it went from 30% to zero overnight.
- Installation — not payment — was the cutoff. The expenditure counts when installation is completed (IRS OBBB FAQ, 2025). Systems finished on or after January 1, 2026 don't qualify, even if paid for in 2025.
- Carryforward survives. If you installed in 2025 or earlier and couldn't use your full credit, you can still carry the unused portion forward (26 U.S.C. 25D(c); Congressional Research Service, 2025).
Watch out: some solar sales reps are still quoting the 30% credit in 2026. Misrepresented tax-credit eligibility is now one of the most common complaints in residential solar — the Texas Attorney General cited it directly when suing San Antonio-based CAM Solar in May 2026 (Office of the Texas Attorney General, 2026). If a rep tells you the federal credit is still available on a purchase, see our guide to solar sales red flags and the questions to ask before you sign.
Is there any federal solar credit left in 2026?
Yes — but not for systems you buy yourself. The commercial clean-energy credit (Section 48E) is still active and covers residential systems owned by a third party (IRS/Treasury, 2025). That's how leases and PPAs work: the solar company owns the system, claims the federal credit as a business asset, and passes some of that benefit to you as lower monthly payments. In 2026, this is the only path to federal solar tax benefits for homeowners.
The July 4, 2026 deadline has passed — what it means now
Under the One Big Beautiful Bill Act, solar projects that began construction by July 4, 2026 keep the standard timeline to finish. That date has now passed. For a lease or PPA signed today, the solar company generally can claim the federal credit only if your system is placed in service — installed, inspected, and turned on — by December 31, 2027 (Pub. L. 119-21).
If a provider tells you your system is already covered by work or equipment started before July 4, 2026, ask them to put in writing how your system qualifies and what happens to your payment if the credit is later disallowed.
Lease vs. PPA — quick refresher
- Lease: a fixed monthly amount to use the system; the company owns and maintains it.
- PPA: a set rate per kilowatt-hour for the power produced, usually below your utility's rate.
Neither gives you ownership, and both involve long-term contracts — read escalator clauses and buyout terms carefully.
State and local incentives still available in 2026
The federal change didn't touch state programs. Depending on where you live, you may still qualify for:
- State tax credits. New York offers 25% up to $5,000, stackable with NY-Sun rebates (NY Dept. of Taxation, Form IT-255); South Carolina offers 25% (claimable over time) (SC Dept. of Revenue, TC-38); Arizona offers 25% up to $1,000 (Arizona Dept. of Revenue, Form 310).
- Utility and state rebates that lower your installed cost directly (DSIRE, 2026).
- Net metering — most states still credit excess power sent to the grid, though some have moved to lower export rates (DSIRE, 2026).
- Property tax exemptions in many states (CA, FL, NY, MA, NJ, MD, AZ, CO, NV and others) (DSIRE, 2026).
- Sales tax exemptions on solar equipment in several states (DSIRE, 2026).
See our full guide to solar incentives in 2026 and net metering by state.
What this means for the cost of going solar
Without the federal credit, the net cost of a purchased system is higher than in 2025 — a system that effectively cost $17,500 after the credit now costs the full $25,000 (illustrative example: $25,000 system, 30% credit). Payback periods for purchased systems have stretched to roughly 8–15 years in most markets (SolarEnergyNerds estimate; varies by electric rate and sun). For a full breakdown of 2026 pricing, see How Much Does Solar Cost in 2026?
Frequently asked questions
Is the solar tax credit gone in 2026?
For homeowners who buy their system — yes. The 30% federal residential credit (Section 25D) expired December 31, 2025, with no phase-out (IRS, 2025; Pub. L. 119-21). A federal credit still reaches homeowners through leases and PPAs.
Can I still claim the credit if I paid in 2025 but it was installed in 2026?
No. The IRS treats the expenditure as made when installation is completed (IRS OBBB FAQ, 2025). If it wasn't fully installed by December 31, 2025, it doesn't qualify.
I claimed the credit for a 2025 installation but couldn't use all of it. Do I lose the rest?
No. Unused credit from a qualifying pre-2026 installation can still be carried forward (26 U.S.C. 25D(c); Congressional Research Service, 2025).
How do leases and PPAs still get a federal credit?
The solar company owns the system, so it qualifies for the commercial credit (Section 48E) and typically reflects it in lower payments. The July 4, 2026 begin-construction deadline has passed, so new systems generally need to be placed in service by December 31, 2027 (Pub. L. 119-21).
A salesperson told me the 30% credit is still available. Who's right?
The credit is gone for homeowner purchases (IRS, 2025). If a rep is quoting it in 2026, treat that as a warning sign about the rest of the proposal — see our solar sales red flags guide.
Is solar still worth it without the federal tax credit?
Often yes — especially with high bills and rising rates. See Is Solar Worth It in 2026?
Sources & verification
Every figure and policy claim on this page was checked against primary sources on October 9, 2026:
- Section 25D expiration and the "placed in service / installation completed" rule — IRS Residential Clean Energy Credit guidance (OBBB FAQ) and the One Big Beautiful Bill Act (Pub. L. 119-21), signed July 4, 2025.
- Carryforward of unused 25D credit — 26 U.S.C. 25D(c) and the Congressional Research Service, "Expiration and Carryforward Rules for the Residential Clean Energy Credit" (IN12611, 2025).
- Section 48E status, the July 4, 2026 begin-construction deadline, and the December 31, 2027 placed-in-service deadline — the One Big Beautiful Bill Act (Pub. L. 119-21) and IRS/Treasury clean-electricity credit guidance; re-checked October 25, 2026. These deadlines are set by statute. IRS Notice 2025-42, which defined how projects prove they began construction, was vacated by the U.S. District Court for D.C. on June 6, 2026 (Oregon Environmental Council v. IRS); that ruling affects construction-start methods, not the statutory dates.
- State tax credits (NY, SC, AZ) and property/sales tax exemptions — DSIRE (Database of State Incentives for Renewables & Efficiency) and state revenue departments (NY Form IT-255, SC Form TC-38, AZ Form 310).
- Deceptive tax-credit sales claim — Office of the Texas Attorney General, Texas v. CAM Solar, filed May 20, 2026.
- Typical-system savings and payback ranges are illustrative estimates, labeled as such where they appear.
See what solar would save you in 2026
The federal credit is gone, but state incentives, net metering, and lease/PPA pass-through still add up — and they're specific to your address. Get a free, no-pressure quote and a clear breakdown of what you qualify for.