The Federal Solar Tax Credit in 2026: What Ended and What Didn’t

Public Law 119-21, signed July 4, 2025, terminated the §25D residential clean energy credit for expenditures made after December 31, 2025. The statute treats an expenditure as made when installation is completed, so a system signed in 2025 but finished in 2026 doesn’t qualify. For a newly built home, the timing is when you begin using the home.

If you claimed §25D for a system finished in 2025 and couldn’t use all of it, the unused portion can still carry forward to later tax years. That’s the only way a homeowner-owned system still touches this credit.

The IRS’s own FAQ on the 2025 law changes covers §25D and the related credits, and it’s the source to check if a salesperson tells you otherwise.

Commercial owners claim the §48E clean electricity credit, and a company that owns a system on your roof under a lease or PPA is a commercial owner. For solar, the system generally has to be placed in service by December 31, 2027, unless construction began by July 4, 2026, in which case a continuity safe harbor may give more time.

That credit is why our lease and PPA offers can come in 20–30% below retail utility rates. It’s also why there’s a practical clock on them: as 2027 approaches, providers will stop signing projects they can’t finish in time.

IRS guidance on what counts as beginning construction has been in flux. Notice 2025-42 was vacated by a federal district court on June 6, 2026, and whether that ruling is appealed or stayed was unknown when we wrote this. That matters more to the leasing company than to you, but it’s one more reason to ask your provider how they’re handling the deadline.

Energy storage is treated differently under §48E: projects that begin construction through 2033 can claim the full credit, stepping down to 75% in 2034 and 50% in 2035. For homeowners buying a battery outright, that doesn’t help — §25D is still gone — but a leased residential battery may carry federal value for years after solar-only leases can’t. New foreign-entity sourcing rules apply to projects beginning construction after 2025, which affects which equipment qualifies.

The §30C credit for EV charging equipment ended for property placed in service after June 30, 2026. The §25C efficiency credit (heat pumps, windows, panel upgrades) ended after December 31, 2025. The §45L credit that homebuilders claimed for efficient new homes ended for homes acquired after June 30, 2026.

If a builder or contractor is still pricing a project around any of these, ask them to show you the current rule in writing.

A business that owns its own solar can still claim §48E, subject to the same placed-in-service and begin-construction rules. The 2025 law also permanently restored 100% bonus depreciation for property acquired and placed in service after January 19, 2025. How that interacts with your specific system and tax position is a question for your CPA; we don’t give tax advice.

USDA’s REAP program has been a major source of money for farm and rural business solar. As of September 2026, REAP grants are paused while USDA rewrites the rule, guaranteed loans remain open, and large ground-mounted solar has been deprioritized. Rooftop solar on farm buildings remains eligible. Check USDA’s current status before you plan around it.

Without the 30% credit, buying solar outright takes longer to pay back than it did in 2024 or 2025. It can still make sense — especially with a high bill, a good roof and a utility that credits exports at retail — but the math is tighter and you should see it honestly. For many households, a lease or PPA now delivers the most immediate savings, while cash still delivers the most over 25 years.

Our financing comparison tool lays cash, loan, lease and PPA side by side for your bill, using our real prices and terms.