For two decades the federal solar credit was the anchor incentive of US home solar. It's gone: the Residential Clean Energy Credit (IRC §25D) was terminated for expenditures after December 31, 2025 by the One Big Beautiful Bill Act, signed July 2025. Here's what that means depending on where you stand.
If you installed in 2025 or earlier
You can still claim it. Systems placed in service through the end of 2025 qualify for the full 30% credit on eligible costs — panels, inverters, batteries (3 kWh+), labor, permitting. You claim it on IRS Form 5695 with the return for the year of installation. The credit is nonrefundable but carries forward: if it exceeds your tax liability, the remainder rolls to future years. If you installed in December 2025 and haven't filed, don't leave it on the table.
If you're buying in 2026
There is no federal credit for a homeowner-purchased system placed in service after 2025. A $22,000 purchase is a $22,000 purchase. Three things follow. First, state and utility incentives are now the whole incentive story — some states offer meaningful credits, rebates, property-tax exclusions, or SREC income, and DSIRE is the authoritative directory. Second, quotes should fall: installers priced against a subsidized market for years, and a market that lost 30% of its subsidy will pressure margins — negotiate accordingly. Third, payback math simply lengthened; run honest numbers in the Tax Credit & Incentives Estimator and Payback Calculator before believing any sales projection that still assumes a credit.
The lease asymmetry
One asymmetry survived: the law killed the residential credit but left the commercial credit (§48E) alive for now, with its own phase-down and sourcing rules. Leasing companies and PPA providers own the systems on their customers' roofs, so they can still monetize a federal credit that you, as a buyer, cannot. Expect lease marketing to lean hard on this. It genuinely lowers lease pricing — but it doesn't change what a lease is: 25 years of escalating payments for a system you never own. Weigh it in the financing comparator, not in the showroom.
Could it come back?
Tax law is legislation, and legislation changes. If a future Congress restores a residential credit, the calculus reverts — but building a purchase decision on that hope is speculation, not planning. Decide on today's rules.
Solar is one piece of a bigger household-finance picture. For decisions that touch your taxes, retirement timeline, or home equity, it can be worth talking to a financial advisor through a directory like AdvisorWorld — alongside primary sources such as DOE, DSIRE, and the IRS.