Can I still claim the credit if I paid in 2025 but installed in 2026?

No. IRS rules treat the expenditure as made when installation is completed. If your system was not fully installed by December 31, 2025, it does not qualify.

What solar incentives are left in 2026?

State tax credits (like South Carolina's 25% and New York's 25% up to $5,000), utility rebates, net metering, property and sales tax exemptions, and the lease/PPA federal credit pass-through. Availability depends on your state and utility.

Solar Tax Credit 2026: What Changed and What's Still Available

Q: Is the solar tax credit gone in 2026?

For homeowners who buy their system, yes. The 30% federal credit (Section 25D) expired December 31, 2025, with no phase-out. A federal credit still applies to leases and PPAs, where the solar company owns the system and passes savings through lower payments.

Q: Is solar still worth it without the federal tax credit?

Often yes, especially with high electric bills and rising rates. The economics are tighter than in 2025, which makes comparing quotes and checking your state's incentives more important than ever.

The short answer: the 30% federal solar tax credit for homeowners is gone. Section 25D — the credit that let you claim 30% of your solar purchase on your federal taxes — expired on December 31, 2025, under the One Big Beautiful Bill Act. If you buy a solar system with cash or a loan in 2026, there is no federal tax credit.

But that's not the whole story. A federal credit still flows to homeowners through solar leases and power purchase agreements (PPAs), many states offer their own tax credits and rebates, and net metering still pays you for the power you produce. This guide covers what changed, what's left, and a deadline in July 2026 that matters if you're considering the lease/PPA route.

Key Takeaways

The 30% federal residential solar tax credit (Section 25D) expired December 31, 2025 — with no phase-out. 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 wasn't enough.
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.
July 4, 2026 is the deadline for solar companies to begin construction on lease/PPA projects under the most favorable federal rules — after that, qualifying projects must be running by the end of 2027.
State tax credits, utility rebates, net metering, and property/sales tax exemptions are unaffected by the federal change.

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. That was Section 25D, the Residential Clean Energy Credit. The One Big Beautiful Bill Act, signed July 4, 2025, ended it abruptly:

No step-down. Earlier law would have phased it out gradually through 2034. Instead it went from 30% to zero overnight.
Installation — not payment — was the cutoff. The expenditure counts when installation is completed. 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.

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. 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

Solar companies must begin construction on projects by July 4, 2026 to lock in the credit under the most favorable terms (with up to four years to complete). Projects starting after that date only qualify if the system is running by December 31, 2027. If you're leaning toward a lease or PPA, getting quotes sooner gives your installer more room to qualify your project.

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. South Carolina offers 25% (claimable over time); New York offers 25% up to $5,000, stackable with NY-Sun rebates; Arizona offers 25% up to $1,000.
Utility and state rebates that lower your installed cost directly.
Net metering — most states still credit excess power sent to the grid, though some have moved to lower export rates.
Property tax exemptions in many states (CA, FL, NY, MA, NJ, MD, AZ, CO, NV and others).
Sales tax exemptions on solar equipment in several states.

See our full guide to solar incentives in 2026.

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. Payback periods for purchased systems have stretched to roughly 8–15 years in most markets. 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 credit (Section 25D) expired December 31, 2025, with no phase-out. A federal credit still applies to 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. 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.

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 — for projects that begin construction by July 4, 2026 or are placed in service by the end of 2027.

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?

Solar Energy Nerds provides general information, not tax or financial advice. Incentives and costs vary by state, utility, and household — verify current figures for your address before making a decision.