Is there a federal solar tax credit in 2026?
There is no federal residential solar tax credit in 2026 for a system you buy and own. The Residential Clean Energy Credit under Section 25D, which returned 30% of the cost of a home solar system as a credit against your federal taxes, expired for any system placed in service after December 31, 2025. If your panels are switched on in 2026, you get nothing back from the IRS for owning them, full stop.
This is the single most common solar claim online, and it is now out of date. Many calculators, sales pitches, and even recent-looking articles still bake a 30% discount into their savings math. For an owned 2026 install, that number is simply gone, and any payback estimate that includes it is too optimistic. When you compare quotes or model savings, use the sticker price with no federal credit subtracted. The cost guide and the pros and cons breakdown both assume the post-2025 reality.
What was the 30% solar tax credit, and why did it end?
The 30% credit was Section 25D, the Residential Clean Energy Credit, a dollar-for-dollar reduction in your federal tax bill equal to 30% of what you spent on an owned home solar system, including panels, inverters, wiring, and labor. On a $24,000 install it was worth about $7,200. It had been extended in 2022 to run through 2032 before stepping down, which is why so much older advice treats it as a given.
It ended early because of the law signed on July 4, 2025 (Public Law 119-21, often called the One Big Beautiful Bill). That law terminated the 25D credit for expenditures on systems placed in service after December 31, 2025. The IRS treats the expense as made when installation is completed, so the cutoff is when the system was finished and turned on, not when you signed a contract or paid a deposit. Sign in 2025 but finish in 2026, and you missed it.
The change applies only going forward. It does not claw back credits from people who lawfully claimed them on systems completed in 2025 or earlier. If you are reading this trying to decide whether to install now, the practical takeaway is that the deadline has already passed for the residential credit, so plan your budget around the full price.
Can you still get a solar tax credit through a lease or PPA in 2026?
Indirectly, yes. If you go solar through a lease or a power purchase agreement (PPA), you do not own the equipment, the financing company does. That company is a business, so it can claim the commercial credit (Section 48E), which still exists and reaches these third-party home systems through 2027. You never file for that credit yourself, but the company can pass part of its value back to you as a lower monthly payment or a lower per-kilowatt-hour rate.
This is why you will see lease and PPA sellers advertising a 30% benefit in 2026: technically the credit is real, it just belongs to them, and what reaches you is a discount, not a check from the IRS. The tradeoff is ownership. With a lease or PPA you do not own the panels, the savings are usually smaller than a cash purchase over the system's life, and selling the home gets more complicated because the buyer has to assume the contract. Weigh that carefully in solar lease vs buy and see how the dominant leasing model works in the Sunrun review.
The commercial credit rules are technical and phasing down, and the terms for new lease and PPA projects are tightening. If a salesperson quotes you a specific percentage, ask in writing exactly how it lowers your payment, and confirm the current rules rather than trusting a marketing figure.
Do state and local solar incentives still exist in 2026?
Yes. The federal change did not touch state and utility programs, which is where most of the remaining savings now live. Depending on where you live, you may still have net metering or net billing that credits the power you export, state rebates or tax credits, sales and property tax exemptions on the system, or Solar Renewable Energy Certificates (SRECs) you can sell. These vary enormously by state and utility, and some are far more generous than others.
Because these programs change often and differ by address, do not assume a number you read applies to you. Check your own state's current incentives and your utility's export rules before you model savings. Net metering in particular has been getting less generous in many states, and it often matters more to your payback than any one-time rebate. Start with how net metering works, then verify the specifics for your utility.
If I installed solar in 2025, can I still claim the credit?
Yes, if your system was placed in service on or before December 31, 2025. The law ended the credit going forward; it did not strip it from systems that were completed and operational by that date. If your install was finished in 2025, you claim the 30% credit on your federal return for the 2025 tax year using IRS Form 5695, the same as always.
The key word is completed. A deposit, a signed contract, or panels sitting on the roof waiting for a final inspection in 2026 does not count; the system had to be finished and turned on by the end of 2025. If you are unsure when yours was officially placed in service, ask your installer for the commissioning or permission-to-operate date and check with a tax professional, since this is the line that decides whether you qualify.
Is home solar still worth it without the tax credit?
It still can be, but the case is weaker and the payback is longer. Losing 30% off the top means an owned system that effectively cost around $17,000 last year now costs the full $24,000 or so, and the years it takes to break even stretch out accordingly, commonly into the 10-to-15-year range rather than the high single digits. Solar did not stop working; it just lost a large discount, so the underlying rate, sun, and price now have to carry the whole return.
Whether it pays for your house comes down to four things: your price per kilowatt-hour, how much sun your roof gets, what your utility pays for exported power, and the installed price you can negotiate. High rates and strong sun still tilt it toward yes; low rates or weak net metering tilt it toward no. Treat every savings and payback figure as an estimate for your situation, not a promise. Model it honestly with the full price in the solar panel calculator, get at least three quotes, and read the full pros and cons before you commit.
Frequently asked questions
Is the solar tax credit going away, or has it already ended?
It has already ended for homeowners who buy their own system. The 30% federal residential solar credit (Section 25D) expired for systems placed in service after December 31, 2025, under the law signed July 4, 2025. There is no phase-down left to catch; for an owned system finished in 2026 or later, the federal residential credit is simply gone.
Can I still get 30% back on solar in 2026?
Not as a homeowner who buys the system outright; that credit expired after 2025. The only way a 30% benefit reaches a 2026 home install is through a lease or PPA, where the financing company claims the commercial credit and passes part of the value back to you as a lower payment. That is a discount on your payments, not a credit you file for, and you give up ownership to get it.
How do solar tax credits work?
A tax credit reduces your tax bill dollar for dollar. The old 30% residential credit let an owner subtract 30% of the system's cost from federal taxes owed, claimed on IRS Form 5695. That residential credit no longer applies to systems placed in service after December 31, 2025. The remaining federal credit is a commercial one that only businesses, including solar lease and PPA companies, can claim.
What did the One Big Beautiful Bill do to solar?
The law signed on July 4, 2025 terminated the 30% federal residential solar tax credit (Section 25D) for systems placed in service after December 31, 2025. It did not remove the credit from systems already completed in 2025 or earlier, and it left the commercial credit (Section 48E) in place, which is what lease and PPA providers use through 2027.
Are there any solar incentives left in 2026?
Yes, mostly at the state and local level: net metering or net billing, state rebates or tax credits, sales and property tax exemptions, and SRECs in some markets. These vary by state and utility and change often, so verify your own before counting on them. A lease or PPA can also pass through part of the commercial credit as lower payments. Treat any figure you find as a starting point, not a guarantee.