The Federal Solar Tax Credit After 2025
The residential solar tax credit that anchored a decade of payback math is gone. This page is the honest post-credit ledger: what ended, what survives in reduced form, which state programs now carry the weight, and what it all means for a purchase this year.
Policy data reviewed August 2026 · last data update 2026-08 · read from IRS and Energy.gov
Planning estimate only - not tax, legal or financial advice. Confirm installed cost and current incentives with a licensed installer and the official IRS and Energy.gov sources.
EndedThe 30% residential credit, in its final window
The residential clean energy credit under IRC section 25D covered 30% of a home solar system’s cost with no dollar cap. It ended for systems placed in service after December 31, 2025. A system that was placed in service in time can still be claimed on the 2025 filing using Form 5695 — the deadline that matters is when the system was up and running, not when the paperwork lands.
ZeroWhat a buyer gets federally now
Nothing on the residential side. A system bought and installed now generates no federal credit, which is why every calculator on this site defaults to zero and prices payback accordingly. Any estimate that still assumes 30% is a year out of date.
ConditionalLeases and PPAs, through the owner’s credit
Third-party ownership is a different lane. The company that owns the system on your roof can claim the separate commercial credit under section 48E for systems placed in service by the end of 2027, and part of that saving reaches you as a lower monthly lease or power-purchase price. You never enter it in a personal calculator — it is already baked into the contract offer, which is exactly why lease quotes deserve line-by-line comparison.
EndedStandalone battery credit
The residential storage credit ended along with section 25D, so a home battery bought on its own now is a pure add-on cost. Batteries paired with third-party-owned systems can fall under the owner’s commercial credit within its window. Otherwise a battery has to justify itself on backup power, bill-shifting in weak-export states, and protection from rate increases — not on a tax form.
ActiveState incentives that now matter more
Several states run their own credits or capped rebates, and they now carry more relative weight than they did before the credit ended. Durable examples on this site’s table: New York’s state tax credit (capped), Arizona’s $1,000-class credit, South Carolina’s capped credit, Massachusetts’ program payments, and Illinois’ long-term incentive contract. Some utilities add upfront rebates, and a handful of states exempt solar equipment from sales tax. Amounts and caps move with legislative sessions — your installer confirms the current paperwork.
What this changes about payback
Losing the federal credit stretches a typical payback by roughly two years at national-average inputs, because the full gross cost now has to be recovered through savings alone. It does not flip the answer everywhere: in high-rate states with a full export credit, the underlying math was strong enough to absorb the loss. In low-rate states, deals that only worked because of the credit stopped working, and honestly pricing that is the whole point of this page. Run the main calculator with your real quote and your state’s prefill to see which side of the line you land on.
Sources
- IRS — Residential Clean Energy Credit (section 25D) and Form 5695 instructions, reviewed August 2026.
- Energy.gov — homeowner guides to the federal solar tax credit and its expiration.
- State program pages — New York State Energy Research and Development Authority, Arizona Department of Revenue, and equivalents (caps change; verify before purchase).
Incentive questions
Is the 30% federal solar tax credit still available?
No. The residential clean energy credit under IRC section 25D ended for systems placed in service after December 31, 2025. A system that was placed in service in time can still be claimed on the 2025 filing with Form 5695, but any purchase from 2026 on gets no federal credit.
What if I lease my system or sign a PPA?
Third-party ownership is treated differently: the company that owns the system can claim the separate commercial credit under section 48E for systems placed in service by the end of 2027, and that saving reaches you indirectly as a lower lease or power price. You do not enter it in the calculator; it is baked into the contract offer.
Do any state incentives still reduce my cost?
Yes, and they now carry more weight than before. Several states offer their own tax credits or capped rebates, some utilities pay upfront rebates, and equipment sales-tax exemptions exist in a handful of states. The incentives page lists the durable examples; your installer confirms the current paperwork.
Can I still claim a credit for a battery?
For a home battery bought on its own after 2025, the residential storage credit ended along with section 25D. Batteries paired with third-party-owned systems can fall under the owner’s commercial credit within its window. Otherwise treat battery cost as a pure addition and justify it on backup and bill-shifting value.