Guide
Federal solar ITC percentage in 2026: what changed, who still qualifies
Updated
For three years the safest line in solar was 'take 30% off, courtesy of the IRS'. A 2025 law changed that; here is how to verify yours before you sign.
Talk to a specialist Your bill, your system size, a sourced price range in ten seconds.
Email me this result
We will send you these figures and a link back to them. One email, nothing else unless you tick the box.
How this calculator works
- Installed cost of $2.50-$3.20 per watt before incentives, typical 2026 Texas quotes for rooftop systems. Your quotes will vary with roof, equipment tier and installer; always compare several (see our table).
- System sizing from your bill assumes a typical Texas residential rate of about 15 cents/kWh (EIA Electric Power Monthly). It also assumes typical Texas production of roughly 1,500 kWh per kW per year (PVWatts (NLR, formerly NREL)). Both are typical figures, not your meter.
- The 30% figure is the federal residential clean energy credit under Section 25D (irs.gov). 2025 federal legislation ended this credit for property placed in service after December 31, 2025.
- As the law stood at our updated date, most systems bought in 2026 do not qualify. The toggle defaults to off; verify at irs.gov and with a tax professional before applying it.
- Battery storage adds a typical $10,000-$15,000 installed for a home battery in the 10-15 kWh class, 2026 quotes; larger backup setups cost more.
- Texas exempts from property tax 100% of the appraised value a solar installation adds to your home, under Tax Code Section 11.27. You must apply for the exemption (Texas Comptroller).
- Texas has no state income tax, so there is no state solar income tax credit. Local utility rebates (for example some municipal utilities and co-ops) exist in places and change often, check your utility directly.
What the credit was
The residential clean energy credit (Internal Revenue Code Section 25D) let homeowners claim 30% of the cost of solar panels against their federal income tax (irs.gov). There was no dollar cap, and it also covered battery storage of 3 kWh or more. The Inflation Reduction Act of 2022 had fixed it at 30% into the 2030s.
What the 2025 legislation did
Federal tax legislation signed in July 2025 terminated the Section 25D credit early: it does not apply to property placed in service after December 31, 2025. As the law stood at this page's updated date, a homeowner paying for a system in 2026 generally cannot claim the 30% credit.
This is the single most expensive assumption to get wrong on a 2026 quote: roughly $6,000-$7,700 on a typical 8 kW system. Verify the current position at irs.gov and with a tax professional before you count on it. Guidance and law can change; we correct this page in place when it does.
Edge cases to check, not assume
- Paid in 2025, installed later: the cutoff is written around expenditures; when an expenditure counts as made has technical timing rules. If you paid in 2025, put the question to a tax professional rather than an installer.
- Leases and power purchase agreements: when a third party owns the system, the homeowner never claimed 25D anyway; the owner may claim a separate business credit (Section 48E) that has its own phase-down and rules. Some installers now market lease structures for exactly this reason, read the contract's escalator clauses carefully and verify who keeps the credit.
- Batteries: the same 25D termination covers standalone battery storage for homeowners; do not price a 2026 battery with a 30% discount unless you have verified eligibility.
How to verify in ten minutes
- Read the current IRS page for the residential clean energy credit, it states the applicable years.
- Ask any installer quoting a 'federal credit' line item to point to the statute or IRS guidance that applies to your purchase date and ownership structure, in writing.
- If the answer matters to whether you buy, spend an hour with a CPA before spending $20,000 on a roof.
Nothing on this page is tax advice. It states the position as of the updated date above and is corrected in place when the law or IRS guidance changes.