Guide
Federal solar tax credit in 2026: what changed, who still qualifies
Updated
For three years the safest line in solar was 'take 30% off, courtesy of the IRS'. That changed in 2025. Here is what the credit was, what the 2025 law did, and how to verify your own position before you sign.
What the credit was
The residential clean energy credit (Internal Revenue Code Section 25D) let homeowners claim 30% of the cost of solar panels, and of battery storage of 3 kWh or more, against their federal income tax, with no dollar cap (irs.gov). 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, so 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.