Is the Solar Tax Credit Ending? What Changed in 2026
The 30% residential solar tax credit ended for systems completed after December 31, 2025. What still qualifies in 2026, how to claim a 2025 install, and the business credit that remains through 2027.
Last reviewed by Lenny Whiting, attorney (NV, UT) and CPA (NV)
Short answer: the homeowner solar tax credit has ended, but the business solar tax credit hasn't yet. The One Big Beautiful Bill Act (signed July 4, 2025) ended the 30% Residential Clean Energy Credit for expenditures made after December 31, 2025. Commercial solar can still earn a credit of up to 30% if the system is placed in service by December 31, 2027.
What changed for the solar tax credit in 2026?
| Who | Credit | Status in 2026 |
|---|---|---|
| Homeowners buying their own system | Section 25D, 30% | Ended: installations completed after Dec 31, 2025 do not qualify |
| Businesses, farms, owners of commercial and rental property | Section 48E, 6%–30% (+ bonuses) | Available if placed in service by Dec 31, 2027, or construction began by July 4, 2026 |
| Buyers of transferred credits | Section 6418 transfers | Available for credits earned by qualifying projects |
When did the residential solar tax credit end?
The residential credit isn't allowed for expenditures made after December 31, 2025. Section 25D treats an expenditure as made when installation is completed. So a homeowner who paid a deposit in 2025 but finished installation in 2026 doesn't qualify. The date that matters is completion, not the contract or the payment.
How do I claim the solar tax credit for a 2025 installation?
- Confirm installation was complete by December 31, 2025, and keep the installer's completion documents.
- Total the qualified costs: panels, inverters, wiring, labor, and battery storage of 3 kWh or more.
- Subtract any utility rebates that reduced your cost.
- Complete Part I of IRS Form 5695 and carry the credit to Schedule 3 of Form 1040.
- Carry any unused credit forward on future returns.
Can business owners still get a solar tax credit?
Yes, and this is where planning matters now. A business that installs solar on its own building, warehouse, farm, or commercial property can claim the Section 48E credit, which is 30% for most systems under 1 MW. It can also deduct the reduced basis with 100% bonus depreciation. For a profitable business owner, the combined first-year federal benefit can be more than half the system cost. Read the full commercial solar tax credit guide for the deadlines, limits, and a worked example, or estimate your numbers with the solar tax calculator.
What about solar leases and PPAs?
With a lease or power purchase agreement, the installer or a third-party owner owns the system and claims the business credit, not the homeowner. Pricing may reflect that credit. But the owner faces the same commercial deadlines and foreign-entity rules, so offers may change as 2027 approaches.
Are there other ways to use clean energy credits to cut taxes?
Taxpayers can also buy credits from project owners at a discount under Section 6418. Individual buyers face passive-activity limits, so this works best against passive income. See how transferable solar tax credits work.
Frequently asked questions
Is the solar tax credit going away?
The residential credit already has. The 30% Residential Clean Energy Credit (Section 25D) does not apply to systems completed after December 31, 2025. The business credit (Section 48E) continues for solar projects placed in service by December 31, 2027, or that began construction by July 4, 2026.
When does the solar tax credit expire?
For homeowners, it expired on December 31, 2025. For businesses, solar projects that did not begin construction by July 4, 2026 must be placed in service by December 31, 2027 to qualify.
Can I still claim the solar tax credit if my system was installed in 2025?
Yes. If installation was completed by December 31, 2025, you can claim the 30% credit on your 2025 federal return using IRS Form 5695. Paying in 2025 was not enough on its own. The IRS treats the expense as made when installation is complete.
Is the solar tax credit a one-time credit?
No. It was claimed for the year each qualifying system was completed, so separate qualifying installations in different years could each earn a credit. Any unused portion carries forward to later tax years.
Can solar tax credit be carried forward?
Yes. If your 2025 residential solar credit is more than your tax liability, the unused amount carries forward to future tax years. The credit itself is nonrefundable, so it can reduce your tax to zero but will not produce a refund on its own.
Is the solar tax credit refundable?
No. The residential solar credit is nonrefundable. It reduces the federal income tax you owe but does not create a refund beyond that. Unused amounts carry forward.
Is there any solar tax credit for 2026?
Not for homeowners who buy their own system. Businesses can still use the commercial Section 48E credit and 100% bonus depreciation until the 2027 deadline. That includes business owners who install solar on commercial property, farms, or rental buildings they operate.
Sources
Get a solar tax plan before you sign
Our tax attorney and CPA confirm whether the credit and depreciation will actually reduce your tax, and structure the project around the December 31, 2027 deadline.
General information about U.S. federal tax law as of the review date above. It is not legal or tax advice and does not create an attorney-client relationship.