The Federal Solar Tax Credit Ended in 2025 — What It Means for Homeowners in 2026
For nearly two decades, the federal solar tax credit was the single biggest incentive for putting panels on a roof. As of 2026, it’s gone for people who buy their own system — but the story is more nuanced than “solar is dead.” Here’s exactly what changed and what your options look like now.
What happened to the 30% credit
The Residential Clean Energy Credit (Section 25D) — the 30% credit homeowners claimed when they bought a solar system with cash or a loan — expired on December 31, 2025. There is no phase-down and no extension: it simply ended.
The change came from the One Big Beautiful Bill (OBBB), signed into law on July 4, 2025. Before that law, the 30% credit had been scheduled to run through 2034. OBBB pulled the deadline forward by nearly a decade.
To have qualified, a homeowner-owned system had to be installed and operational by December 31, 2025. If your system was switched on in 2026, the 25D credit is not available to you.
The important exception: leases and PPAs still get a credit
Here’s the part most headlines miss. The credit that ended (25D) is the one for systems you own. A different credit — Section 48E, the commercial clean-energy credit — still applies to third-party-owned (TPO) systems:
- Solar leases — a company owns the panels on your roof; you pay a fixed monthly fee.
- Power Purchase Agreements (PPAs) — you pay per kilowatt-hour the system produces, usually below your utility rate.
In these arrangements, the leasing company claims the 48E credit, and passes the savings to you through a lower payment. As of 2026, 48E remains available for TPO systems through at least 2027 (and potentially later, depending on when a project begins construction).
This is why the industry is shifting hard toward leases and PPAs in 2026: it’s the main way a homeowner can still benefit, indirectly, from a federal credit.
A newer option: prepaid leases and PPAs
Because owned systems lost their credit, “prepaid” TPO products are gaining ground. You pay for 20–25 years of solar up front — often around 70% of the cost of buying the system outright — while the provider keeps the tax credit. You get most of the savings of ownership without qualifying for 25D yourself.
What this means for you in 2026
| Your situation | Best path in 2026 |
|---|---|
| Want lowest lifetime cost, have cash | Buying still works, just without the 30% credit — run the new payback math |
| Want $0-down, no tax appetite | Lease or PPA — the provider’s 48E credit lowers your payment |
| Want ownership economics, less cash | Prepaid lease/PPA — middle ground |
The headline takeaway: don’t assume solar still comes with a 30% rebate. Any quote that advertises the federal credit for a purchased 2026 system is either out of date or misleading.
Watch out for
- Stale marketing. Plenty of sites and door-to-door reps still pitch the “30% federal tax credit” for purchases. For owned systems installed in 2026, that’s no longer true.
- State and utility incentives. These are separate from the federal credit and still exist in many states. Always check your state’s program — it can meaningfully change the math.
- Demand-driven pricing. With the federal purchase credit gone, 2026 pricing and financing terms are in flux. Get more than one quote.
Bottom line
The 30% credit for buying your own system ended December 31, 2025. In 2026, the federal benefit lives on mainly through leases and PPAs via Section 48E. Solar can still pencil out — but the right structure for you now depends more on your cash position and tax situation than it did a year ago.
Sources: U.S. Internal Revenue Service (Residential Clean Energy Credit); Solar Energy Industries Association (SEIA) summary of the One Big Beautiful Bill; EnergySage and Solar.com 2026 tax-credit guides. Figures current as of June 2026. This is educational information, not tax advice — confirm your eligibility with a tax professional.