The solar tax credit in 2026 no longer exists for systems most homeowners buy and own. The 30% Residential Clean Energy Credit (IRC 25D) ended for property installed after Dec 31, 2025. A few things are left, though, and some of them matter a lot if your 2025 credit was bigger than your tax bill.
What Ended: The 25D Credit
The IRS’s Residential Clean Energy Credit page says the credit equals 30% of qualified costs “installed anytime from 2022 through December 31, 2025” and “is not available for any property placed in service after December 31, 2025.” The cutoff came from the July 4, 2025 tax law (Public Law 119-21).
What counts is the install date. The IRS says you claim the credit “for the tax year when the property is installed, not merely purchased.” A contract signed and paid in 2025 but installed in 2026 doesn’t qualify.
The credit also covered home batteries of at least 3kWh, so batteries installed in 2026 lost it too.
Solar Tax Credit 2026: What Is Left
| Item | Status in 2026 |
|---|---|
| 25D for homeowner-owned solar/ | Ended |
| Unused 25D credit from 2025 or earlier | Can still carry forward to future tax years |
| Lease/PPA (company-owned) systems | Owner may claim the business credit (48E) under new deadlines |
| State and utility incentives | Vary by state. Check DSIRE |
Carryforwards
25D was nonrefundable but could carry forward. If your 2025 install produced more credit than you owed in tax, the IRS says you can apply the excess to future years. You’ll still file Form 5695.
Leases and PPAs
In a lease or power purchase agreement, the company owns the system and may claim the clean electricity investment credit (IRC 48E). IRS Notice 2025-42 explains that solar facilities starting construction after July 4, 2026 must be placed in service by Dec 31, 2027 to qualify. The homeowner doesn’t claim this credit, and how much of it shows up in your payment depends on the contract. Rules and guidance here are still changing, so ask the provider in writing how the credit affects your price.
Red Flags in 2026 Quotes
- A sales pitch that still subtracts “30% federal tax credit” from a system you’d own.
- Loans structured around a large lump-sum payment “when your tax refund arrives.”
- Pressure to sign quickly “before the credit ends.” It already has.
What to Do Now
Re-run your payback math without the credit, compare cash, loan and lease offers on equal terms, and check state programs at DSIRE (dsireusa.org).
Timeline: How the Residential Solar Credit Got Here
The credit changed several times before it ended. The rates below are from the IRS and the laws that set them.
| Install year | Credit rate | Law |
|---|---|---|
| 2006–2019 | 30% | Energy Policy Act of 2005, later extended |
| 2020–2021 | 26% | Step-down under the 2015 extension |
| 2022–2025 | 30% | Inflation Reduction Act of 2022 |
| 2026 and later | 0% for homeowner-owned systems | Public Law 119-21 (July 4, 2025) |
Before the 2025 law, the IRA had scheduled 30% through 2032. That is why some older articles and sales sheets still quote the credit for 2026. Check the date on anything you read, and use the IRS Residential Clean Energy Credit page as the source of truth.
Worked Example: How a Carryforward Works
25D was nonrefundable. It could reduce your federal income tax to zero, but any excess was not paid out as a refund. It rolled into the next year instead. Here is how that plays out with simple numbers (illustrative only):
| Item | Amount |
|---|---|
| 2025 system cost (solar + battery), installed by Dec 31, 2025 | $30,000 |
| 25D credit at 30% | $9,000 |
| Federal income tax owed for 2025 | $6,000 |
| Credit used in 2025 | $6,000 |
| Carried forward to 2026 | $3,000 |
In 2026 you would file Form 5695 again to claim the $3,000 carryforward against 2026 tax. If 2026 tax is $2,000, $1,000 carries again into 2027. A tax professional can confirm how this applies to your return.
Step-by-Step: What to Do If You Installed in 2025
- Confirm the placed-in-service date. Keep the final inspection record or permission-to-operate letter from your utility. The IRS keys the credit to when the property is installed.
- Gather costs. Qualified costs included equipment, labor for onsite prep, assembly and original installation, and wiring to connect the system.
- Subtract any utility rebates that reduce your cost, as the IRS instructions for Form 5695 describe.
- File Form 5695 with your 2025 return and note any unused amount.
- Claim carryforwards on later returns until the credit is used up.
What 2026 Buyers Should Model Instead
Without a federal credit, the full installed price has to pay for itself. Using Lawrence Berkeley National Laboratory’s 2024 median of $3.5/W for cash purchases, a 7 kW system costs about $24,500. In 2025, the 30% credit would have cut that to about $17,150, a $7,350 difference. That gap is why payback periods are longer now. Our solar payback period guide and are solar panels worth it in 2026 show how to redo the math.
| 7 kW system at $3.5/ | 2025 (with 25D) | 2026 (owned, no 25D) |
|---|---|---|
| Installed price | $24,500 | $24,500 |
| Federal credit | $7,350 | $0 |
| Net cost | $17,150 | $24,500 |
Lease and PPA Pricing in 2026
In a lease or PPA, the installer or a finance company owns the equipment. Under IRS Notice 2025-42, solar facilities that begin construction after July 4, 2026 must be placed in service by Dec 31, 2027 to qualify for the business credits. Questions to ask any lease provider in writing:
- Does the price assume the 48E credit, and what happens if the project doesn’t qualify?
- What is the annual escalator (for example, 0%, 1.9% or 2.9% per year)?
- What is the buyout price, and what happens if I sell the house?
Our lease vs loan vs cash comparison and lease buyout guide cover these terms.
Other Home Energy Credits
The Energy Efficient Home Improvement Credit (IRC 25C), which covered items like heat pumps, insulation and windows, also ended for property placed in service after Dec 31, 2025 under the same law, according to the IRS. State and utility programs are now the main source of help. Search by ZIP code in DSIRE or read our solar incentives by state post.
Five 2026 Claims Worth Checking
- “Sign now to lock in the 30% credit.” For owned systems, the credit ended for anything installed after Dec 31, 2025. No contract date changes that.
- “The credit moved to 2032.” That was the schedule under the 2022 Inflation Reduction Act. Public Law 119-21 replaced it.
- “Your battery still qualifies on its own.” Standalone batteries of 3 kWh or more did qualify for 25D from 2023 through 2025. Homeowner-owned batteries installed after 2025 don’t.
- “You’ll get a check from the IRS.” 25D was never refundable. It only reduced tax owed, with any excess carried forward.
- “Leasing gives you the credit.” In a lease or PPA, the owner of the equipment claims any business credit, not the homeowner.
Questions to Ask Your Installer in Writing
- Is the quoted price before or after any incentive, and which incentive exactly?
- If a federal credit is mentioned, which IRC section is it, and who claims it?
- Is there a loan payment that assumes a tax refund lump sum?
- Which state, utility or local programs did you include, and are they confirmed or applied for?
For more questions, see how to choose a solar installer.
FAQ
Can I still claim the solar tax credit in 2026?
Only as a carryforward from an earlier install. New homeowner-owned systems installed in 2026 don’t qualify.
My system was installed in December 2025. Do I qualify?
If installation was complete by Dec 31, 2025, it falls in the 2025 tax year. Confirm with a tax professional.
Does the credit still apply to batteries?
Not for batteries installed after 2025 that you own.
Is the solar tax credit going away in 2026?
It already has for homeowner-owned systems. Anything installed after Dec 31, 2025 gets no 25D credit.
Can I claim the solar credit if I paid in 2025 but the install finished in 2026?
No. The IRS ties the credit to the year the property is installed, not when it was purchased.
Is the solar tax credit refundable?
No. 25D was nonrefundable, but unused amounts carry forward to future tax years.
Do I need to file Form 5695 for a carryforward?
Yes. Form 5695 is used to figure the carryforward amount you can apply each year.
Sources: IRS, Residential Clean Energy Credit (irs.gov); IRS FAQs on modifications under Public Law 119-21; IRS Notice 2025-42 (45Y/48E beginning of construction); SEIA, Guide for Residential Solar Installers (Jan 2026); DSIRE. Accessed Oct 2026. Not tax advice; IRS, About Form 5695; IRS, Energy Efficient Home Improvement Credit; LBNL 2025 Data Update (cash median $3.5/W). Accessed Oct 2026.
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2 replies on “Is the Solar Tax Credit Gone in 2026? What Ended, What Is Left, and Carryforwards”
[…] Compare that with 2025, when the federal 25D credit would have taken another 30% off. State credits are now the main tax help for owned systems. See is the solar tax credit gone in 2026. […]
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