The 30% federal tax credit for home solar panels ended for systems installed after December 31, 2025. If your panels were finished in 2026, there is no federal homeowner credit to claim, even if you paid or signed earlier. Systems completed in 2025 still qualify, and you claim the credit on your 2025 tax return.
This guide explains how the credit worked and what changed. It also covers the date rule that decides who qualifies, and which incentives remain as of October 2026.
How the solar tax credit worked before 2026
The credit’s formal name is the Residential Clean Energy Credit, found in section 25D of the tax code. After the Inflation Reduction Act of 2022, it was worth 30% of the cost of qualifying equipment installed from 2022 on. Under that law, the rate was scheduled to stay at 30% through 2032 and then step down to 26% in 2033 and 22% in 2034.
The credit covered more than the panels. It included inverters, wiring, mounting hardware and installation labor. Starting in 2023, home batteries with a capacity of at least 3 kilowatt-hours also qualified. There was no dollar cap for solar, so a $25,000 system produced a $7,500 credit.
It was a nonrefundable credit, which means it could cut your tax bill to zero but not below. If the credit was larger than your tax for the year, you could carry the unused part forward to later years.
What changed, and when
The change came in the tax law signed on July 4, 2025, Public Law 119-21. Section 70506 of that law replaced the old end date. Instead of running until 2034, section 25D now ends for expenditures made after December 31, 2025. The law removed the 26% and 22% step-down years, so the rate went from 30% straight to zero.
The IRS page on the Residential Clean Energy Credit now says the credit is not available for property placed in service after December 31, 2025. The same law ended several related home credits on similar timelines.
| Federal credit | What it covered | End date under Public Law 119-21 |
|---|---|---|
| Residential Clean Energy Credit (25D) | Solar panels, solar water heaters, batteries, small wind, geothermal heat pumps. | No credit for expenditures made after December 31, 2025. |
| Energy Efficient Home Improvement Credit (25C) | Insulation, windows, heat pumps, home energy audits. | No credit for property placed in service after December 31, 2025. |
| Alternative Fuel Vehicle Refueling Property Credit (30C) | Home EV chargers in eligible areas. | Ended after June 30, 2026. |
| New Energy Efficient Home Credit (45L) | Credit for builders of efficient new homes. | Ended after June 30, 2026. |
The date that decides who qualifies
For many households, the timing rule matters most. The IRS published guidance on the changes in August 2025, in its FAQ on the modified energy credits. It says an expenditure counts as made when installation is complete, not when you pay.
So a family that paid a deposit in November 2025 but had panels finished in January 2026 gets no credit. On the other hand, a family whose installation was complete in December 2025 qualifies, even if part of the bill was paid later. For a newly built or rebuilt home, the date is when you first begin living in it.
If you are unsure which year your system counts in, check the installer’s completion paperwork. A final inspection date or a utility permission-to-operate letter can help show when the work was done.
If your system was installed in 2025
You can still claim the full 30%. File IRS Form 5695, Residential Energy Credits, with your 2025 federal return. Some incentives, such as a utility subsidy for the installation, can reduce the cost you count. The form’s instructions explain how to handle them.
If you already filed your 2025 return without it, you can generally file an amended return. The IRS usually allows a refund claim within three years of the date you filed the original return.
Any unused credit still carries forward. The IRS says excess credit can be carried to future tax years. So a 2025 system can still lower your taxes in 2026 and beyond, even though new installs no longer qualify.
Keep these records with your tax files in case the IRS asks questions later:
- The signed contract and final invoice, showing the total cost and what it covered.
- Proof of payment, such as bank statements or loan documents.
- The final inspection record or the utility’s permission-to-operate letter, which shows the completion date.
- A copy of Form 5695 for every year you use a carried-forward amount.
The amount you can carry forward each year depends on your tax bill, so the credit may take several years to use up. Tax software and the Form 5695 instructions walk through the calculation line by line.
Leased systems and business credits
Business credits follow separate rules, and they have not ended yet. A solar company that owns panels on your roof, through a lease or a power purchase agreement, may claim the clean electricity investment credit under section 48E.
The 2025 law also set an end date for that credit. Solar property whose construction began after July 4, 2026, must be in service by December 31, 2027. That rule is spelled out in the instructions for IRS Form 3468. New limits also apply to equipment and companies with ties to certain foreign entities.
The homeowner does not claim this credit. A company may pass part of the value on through a lower price, but it is not required to. Our guide to solar panel costs in 2026 shows what homeowners paid for owned systems.
State and local incentives that remain
The federal change does not touch state, city or utility programs. Some still offer rebates, performance payments or low-interest loans. These vary widely, and many have limited funding, so check what is open in your area before you sign. The DSIRE database, run by the NC Clean Energy Technology Center, lists programs by state.
California homeowners face a second deadline. Under state law, adding an active solar energy system does not trigger a property tax reassessment. However, that exclusion becomes inoperative on January 1, 2027, the state Board of Equalization told county assessors in a September 2026 letter. Systems that already qualify keep the exclusion until the property changes ownership.
Net metering or net billing rules also shape the value of solar, because they set what your utility pays for power you send to the grid. Those rules come from state regulators and utilities, not from the federal tax code.
How the change affects the math
The difference is easy to measure. Berkeley Lab found that cash buyers paid a median of about $23,100 for a typical 7.7-kilowatt system installed in 2025. With the 30% credit, the net cost was about $16,170. Without it, a buyer pays the full price, so the system needs roughly 43% more years of savings to break even, all else equal.
That does not settle whether solar makes sense for your home. Electricity rates, sunlight, roof condition and how long you will stay still decide most of the answer. Our guide on whether solar panels are worth it walks through payback with current prices. For more explainers, browse our science and technology guides.
This article is general information, not tax or financial advice. Check with a tax professional for your own return.
Frequently asked questions
Is there a federal solar tax credit in 2026?
Not for homeowners who buy a system. The 30% credit does not apply to systems installed after December 31, 2025. A company that leases panels to you may still claim a business credit through 2027.
I paid in 2025 but my panels were installed in 2026. Do I qualify?
No. The IRS counts the date installation was completed. Payment in 2025 does not qualify a system finished in 2026.
Can I still use a solar credit I carried forward?
Yes. Unused credit from a qualifying system installed in 2025 or earlier can still be carried forward to future tax years.
Do home batteries still qualify for a tax credit?
Not for homeowners. Batteries were covered by the same 25D credit, which ended for expenditures after 2025. Batteries owned by a company may still qualify for business credits.
Have a question about this topic? Ask in the comments below. Our editors read every comment and answer questions here, and we add useful answers to the guide.
Sources
- irs.gov/credits-deductions/residential-clean-energy-credit
- irs.gov/newsroom/faqs-for-modification-of-sections-25c-25d-25e-3…
- irs.gov/newsroom/one-big-beautiful-bill-provisions
- irs.gov/forms-pubs/about-form-5695
- irs.gov/instructions/i3468
- govinfo.gov/content/pkg/PLAW-119publ21/html/PLAW-119publ21.htm
- eta-publications.lbl.gov/publications/us-distributed-solar-and-storage-0
- dsireusa.org
- leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml
- boe.ca.gov/proptaxes/pdf/lta26034.pdf