Federal Solar Tax Credit in 2026: What Happened to the 30% Credit
If you came here expecting to claim 30% of your solar installation back on your 2026 taxes, here’s what you need to know before you sign anything: the federal residential solar tax credit is gone. The One Big Beautiful Bill Act (H.R.1), signed July 4, 2025, terminated the Residential Clean Energy Credit (IRC Section 25D) for systems placed in service after December 31, 2025. There was no step-down to 26% or 22% — it dropped straight to zero on January 1, 2026.
I’ve kept this guide up because the situation is more nuanced than “the credit is dead,” and getting the details wrong can cost you thousands. Here is exactly who can still claim a credit, who can’t, and where the real 2026 savings actually come from.
Who Can Still Claim the Federal Credit — and Who Can’t
Bought with cash or a loan and installing in 2026: $0
This is the hard part. If you buy your system outright or with a solar loan and it is placed in service in 2026 or later, you get no federal tax credit. None. When you compare quotes and a salesperson folds a “30% federal credit” into your payback math, ask them to redo the numbers without it — or walk away. Every estimate you run for a 2026 install should assume zero federal credit. Our 2026 payback calculator already works this way: it calculates your break-even on state incentives only.
Placed in service by December 31, 2025: you can still claim it
The credit is tied to when your system is “placed in service” — the date it is fully installed, inspected, and granted permission to operate by your utility — not when you signed the contract or paid a deposit. If your system received permission to operate on or before December 31, 2025, you can still claim the 30% credit on the 2025 return you file in early 2026. You file IRS Form 5695 (Residential Energy Credits) and carry the result to Schedule 3 of your Form 1040. The credit is non-refundable, but any unused portion carries forward to future tax years.
Leasing or signing a PPA: the credit goes to the system’s owner
This is the one federal door still open in 2026. When a third party owns the panels — a lease or power purchase agreement (PPA) — the system qualifies under the commercial credit (Section 48E), not the homeowner credit. You don’t claim anything yourself, but the company that owns the system can, and competitive installers often pass that value back to you as a lower monthly rate. That commercial pathway runs on its own timeline (broadly, projects that begin construction before mid-2026 or are placed in service by 2028). If you’re weighing this, our lease vs. buy calculator lays out the trade-offs.
Where 2026 Solar Savings Actually Come From
Losing the federal credit lengthens payback, but it doesn’t kill the economics in most states. The real drivers in 2026 are:
- State tax credits and rebates. Several states still offer their own credits or rebates — New York’s 25% state credit (up to $5,000), Hawaii’s 35% credit, and others. These never depended on the federal credit and are unaffected by its repeal.
- Net metering. In states with fair net metering, the credits you earn for exporting power to the grid are often a bigger lifetime number than any one-time tax credit ever was.
- Property and sales tax exemptions. Many states exempt solar from added property tax or sales tax, which quietly improves your return.
- Falling hardware prices. Panel and inverter costs have dropped sharply over the past decade, partly offsetting the loss of the credit.
Because incentives vary so much by state, the only honest way to estimate your 2026 numbers is to run them for your specific location. Start with our solar cost estimator, then check what’s available where you live on our state-by-state incentive guide.
Frequently Asked Questions
Is there any federal solar tax credit in 2026?
Not for homeowners who buy their system with cash or a loan — that credit (Section 25D) expired December 31, 2025. The only federal benefit left flows through leases and PPAs, where the third-party owner claims a commercial credit and may pass the savings on through a lower rate.
I installed solar in 2025 — can I still get the 30% credit?
Yes, as long as your system was placed in service (installed, inspected, and granted permission to operate) on or before December 31, 2025. You claim it on your 2025 federal return using Form 5695. Signing a contract or paying a deposit in 2025 isn’t enough; the operational date is what the IRS looks at.
Does battery storage still qualify?
Residential battery storage fell under the same Section 25D credit that expired at the end of 2025, so batteries placed in service in 2026 don’t qualify for the homeowner credit either. As with solar, the commercial pathway may still apply to third-party-owned systems.
Will the credit come back?
There is no current law restoring it, and any change would require new federal legislation. When you plan a 2026 purchase, the safe assumption is that there is no federal credit — if that ever changes, treat it as upside, not something to count on.
For the official federal position, the U.S. Department of Energy’s Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics is the authoritative reference.
This guide is for general information and is not tax advice. For your specific situation, talk to a qualified tax professional.