Is the 30% federal solar tax credit still available in 2026?

No. The Residential Clean Energy Credit (Section 25D) ended for systems purchased after December 31, 2025, under the One Big Beautiful Bill Act signed in July 2025. Homeowners who buy a solar system with cash or a loan in 2026 receive no federal tax credit — the credit went from 30% to zero with no phase-down period.

Can I still claim the credit for a system I installed in 2025?

Generally yes — if your system was paid for and placed in service by December 31, 2025, you can typically claim the 30% credit on the tax return covering that year, using IRS Form 5695. Confirm your specific eligibility and timing with a tax professional.

The Federal Solar Tax Credit Ended in 2025 — What It Means in 2026

Q: Do solar leases or PPAs still get any federal credit in 2026?

Indirectly, possibly. Third-party-owned systems (leases and power purchase agreements) fall under the commercial credit rules in Section 48E, which survived longer than the residential credit but are subject to construction-start and placed-in-service deadlines set by the 2025 law. The leasing company claims any credit, not you — but competitive lease pricing may partially reflect it. Ask providers directly how their pricing accounts for it.

Update (July 2026): This article was revised to reflect a major legal change. The federal residential solar tax credit no longer exists for systems purchased in 2026 or later. Here’s what happened and what it means for your budget.

This article is educational, not tax advice. Confirm current details with a qualified tax professional before filing.

What changed

The Residential Clean Energy Credit — Section 25D of the tax code, commonly called the federal solar tax credit or ITC — previously let homeowners claim 30% of their total solar system cost against their federal income taxes, and was scheduled to run through 2034.

That schedule was cut short. The One Big Beautiful Bill Act, signed into law on July 4, 2025, terminated the residential credit for expenditures after December 31, 2025. There was no phase-down: the credit went from 30% to zero on January 1, 2026.

The practical consequence: if you buy a solar system with cash or a loan in 2026, there is no federal tax credit to subtract from your cost.

If you installed in 2025

If your system was paid for and placed in service by December 31, 2025, you can generally still claim the 30% credit on the tax return covering that year:

Keep your final invoice showing the total system cost from your installer.
File IRS Form 5695 (Residential Energy Credits) with your federal return for the year the system was placed in service.
Carry the calculated credit to your Form 1040.
Work with a tax professional if your situation involves multiple properties, business use of your home, or timing questions about “placed in service.”

The lease/PPA nuance

The 2025 law treated third-party-owned residential systems differently. Leases and power purchase agreements fall under the commercial credit rules (Section 48E), which continue past the residential cutoff but are subject to construction-start and placed-in-service deadlines defined in the law.

Two things to understand clearly:

You never claim this credit yourself. The company that owns the system does.
It may or may not show up in your pricing. A competitive lease or PPA market can pass part of that value through as lower monthly payments — or not. Compare offers carefully, and see our financing comparison for how ownership structure changes the long-term math.

This is a genuine reversal of the pre-2026 advice, when owning the system was what qualified you for the credit. In 2026, third-party ownership is the only path where any federal credit still exists in the residential market — which doesn’t automatically make leasing the better deal, since you give up ownership of the system and its long-term savings.

What this does to solar payback in 2026

Removing a 30% credit materially lengthens payback periods. A $21,000 system that effectively cost about $14,700 after the credit in 2025 costs the full $21,000 in 2026. That doesn’t make solar universally a bad deal — it shifts the math toward states with:

High electricity rates (California, Massachusetts, New York — see state guides), where each offset kWh is worth more
Real state-level incentives — state tax credits (New York, Arizona, Massachusetts), SREC programs (New Jersey, Maryland, Pennsylvania), and upfront rebates (NY-Sun, Illinois Shines, Maryland’s grant)
Full retail net metering, where it still exists

Our calculator uses per-state electricity rates and no longer assumes a federal credit. See our state incentives overview for what remains program by program.

Common mistakes in 2026

Trusting outdated articles or sales pitches that still cite the 30% credit. Any quote or savings estimate that subtracts a federal credit for a 2026 cash/loan purchase is wrong — treat it as a red flag about that installer’s honesty or competence.
Assuming leases are automatically better now. The 48E benefit goes to the leasing company; whether you see any of it depends on pricing. Run the full comparison.
Ignoring state incentives. With the federal credit gone, state-level programs are now the largest incentives available, and they vary enormously by state.

Bottom line

The 30% federal residential solar tax credit ended on December 31, 2025, with no replacement for homeowners who purchase their systems. In 2026 the financial case for solar rests on your state’s electricity rate, its net metering policy, and state-level incentives — which is why running state-specific numbers matters more now than ever.