Updated 9 July 2026
Solar Tax Credit 2026: The 30% Federal Credit Has Ended
The 30% federal residential solar credit (Section 25D) was terminated by the One Big Beautiful Bill Act. It no longer applies to systems placed in service after 31 December 2025. Here is what changed, who could still claim it, and the state incentives that carry the economics now.
The short version: If you purchase and install a home solar system in 2026, there is no federal tax credit. The credit was worth 30% of the installed cost, but it ended for anything placed in service after 31 December 2025. Verified against IRS guidance on the OBBB changes to Section 25C and 25D and the SEIA summary.
The Credit Timeline
| Placed in service | Credit rate | On a $20,000 System |
|---|---|---|
| 2022 to 31 Dec 2025 | 30% | $6,000 |
| 2026 onward (purchased) | 0% | $0 |
The Inflation Reduction Act of 2022 had scheduled the 30% rate to run through 2032 before stepping down. The One Big Beautiful Bill Act overrode that schedule and terminated the residential credit early, at the end of 2025. The step-down years (26% in 2033, 22% in 2034) never take effect.
Who Could Still Claim It
The test is when the system was placed in service, meaning fully installed and operational, not when you paid or signed. A system had to be placed in service on or before 31 December 2025 to qualify. If yours was:
- • File IRS Form 5695 (Residential Energy Credits) with the tax return for the year it was placed in service.
- • Carry forward the unused amount. If your 2025 tax bill was smaller than the credit, the remainder carries forward to future tax years until it is used up.
- • Batteries counted too if placed in service by the same deadline (3 kWh minimum), even standalone.
What This Means for 2026 Pricing
Every "net after the 30% credit" figure you saw in prior years no longer applies to a 2026 purchase. The price you pay is the gross installed cost. A 6 to 8 kW system that ran $15,000 to $20,000 installed is $15,000 to $20,000 out of pocket in 2026. This is one reason the industry is shifting toward third-party-owned systems (leases and power purchase agreements): the separate commercial clean-electricity credit still applies to the company that owns the equipment, so lease and PPA providers can price some of that value back into their monthly rate. A cash buyer in 2026 has no equivalent federal offset.
State Incentives Still Apply
State programs were never tied to the federal credit and continue in 2026. These now carry the economics:
| State | Incentive | State-only value |
|---|---|---|
| New York | 25% state credit (up to $5,000) + NY-Sun | Up to $5,000 |
| Massachusetts | SMART incentive + SREC sales | Ongoing income |
| South Carolina | 25% state credit (annual cap) | Up to $3,500/yr |
| Arizona | $1,000 state credit + property tax exemption | $1,000 + ongoing |
| Texas | Property tax exemption only | Ongoing savings |
Check DSIRE for the current program in your state, and confirm caps and carry-forward rules with a tax professional. Net metering, where your utility credits exports to the grid, is the other lever that still shapes payback.
Calculate your 2026 installed cost
Our calculator shows the full installed cost now that the federal credit has ended, plus your payback and 25-year savings.
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