Solar Tax Credit 2026: What's Still Available After the Federal Credit Ended

If you are searching "solar tax credit 2026," here is the blunt answer up front: for a home solar system placed in service in 2026, there is no federal tax credit. The 30% credit homeowners had counted on for years was ended early, and 2026 is the first year it does not apply.

That sounds harsh, so let me be precise about what changed and, more usefully, what you can still claim. The federal 25D Residential Clean Energy Credit was terminated by the One Big Beautiful Bill (Public Law 119-21), signed July 4, 2025, for systems placed in service after December 31, 2025. A system up and running in 2025 can still claim its 30% on the 2025 return. Everything after that, the state credits, rebates, SRECs, net billing, and tax exemptions, is what your 2026 economics now ride on. This is a homeowner-first overview, not tax advice. Want one place to track quotes, model numbers, and incentive deadlines while you sort this out? Start with My Plan.

What actually changed in 2026

For most of the past decade, the story was simple: install qualifying solar (and, from 2023, a battery of at least 3 kWh) on your home and claim 30% of the cost as a federal income tax credit, with no dollar cap. The Inflation Reduction Act had extended that 30% rate through 2032. The One Big Beautiful Bill repealed that extension and moved the finish line to the end of 2025. The mechanics did not change for 2025 itself. Only the expiration date did. So the question that decides everything now is one date: when was your system placed in service?

"Placed in service" means installed and operational, not ordered or paid for. The IRS treats the expenditure as made when the original installation is completed. A system you paid for in December 2025 but that was not energized until January 2026 has a 2026 placed-in-service date, and it misses the federal cutoff entirely.

If your system went in during 2025: claim the 30%

You are in the good column. You claim the credit on the 2025 federal return you file in 2026, on IRS Form 5695, Residential Energy Credits, Part I.

What counts toward eligible cost: the solar panels, mounting hardware, inverters, wiring, the battery (if 3 kWh or more), and the labor for on-site preparation, assembly, and installation, plus permitting and inspection fees tied to the install. There is no dollar cap, so the credit is a clean 30% of the total eligible cost.

One adjustment people miss: if a manufacturer, installer, or utility rebate reduced your price, you subtract that rebate before computing the 30% credit. State income tax credits usually work differently and may not reduce your federal cost basis. When rebates and the credit overlap, that is the moment to ask a preparer.

A detail unique to 25D: the credit is nonrefundable but it carries forward. It will not push your tax below zero in the filing year, but any unused portion rolls to future years until you use it up. If you owe little federal tax for 2025, you do not lose the excess the way you would with the 25C efficiency credit.

If you are installing in 2026: plan on the full price

Here is the part a lot of installer pages and even AI search summaries still have wrong: there is no federal credit to subtract from a 2026 solar quote. The OBBB did not phase the credit down gradually. It cut it off at the end of 2025.

What that means for your budget:

• A 30% federal credit is not part of your 2026 math. If a salesperson quotes a price "after the federal tax credit," that is stale. Ask for the price without it, then compare bids on that all-in number.
• Install cost is the bigger lever now. With the federal credit gone, shaving dollars off the gross price and stacking state and local incentives matters more than it used to. Get multiple itemized bids.
• A leased system or a power purchase agreement (PPA) is owned by the installer, not you, so the homeowner never claimed 25D in the first place. The math on those deals turns entirely on the contract terms and the rate they lock you into.

Whether solar still pencils out without the credit depends on your electricity rates, sun exposure, and how your utility credits exported power. For a payback sanity check on the new numbers, see Are Solar Panels Worth It in 2026?.

What is still available in 2026 (the real levers)

Losing the federal credit does not mean losing every incentive. These run independently of 25D and are set at the state, local, and utility level. What you can claim varies a lot by location, so treat the list below as a checklist to run against your own address.

State income tax credits

A handful of states offer their own income tax credit for residential solar, separate from the federal one. The amounts and caps differ by state, and some are being phased out, so confirm the current-year terms before you count on one.

State and utility rebates

Many states and electric utilities offer upfront rebates that cut your price directly, often a few hundred to a few thousand dollars, sometimes more for battery storage. Some are point-of-sale (the installer applies it) and some are reimbursement (you pay, then claim). The IRA also funded Home Energy Rebate programs administered by state energy offices. These roll out on each state's own schedule and are aimed more at efficiency and electrification than rooftop solar, but they are worth checking.

SRECs (Solar Renewable Energy Certificates)

In states with a renewable portfolio standard and an SREC market (Pennsylvania, New Jersey, Maryland, Ohio, Illinois, and the District of Columbia have run notable ones), your system earns a certificate for each megawatt-hour it generates, which you sell for ongoing income. SREC prices swing widely with the market, so this is a recurring revenue stream, not a fixed discount.

Net metering or net billing

This is the quiet workhorse of solar economics. When your panels send power back to the grid, your utility credits your bill. Net metering credits exports at the full retail rate. Net billing, which more states are shifting to, credits them at a lower, often wholesale-ish rate. The rules are set by your state and utility and have a bigger effect on your payback than most rebates do. Confirm exactly how your utility credits exports before you size a system.

Property and sales tax exemptions

Many states exempt the added home value from a solar installation from your property tax assessment, and several exempt the purchase from state sales tax. Neither puts cash in your hand, but together they can add up over the life of the system.

We are deliberately not quoting specific dollar amounts for these programs, because they vary by state, utility, and equipment, and they change. Quoting a number we cannot stand behind would just mislead you.

What about batteries?

Battery storage rode the same timeline as solar. Standalone batteries of at least 3 kWh became eligible for the 30% 25D credit in 2023, and they lost it on the same date, December 31, 2025. A battery installed and running in 2025 can still claim 30% on the 2025 return; a battery added in 2026 gets no federal credit.

That changes the battery conversation. Without a credit to monetize, a home battery has to earn its place on backup value and any state, utility, or VPP (virtual power plant) program your area offers. For the all-in numbers, see Tesla Powerwall 3 Installed Cost in 2026 and the broader whole-house battery backup cost breakdown.

Businesses are a different story

If you own rental property or run a business, the residential 25D credit was never your lane. Commercial and business solar runs under the 48E Clean Electricity Investment Credit and the 45Y Production Credit, which have their own phase-down schedule and placed-in-service deadlines under the One Big Beautiful Bill. Those rules differ from the residential ones above, so if any part of your system serves a business or rental use, get a tax professional involved before you commit.

A fast checklist before you commit

• 2025 install? Confirm the placed-in-service date (operational by Dec 31, 2025) and keep the itemized invoice, proof of payment, and system description for Form 5695, Part I.
• 2026 install? Build your budget on the full installed price. Reject any quote that bakes in a federal credit.
• State and local incentives. Run your address through DSIRE and your utility's site for state credits, rebates, SRECs, and the exact net metering or net billing terms.
• Tax exemptions. Check whether your state offers property and sales tax exemptions on the system.
• Bids. Get multiple itemized bids and compare them on the all-in number, since install cost is the lever that matters most now.
• One place to track it. Keep scope, model numbers, and incentive deadlines together in My Plan.

Common mistakes to avoid

Trusting a 2026 quote that still subtracts 30%. The federal credit is gone for 2026 installs. That "net price" is overstating your savings by thousands.

Confusing "ordered" with "placed in service." For a 2025 claim, the cutoff is when the system was operational, not when you signed or paid. A January 2026 energizing date misses it.

Assuming the credit will come back. There is no scheduled return. Plan on the rules as they are, not as you wish they were.

Ignoring net metering terms. How your utility credits exported power affects payback more than most rebates. Read those terms before sizing a system.

Forgetting to subtract rebates from the basis. For a 2025 claim, a manufacturer, installer, or utility rebate reduces the cost you compute 30% on.

FAQ

Is there a federal solar tax credit in 2026? No. The Section 25D credit was terminated by the One Big Beautiful Bill for systems placed in service after December 31, 2025. A residential solar or battery system installed in 2026 gets no federal tax credit.

Can I still claim 30% for a 2025 install? Yes. If the system was placed in service (operational) on or before December 31, 2025, you claim 30% of eligible cost on Form 5695, Part I, with your 2025 return filed in 2026. The placed-in-service date is what counts, not the contract or deposit date.

What is still available in 2026? State income tax credits, state and utility rebates, SRECs (where a market exists), net metering or net billing, and property and sales tax exemptions. What you get depends on your state and utility; DSIRE (dsireusa.org) is the index.

Does the credit still cover home batteries? Not in 2026. Batteries of at least 3 kWh were eligible under 25D from 2023, but lost the credit on the same date solar did. A battery running in 2025 can still claim 30%.

Is the 2025 credit refundable? No, but it carries forward. It will not push your tax below zero in the filing year, and any unused portion rolls to future years until used.

Do businesses get a credit? Under different sections (48E and 45Y), not residential 25D, with their own deadlines. Talk to a tax professional for rental or business use.

Will the federal credit come back? There is no scheduled return. Restoring it would require new legislation. Plan a 2026 project on the full installed price.

Should you go solar at all in 2026?

The credit is gone, but solar is not automatically a bad deal. Whether it pays back now turns on your electricity rates, your sun exposure and roof, your utility's export credit, and the state and local incentives you can stack. For a payback walkthrough on the post-credit numbers, start with Are Solar Panels Worth It in 2026?, then keep your quotes and incentive deadlines in one place with My Plan.

Sources & further reading

• Residential Clean Energy Credit (Section 25D) — IRS
• FAQs for modification of sections 25C, 25D and others under the One Big Beautiful Bill — IRS
• About Form 5695, Residential Energy Credits — IRS
• Homeowners Guide to the Federal Tax Credit for Solar Photovoltaics — U.S. Department of Energy
• Database of State Incentives for Renewables and Efficiency (DSIRE) — NC Clean Energy Technology Center
• Solar Investment Tax Credit and Policy Resources — SEIA

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About this post: We wrote this to help homeowners understand what the federal solar credit's end actually means and where the remaining 2026 incentives live. We are not tax professionals; verify current-year IRS guidance and consult a qualified tax pro for your situation. State, utility, and market incentives vary by location and change often, so confirm the current terms before you rely on them.