The 30% federal solar tax credit for homeowners has ended. Congress terminated it in July 2025, and it does not apply to any residential system finished after 31 December 2025. If you have read otherwise on this site before today, that page was out of date and we have replaced it.
This page explains what the rule actually says, what you can still claim if your system was finished in time, and what other help is still available in 2026. We sell equipment — we are not tax advisors, and nothing here is tax advice. Anything below that involves your return should be checked with a CPA or enrolled agent who knows your circumstances.
What changed
Public Law 119-21, signed 4 July 2025, brought forward the end of two home energy credits that had been due to run to 2032:
- Section 25D, the Residential Clean Energy Credit — the 30% credit on solar panels, batteries of 3 kWh or more, solar water heating, small wind and geothermal. The IRS states the credit "will not be allowed for any expenditures made after December 31, 2025."
- Section 25C, the Energy Efficient Home Improvement Credit — insulation, windows, doors, heat pumps and similar. Not allowed "for any property placed in service after December 31, 2025."
The deadline was about installation, not payment.
This caught people out. Under the IRS guidance, "an expenditure with respect to an item is treated as made when the original installation of the item is completed." Paying a deposit, or paying in full, during 2025 was not enough on its own. If the installation was finished on or after 1 January 2026, there is no credit — even if the money left your account in 2025.
If your system was finished in 2025
You still claim it, on your 2025 return, using IRS Form 5695. Two points worth knowing:
- File the form even if you cannot use the credit this year. The IRS instructions say so explicitly — filing is what preserves the unused amount.
- Unused credit carries forward to 2026. The credit is non-refundable, so it can only reduce tax you actually owe; whatever is left over moves to the following year. How far beyond 2026 it can travel is a question for your accountant, not for us.
What is still available in 2026
The federal residential credit is gone. Several other things are not.
State and utility programmes
These are where most of the remaining money is, and they vary enormously — some states run income tax credits, some run upfront rebates, some run performance payments (SRECs) that pay per megawatt-hour generated for years. Several also exempt solar equipment from sales tax, or exclude the added value from your property assessment, which is worth real money in a high-property-tax state.
We deliberately do not list state figures here, because they change and a stale number is worse than none. The authoritative, continuously updated source is DSIRE, the Database of State Incentives for Renewables & Efficiency, run by NC State University. Look up your ZIP code there before you buy anything.
Net metering
If you are grid-tied, what your utility pays for exported power often matters more over twenty years than any one-off credit. Full retail net metering, a reduced export rate, or no export payment at all — it depends on your state and sometimes on your particular utility. Ask them directly, in writing, before you size a system around exporting.
Farms and rural small businesses — USDA REAP
The Rural Energy for America Program funds renewable energy for agricultural producers and rural small businesses. Its position right now is split, and worth stating plainly:
- Grants are paused. USDA has stopped making new REAP grant awards pending revised regulations, and says it "will not be making further grant awards until the new regulations are in effect." A new funding notice is expected once those take effect; no date has been published.
- Guaranteed loans are still being made for FY 2026, including for solar projects.
When grants reopen, the shape of the programme has historically been: renewable energy system grants from $2,500 to $1 million, energy efficiency grants from $1,500 to $500,000, with a federal share of 25% or 50% depending on the project. Eligibility runs to agricultural producers with at least 50% of gross income from agriculture, and to small businesses in areas of 50,000 people or fewer. Check the current terms with your USDA Rural Development state office rather than relying on this summary.
If the system is for a business
Equipment bought for business use sits under a different part of the tax code from the residential credit that expired. The Clean Electricity Investment Credit (Section 48E) is still on the books, with a base rate of 6% rising to 30% where prevailing wage and apprenticeship requirements are met, plus possible additions for domestic content and for projects in designated energy communities. Depreciation may also be available.
The July 2025 law attached new conditions and timing rules to this credit, and they are genuinely complicated. If you are buying as a farm, a business or a rental property owner, this is the conversation to have with your accountant — not one to settle from a web page, ours included.
Leases and power purchase agreements
Some installers offer arrangements where they own the system on your roof and you pay for the power or rent the equipment. In those the company, not you, owns the asset and claims whatever business credits apply; the benefit reaches you as a lower rate rather than as a credit on your return. That can still be worth having, but read the escalator clause and the term carefully, and do not confuse it with owning a system.
What this means for buying from us
Honestly: the arithmetic changed. A 30% federal credit was doing a lot of work in most payback calculations, and without it, systems take longer to pay for themselves. The cases that still stack up quickly are the ones where solar is replacing something expensive rather than something cheap — generator fuel on an off-grid site, diesel pumping on a farm, a large pool pump running on high-tariff power, or anywhere the grid connection itself would cost more than the array.
Our system finder will size a system for what you are actually running and show you what it saves against your own state's electricity prices, with no federal credit assumed. If the numbers do not work, it will say so.
Sources
- IRS — FAQs on the modification of sections 25C, 25D and others under Public Law 119-21
- IRS — Instructions for Form 5695, Residential Energy Credits
- IRS — Clean Electricity Investment Credit (Section 48E)
- USDA Rural Development — REAP renewable energy system grants
- DSIRE — Database of State Incentives for Renewables & Efficiency
Last reviewed September 2026. ROCKSOLAR sells solar equipment; we are not tax advisors, accountants or attorneys, and this page is general information rather than advice about your situation. Tax law changes, and programmes open and close — verify anything you intend to rely on with a qualified professional and with the programme administrator before you commit money.