Guide
What happened to the federal solar credit
The Residential Clean Energy Credit ended for property placed in service after 31 December 2025. What that means for a 2026 purchase, and what still exists.
Updated September 18, 20262 min readAwaiting expert review
Written from primary sources by our editorial team. A credentialed reviewer hasn't signed off yet, so this page isn't in search results. It's information, not professional advice.
Not sure where to start? Take the Solar Check.About 2 minutes. Rough answers are fine.The federal Residential Clean Energy Credit, section 25D, is gone for new purchases. The IRS is unambiguous: it "is not available for any property placed in service after December 31, 2025". A cash or loan purchase in 2026 receives nothing from it.
What changed
The credit was scheduled to run for years and was terminated early. The practical effect is a cliff rather than a slope: systems placed in service through 31 December 2025 qualify, and systems placed in service afterwards do not. The IRS page is the authority, and its home energy credits overview covers the related provisions.
Why this matters more than it sounds
Almost every payback model on the internet, and a great deal of sales material, subtracts 30% from the system price before calculating anything. Remove that subtraction and a payback that looked like seven years can look like ten or eleven. The arithmetic did not get worse because solar got worse; it got worse because a subsidy ended.
If a proposal in front of you shows a federal credit line, it is out of date, and everything downstream of it is wrong.
What still exists
State and utility incentives are set independently of federal law, and many remain. DSIRE indexes them by state, and your own utility is the authority on its own programmes. Confirm any incentive in writing before you count it in a payback.
Bottom line
Set the federal line to zero, then decide on the real numbers — see are solar panels worth it now and what solar costs to install.
Common questions
Is the federal residential solar credit still available?
No. The IRS states the Residential Clean Energy Credit is not available for any property placed in service after 31 December 2025.
What if my system was finished in 2025?
A system placed in service by that deadline can still be claimed on the relevant return, and unused amounts can generally carry forward. That is a question for your tax preparer.
Do leases and power purchase agreements still benefit?
The company that owns the system may be able to claim a credit under a different part of the code, because it owns the equipment. You do not — you are buying power or renting hardware.
Are there still state or utility incentives?
Often yes, and they are separate from federal law. DSIRE indexes them by state, and your own utility is the authority on its own programmes.
Sources
- IRS: Residential Clean Energy Credit — not available for property placed in service after 31 December 2025
- IRS: Home energy tax credits
- DSIRE: Database of State Incentives for Renewables and Efficiency
- U.S. Department of Energy: Homeowner's guide to going solar
- U.S. Energy Information Administration: average retail price of electricity by state
By SolarRealCost Editorial Team. First published September 18, 2026. Advertiser disclosure
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