# What happened to the federal solar credit URL: https://solarrealcost.com/does-solar-pay/what-happened-to-the-federal-solar-credit Updated: 2026-09-18 Review: Reviewed by SolarRealCost Editorial Team, editorial review: primary sources checked and independently fact-checked 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. 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. - **Section 25D is unavailable** for property placed in service after 31 December 2025. - A 2026 cash or loan purchase gets **$0** from it — there is no phase-down. - Systems **placed in service by the deadline** may still be claimed; ask your tax preparer. - A **lease or PPA provider** may still claim under a different code section, because it owns the system. That is their benefit, not yours. - **State and utility incentives are separate** and often still exist. ## 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](https://www.irs.gov/credits-deductions/residential-clean-energy-credit) is the authority, and its [home energy credits overview](https://www.irs.gov/credits-deductions/home-energy-tax-credits) covers the related provisions. Tool: [Will solar pay for itself on your roof?](https://solarrealcost.com/does-solar-pay/tools/will-solar-pay-for-itself). Production from NREL's model, at your real rate, with the federal credit shown at $0 and dated. ## 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 If a proposal in front of you shows a federal credit line, it is out of date, and everything downstream of it is wrong. **The asymmetry that is now a sales argument** A leasing or PPA company owns the system, so it may be able to claim a credit you cannot. That is a genuine difference — and it is a reason for the provider to offer a better price, not a reason for you to prefer the structure. Look at the total you pay over the term, which is what [cash, loan, lease or PPA](https://solarrealcost.com/does-solar-pay/cash-loan-lease-or-ppa-explained) sets out. ## What still exists State and utility incentives are set independently of federal law, and many remain. [DSIRE](https://www.dsireusa.org/) indexes them by state, and your own utility is the authority on its own programmes. Our guide to [solar incentives by state](https://solarrealcost.com/does-solar-pay/solar-incentives-by-state) explains the kinds that remain and how to look yours up. 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](https://solarrealcost.com/does-solar-pay/are-solar-panels-worth-it-now) and [what solar costs to install](https://solarrealcost.com/does-solar-pay/install-solar-panels-cost). Start the Solar Check: https://solarrealcost.com/check ## 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](https://www.irs.gov/credits-deductions/residential-clean-energy-credit) - [IRS: Home energy tax credits](https://www.irs.gov/credits-deductions/home-energy-tax-credits) - [DSIRE: Database of State Incentives for Renewables and Efficiency](https://www.dsireusa.org/) - [U.S. Department of Energy: Homeowner's guide to going solar](https://www.energy.gov/eere/solar/homeowners-guide-going-solar) - [U.S. Energy Information Administration: average retail price of electricity by state](https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a)