Solar Tax Credit 2026: What Ended and What’s Left

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A solar salesperson knocks on a sunny afternoon, tablet in hand, and the first slide says “30% back from the federal government.” A year ago that was true for anyone who bought panels for their home. In 2026 it isn’t, at least not the way most people think. Before you sign anything, here’s what really happened to the solar tax credit and what money is still on the table.

Is there a solar tax credit in 2026? Not for homeowners who buy. The 30% federal credit (section 25D) ended for systems whose installation was completed after December 31, 2025. Companies that own solar on your roof through a lease or power purchase agreement may still claim a business credit (48E) for a limited time. State and utility incentives remain in some places.

We explain the rules in plain language from IRS, Congressional Research Service and state sources. This is not tax advice; talk to a tax professional about your own return.

The solar tax credit in 2026 at a glance

• Buying solar for your home in 2026: no federal tax credit. The IRS says the Residential Clean Energy Credit “is not available for any property placed in service after December 31, 2025.”
• Installed in 2025: you can still claim 30% on your 2025 return with Form 5695, if the installation was completed by December 31, 2025.
• Paid in 2025, finished in 2026: no credit. The date that counts is when installation is completed, not when you paid.
• Unused credit from 2025 or earlier: still carries forward to future years. The new law didn’t change that.
• Leases and PPAs: you never could claim 25D on equipment you don’t own. The company that owns it may claim the 48E business credit if the system is placed in service by the end of 2027 (or construction began by July 4, 2026).
• Batteries and solar water heaters: same 25D rules and the same end date.
• States and utilities: some still offer tax credits, rebates, property tax exemptions or performance payments. Search DSIRE.

What happened to the 30% solar tax credit?

Under the Inflation Reduction Act of 2022, the Residential Clean Energy Credit (25D) paid 30% of the cost of solar panels, solar water heaters, batteries of at least 3 kWh, geothermal heat pumps and small wind turbines, labor included, through 2032. Then Public Law 119-21, signed July 4, 2025 and often called the One Big Beautiful Bill Act, ended it early. The law says the credit doesn’t apply to “any expenditures made after December 31, 2025.”

The key question became: when is an expenditure “made”? The tax code already answered it. Section 25D says an expenditure is treated as made when the original installation is completed. The IRS confirmed this in its August 21, 2025 FAQs: if installation is completed after December 31, 2025, you can’t claim the credit, even if you paid in 2025. The Congressional Research Service reached the same reading in a September 2025 analysis.

What does that cost a family? The CRS gives a simple example: rooftop panels costing $30,000 would have earned a $9,000 credit. A homeowner buying the same system in 2026 pays the full price, unless a state, utility or local program helps.

Does the credit apply to me? Common situations

Your situation	Federal 25D credit?	Why
You bought solar and installation was completed in 2025	Yes, on your 2025 return	Expenditure made in 2025; file Form 5695
You paid a deposit in 2025, installation finished in 2026	No	IRS: completed after Dec 31, 2025 means made after that date
You’re buying solar in 2026 or later	No	Credit ended for expenditures after 2025
Solar on a new home you first moved into in 2026	No	For a new home, costs count when your original use of the home begins
You have unused credit from a 2025 or earlier install	Yes, carryforward	Carryforward rules weren’t changed
You lease the panels or buy power under a PPA	No (never could)	IRS: equipment must be owned, not rented or leased, by the person claiming
A battery added in 2026 to existing solar	No	Batteries were part of 25D and ended with it

If you finished in 2025, our step-by-step guide to Form 5695 and the solar tax credit covers how to claim it, how the tax limit works and how carryforward keeps the unused part alive.

Leases, PPAs and the 48E credit

Here is the part of the story most salespeople lead with. When a solar company (or the investor behind it) owns the panels on your roof and you lease them or buy their power, the owner isn’t claiming 25D. It claims a business credit, the Clean Electricity Investment Credit (section 48E). The same 2025 law put an end date on that credit for wind and solar too, but a later one.

What we confirmed: IRS Notice 2025-42 (August 2025) says the law ends the 48E and 45Y credits for wind and solar facilities placed in service after December 31, 2027, and that this end date applies to facilities whose construction begins after July 4, 2026. In plain words: a solar system that started construction by July 4, 2026 has more time; one that starts later must be placed in service by December 31, 2027 for the owner to claim the credit. The notice also explains how construction is shown to have begun (significant physical work), and separate Treasury rules on components from “prohibited foreign entities” now apply to these business credits.

What that means for you:

• The credit goes to the owner, not you. Whether any of it shows up as a lower lease payment or power price depends on the company. Compare the total you’ll pay over the contract, not the “30%” headline.
• Read the escalator. Many leases and PPAs raise the payment or price each year. Ask for the full schedule.
• Ask what happens if you sell the house. The buyer may have to take over the contract, or you may need to buy it out.
• Check state rules. Some state credits require you to own the system; New York’s also covers leases and PPAs of 10 years or more.
• Deadlines are the company’s problem, but they can become yours. If a contract depends on finishing by a credit deadline, ask what happens to your price if the install slips.

For the bigger decision, see buying vs leasing solar panels.

State and local solar incentives in 2026

With the federal credit gone for buyers, state programs carry more weight. Two we confirmed on state tax agency pages:

• New York: the Solar Energy System Equipment Credit is 25% of qualified costs, up to $5,000, for a system at your principal residence in New York. It covers purchases, leases under a written agreement and PPAs of at least 10 years. Unused credit carries over for up to five years; claim it on Form IT-255. (The tax department’s page was last updated in 2019; confirm before you count on it.)
• South Carolina: a credit of 25% of the cost of buying and installing a solar system you own, up to $3,500 per year, claimed on Form TC-38, with unused credit carried forward for up to 10 years, per the SC Department of Revenue’s materials.

Beyond credits, look for property tax exemptions (so panels don’t raise your home’s assessed value), sales tax exemptions, utility rebates and programs that pay for solar output or for sharing a battery at peak times. How your utility credits the power you send back (net metering) can matter more than any rebate; see net metering explained. To find everything for your address, search your ZIP code on DSIRE and follow the steps in our home energy rebates guide.

Is solar still worth it without the federal credit?

For some homes, yes; for others the payback got much longer. Losing the 30% credit raises your net cost by about 43% compared with 2025 (you now pay 100% of the price instead of 70%). What decides it now:

• Your electricity price. The more you pay per kWh, the more each solar kWh is worth.
• Net metering and rate design. Full retail credit for exports pays back faster than a low export rate.
• State incentives like the New York and South Carolina credits above.
• Your roof and sun. Shade, orientation and a roof that will need replacing soon all change the math.
• Installed price. Get two or three quotes and compare by price per watt.

We work through it with real numbers in are solar panels worth it and how much solar panels cost. Rooftop solar is a job for a licensed installer, with a building permit and an interconnection agreement with your utility before the system is turned on.

Smaller solar you can buy and use yourself

Not ready for a roof full of panels? A portable solar generator or a small 12 V kit for a shed or cabin costs far less and needs no utility approval when it isn’t connected to your home’s wiring. There’s no federal credit for these in 2026 either, so judge them on what they do for you: backup for a fridge and phones in an outage, power at the campsite, lights in the workshop.

Prices change often. The prices below are what we saw at the maker or a major retailer in October 2026; check the current price before you buy.

• Jackery Solar Generator 1000 v2: the Explorer 1000 v2 power station (1,070 Wh, LiFePO4, 1,500 W, 3,000 W surge) with a 200 W SolarSaga panel. Jackery rates the battery for 4,000 cycles to 70% or more and lists about 7.5 hours to charge from the panel. Jackery says its stations aren’t recommended for medical or life-support devices.
• ECO-WORTHY 400W kit: four 100 W panels, a 40A MPPT controller with Bluetooth, brackets and cables. You add a 12 V battery (and an inverter for AC). The listing estimates about 1.6 kWh a day; real output depends on your sun.

Check the Jackery Solar Generator 1000 v2 price on Amazon

Check the ECO-WORTHY 400W solar kit price on Amazon

More options: the best solar generators, the best DIY solar panel kits and the best portable solar panels.

How to handle a solar sales pitch in 2026

• “You’ll get 30% back on your taxes.” If you’re buying the system for your home in 2026, ask the seller to show you the IRS rule. For 25D, there isn’t one anymore.
• “We’ll pass the tax credit on to you.” That’s a lease or PPA. Get the monthly payment, escalator, term, buyout price and total cost in writing.
• “Sign today before the deadline.” Deadlines in 2026 belong to the company’s 48E credit. Your deadline is the one in your state or utility program, if any.
• Check the installer: license, insurance, reviews, who pulls the permit and who handles utility interconnection.

Keep exploring

Start with our home energy rebates guide to find what’s left in your state, then read Form 5695 and the solar tax credit if you installed in 2025, and the heat pump tax credit in 2026 for the other credit that ended. Planning solar? See solar panels for home and home battery backup, and learn the basics in how solar energy works and radiant energy. Browse all tax credit and grant articles.

Solar tax credit questions

Is the solar tax credit gone for good?

Under current law, yes, for homeowners. Public Law 119-21 ended the 25D credit for expenditures made after December 31, 2025, and the IRS says it isn’t available for property placed in service after that date. Congress could change the law again, but nothing we found brings it back. Unused credit from earlier installs still carries forward.

I signed in 2025 but my panels were installed in January 2026. Can I claim it?

No, under the IRS reading. Section 25D treats the expenditure as made when the original installation is completed, and the IRS FAQs say an installation completed after December 31, 2025 can’t get the credit, even if you paid earlier. If you’re unsure when your installation counts as complete, talk to a tax professional and keep the installer’s completion paperwork.

Can I claim a solar tax credit on a leased system?

Not the federal 25D credit. The IRS says the equipment must be owned, not rented or leased, by the person claiming. The company that owns a leased or PPA system may claim the 48E business credit if the system is placed in service by December 31, 2027 (or construction began by July 4, 2026). Some state credits, such as New York’s, do cover leases.

Is there a tax credit for solar batteries in 2026?

No federal one for homeowners. Batteries of 3 kWh or more were part of the 25D credit and ended with it for installations completed after December 31, 2025. Some states and utilities offer battery rebates or pay owners to share stored power at peak times; see home battery backup.

Do state solar tax credits still exist?

In some states. New York offers 25% up to $5,000 and South Carolina 25% up to $3,500 per year, according to their tax agencies, and others offer rebates or property tax exemptions. Rules and funding change, so check your state tax agency and DSIRE before you sign a contract.