Solar / Federal credit, 2025 · also: 2026

The federal solar tax credit in 2025

If you buy solar in 2025 with cash or a loan, you get a 30% federal tax credit under IRC 25D (Residential Clean Energy Credit), for property placed in service on or before 31 December 2025. It is not available for systems placed in service after 31 December 2025.IRC 25D (Residential Clean Energy Credit) — IRS, read 2026-09-05.

The lease also carries 30%

A leasing or PPA company that owns the panels on your roof claims a 30% credit under IRC 48E. It is claimed by the system owner (lessor / PPA provider). You never see it as a line on your return; you see it, if at all, in the rate you are offered — which is why the lease line in the comparison below does not move when the buyer's credit disappears.Source, IRC 48E, read 2026-09-05.

Same house, same bill, with and without the credit

Not an illustration: the site's engine ran a 9.54 kW system in Austin, Texas, on a $200-a-month bill, once under 2025 policy and once under 2026. Texas has no state credit, so nothing but the federal credit differs between the two columns.

Rate 15.94¢/kWh (EIA 2026-06); 1483 kWh/kW/yr (city:austin-tx); $2.22/W (EnergySage 2026). Every formula is on the methodology page.

The three ways to pay in 2025

The 30% federal credit goes to the system owner, not to you. It is reflected in the rate you are offered. The owner claims it at 30% under IRC 48E.

How the gap plays out over 25 years

The cash position of the same buyer, year by year, under each policy. The two systems produce and save the same electricity, so the curves run parallel: the gap between them is $6,356 in every one of the 25 years — the credit, and nothing else. The 2025 buyer crosses zero in year 9; the 2026 buyer in year 12. Hover or focus the chart for any year.

Did the credit cover batteries?

Yes, and on the same terms as panels. The IRS lists Battery storage technology (beginning in 2023) among the property that qualified, with one condition: Battery storage technology must have a capacity of at least 3 kilowatt hours. A home battery of 3 kWh or more, installed with panels or on its own, earned the same 30% — and it ended on the same day. Nothing on the IRS page carves batteries out of the 31 December 2025 cut-off: a battery placed in service after that date gets no federal credit, whether or not the panels it pairs with were installed in time.IRS, page updated 4 July 2026, read 2026-09-05.

What that leaves is the state layer, and there it is mostly income-qualified. The battery page runs storage with and without by state; the California page records what the state's programme now covers and for whom.

I signed in 2025 but the system was installed later

The date that decides it is the installation, not the contract and not the payment. The IRS puts it in one sentence: You must claim the credit for the tax year when the property is installed, not merely purchased. A system whose installation was completed on or before 31 December 2025 is claimed on the 2025 return. One completed after that date is outside the credit, however early the contract was signed or the deposit paid.IRS, read 2026-09-05.

Which document proves the installation date — the completion certificate, the inspection, the utility's permission to operate — is a question for your installer and your tax professional, not for this page. What this page can say is that a deposit in 2025 bought no protection on its own.

Unused 2025 credit: how the carryforward works

The credit is nonrefundable, so the credit amount you receive can't exceed the amount you owe in tax. You can carry forward any excess unused credit, though, and apply it to reduce the tax you owe in future years. In plain terms: if your 2025 credit was larger than the federal income tax you owed for 2025, the remainder was not lost. It rolls forward and reduces what you owe in later years until it is used up. The IRS page states no limit on the number of years. A carryforward is not a refund: it only ever offsets tax you would otherwise pay.IRS, read 2026-09-05.

State credits keep their own rules. New York's, for example, carries forward for five years — see the New York page.

Rental property, second home, home office

Your main home

You may claim the residential clean energy credit for improvements to your main home, whether you own or rent it. Renters who paid for a system on the home they live in qualified as well as owners.

A second home

You may be able to claim a credit for certain improvements made to a second home located in the United States that you live in part-time and don't rent to others. Living there part of the year is the test; renting it to others fails it.

A rental you do not live in

You can't claim the credit if you're a landlord or other property owner who doesn't live in the home. The credit follows the resident, not the owner.

A home office

Business use up to 20%: full credit; Business use more than 20%: credit based on share of expenses allocable to nonbusiness use. Up to 20% business use of the home changed nothing; above it, only the non-business share of the cost counted.

All four: IRS, read 2026-09-05.

What happened, and when

1. 16 August 2022Public Law 117-169 approved: the reconciliation act known as the Inflation Reduction Act of 2022.govinfo, read 2026-09-05. govinfo lists the formal title ("An act to provide for reconciliation pursuant to title II of S. Con. Res. 14"); the short title is the name in common use.
2. 4 July 2025Public Law 119-21 (H.R. 1) approved: the reconciliation act known as the One Big Beautiful Bill Act, which ended 25D for property placed in service after 2025-12-31.govinfo, read 2026-09-05. govinfo lists the formal title ("An act to provide for reconciliation pursuant to title II of H. Con. Res. 14"); passed the House 2025-05-21, the Senate 2025-06-30, House concurrence 2025-07-02.
3. 31 December 2025Last day a residential system could be placed in service and qualify for the 30% credit under 25D.IRS, read 2026-09-05.
4. 4 July 2026Begin-construction cut-off under the 48E termination rules for third-party-owned systems.eCFR, read 2026-09-04.
5. 31 December 2027Placed-in-service cut-off under the 48E rules for third-party-owned systems.eCFR, read 2026-09-04.

What are my options now?

1. Buying with cash or a loan. No federal credit, but a state credit in New York, Arizona, Massachusetts. The installed price you are quoted matters more than any incentive now: the site models competitive quoted prices and shows the typical reported price beside it on every state page — the gap is the single biggest lever you control. What solar costs; how the two bases differ.
2. A lease or PPA. The provider keeps its 30% and prices the contract with it. Whether that beats buying depends on your state's export rules and your retail rate: the lease-vs-buy page runs the three ways to pay on one house and in every state; the calculator does it for yours. Ask about the zero conditions above before you sign.
3. If your system was placed in service in 2025. Claim the 30% on your 2025 return; if it exceeds your tax, the remainder carries forward. Batteries of 3 kWh or more installed by then count too.
4. Adding a battery now. No federal credit. Where a battery pays and where it cannot; most remaining state programmes are income-qualified.
5. Run your own numbers. The calculator uses the same engine as this page, with your bill, your state and both price bases. Nothing here is a quote; everything here is checkable.

What survives at state level

For the same $200-a-month bill in 2025, these are the state credits a buyer gets in the states we publish, each read from its own statute or tax department. The full list, with sources.

• New York$4,08925%, up to $5,000
• Arizona$1,00025%, up to $1,000
• Massachusetts$1,00015%, up to $1,000

Paid for production instead of up front — a fixed-term contract for the electricity's environmental attributes, which the model pays out on its own schedule: Illinois (Illinois Shines REC contract, $80.77 per MWh); New Jersey (SuSI Administratively Determined Incentive (SREC-II), $77.00 per MWh). What each is worth.

No statewide incentive of any kind (verified): California, Connecticut, Florida, Maryland, Pennsylvania, Texas. Each state page lists what was checked and where.

Questions

Is there a federal solar tax credit for homeowners in 2025?

Yes, if you buy the system. If you buy solar in 2025 with cash or a loan, you get a 30% federal tax credit under IRC 25D (Residential Clean Energy Credit), for property placed in service on or before 31 December 2025. It is not available for systems placed in service after 31 December 2025. Source: IRC 25D (Residential Clean Energy Credit), https://www.irs.gov/credits-deductions/residential-clean-energy-credit, read 2026-09-05.

I signed a contract in 2025 but the system was installed the following year. Do I get the credit?

No. The IRS rule is: "You must claim the credit for the tax year when the property is installed, not merely purchased." A system installed after 31 December 2025 is not eligible, whatever the contract or payment date. Source: https://www.irs.gov/credits-deductions/residential-clean-energy-credit, read 2026-09-05.

Did the federal credit cover home batteries?

Yes, on the same terms as panels: "Battery storage technology (beginning in 2023)" qualified, provided "Battery storage technology must have a capacity of at least 3 kilowatt hours." It ended on the same date as the rest of the credit. Source: https://www.irs.gov/credits-deductions/residential-clean-energy-credit, read 2026-09-05.

Can I carry unused 2025 credit into later years?

Yes. "The credit is nonrefundable, so the credit amount you receive can't exceed the amount you owe in tax. You can carry forward any excess unused credit, though, and apply it to reduce the tax you owe in future years." The IRS page states no limit on the number of years. Source: https://www.irs.gov/credits-deductions/residential-clean-energy-credit, read 2026-09-05.

Does a second home or a rental property qualify?

A second home you live in part of the year: yes — "You may be able to claim a credit for certain improvements made to a second home located in the United States that you live in part-time and don't rent to others." A property you rent out and do not live in: no — "You can't claim the credit if you're a landlord or other property owner who doesn't live in the home." Source: https://www.irs.gov/credits-deductions/residential-clean-energy-credit, read 2026-09-05.

Does a solar lease or power purchase agreement get a credit in 2025?

Yes: 30% under IRC 48E. It is claimed by the system owner (lessor / PPA provider). The homeowner does not receive it; it is reflected in the rate the provider offers. Source: https://www.irs.gov/, read 2026-09-05.

What does the same house get in 2025 versus 2026?

For a 9.54 kW system in Austin, Texas, on a $200-a-month bill: a federal credit of $6,356 (30%) in 2025 against $0 (0%) in 2026; payback 8.1 yr against 12 yr. The lease line is the same in both years by construction: it is modelled from the offered rate, and the owner's tax position is not an input.

Is this tax advice?

No. This page is general information computed from published statute, regulation and data, each cited with the date it was read. Your eligibility depends on your own tax situation: confirm it with a tax professional before you rely on any figure here.

This is general information, not tax advice. It is computed from published statute, regulation and data, each cited with the date it was read. Whether a credit applies to you depends on your own tax situation: confirm it with a tax professional before you rely on any figure on this page.

Published 5 September 2026. Data last verified 5 September 2026. About the author.