Is There Still a Federal Solar Tax Credit in 2026?

If you're reading a 2026 solar quote that subtracts 30% for a federal tax credit, the quote is out of date. The residential credit that made that arithmetic work no longer applies to systems whose installation is completed this year.

What changed

The Residential Clean Energy Credit under Section 25D — the 30% credit homeowners claimed for solar, batteries, and similar property — was ended early by Public Law 119-21, enacted on 4 July 2025: it is not available for expenditures made after 31 December 2025. The Energy Efficient Home Improvement Credit under Section 25C, which covered items such as heat pumps up to $2,000, ended on the same date, but through a different test: 25C turns on property placed in service after 31 December 2025, while 25D turns on expenditures made after that date.

Does paying in 2025 preserve the credit?

No, not by itself. For §25D the IRS generally treats an expenditure as made when the original installation of the item is completed (Section 25D(e)(8)(A)) — not when you ordered the system, signed a contract, or paid a deposit. An installation completed after 31 December 2025 therefore does not qualify for the credit, even if you paid for it earlier. If your installation was completed on or before 31 December 2025, the credit applies to that tax year.

What this does to the payback math

For an installation completed in 2026 there is no federal §25D credit to subtract, so the payback starts from the full installed price. That doesn't make solar unviable, but it lengthens payback compared with the old rules, because the credit used to reduce your net cost. Any payback figure you were quoted in 2025 needs recalculating from the full installed price.

Our Solar Savings Calculator estimates from the installed cost without assuming a federal credit, so the figure it returns is the un-subsidised starting point. Add any state or utility incentive you actually qualify for on top of that.

A tax credit, a rebate and a cash payment are different things

• A tax credit reduces the tax you owe when you file. The 25D credit worked this way for expenditures through 2025: it did not lower the price on the quote, it reduced a later tax bill. The IRS and CRS pages in our sources explain how claiming it, and carrying it forward, worked.
• A rebate comes from a state, utility or programme and either lowers the price you pay or arrives as a payment afterwards. It has its own eligibility rules, funding limits and application deadlines.
• A performance incentive pays over time, per unit of electricity produced, rather than up front.
• A quote that says 'after incentives' may be mixing these. Ask which line is which, who pays it, and when the money reaches you.
• Whether any particular incentive is taxable, or affects your tax position, is a tax question for a professional — not something this page can answer.

What may still exist

The end of the federal §25D credit does not by itself mean other incentives have ended. Whether any applies to you depends on your state, your utility and your address. We do not name specific programmes here, because we cannot verify them for your location; check DSIRE, your state energy agency and your local utility.

• State income tax credits, rebates, and property or sales tax exemptions, which vary by state.
• Local incentives, which vary by city or county.
• Utility rebates and performance incentives in some service territories.
• Financing programmes, which change the cost of paying for a system rather than its price.
• Net metering or net billing rules, which often matter more to lifetime economics than any one-off rebate.
• Third-party ownership products (leases and PPAs), where the company owning the system claims the business-side credit rather than you — evaluate these on the contract terms, not on a credit you won't claim.

Reading a 2026 solar quote

How to check your own situation

1. Search your state and utility in the DSIRE database for currently active programmes.
2. Ask any installer to show a quote with no federal credit line, so you see the real number.
3. Confirm your net metering terms with your utility — future rate changes affect lifetime value more than most rebates.
4. Take the final figures to a tax professional before assuming any credit applies to you.

What to do next

If a salesperson is still quoting the 30% federal credit for a 2026 installation, treat it as a signal about the quality of the rest of the quote. Ask for the numbers again without it, then compare against your state's actual programmes.