Federal Solar Tax Credit 2026: The 30% ITC Expired — Here's What to Know
The short version: The federal 30% residential solar Investment Tax Credit (Section 25D) expired on December 31, 2025. If you installed solar or battery storage before that date, you can still claim or carry forward your credit. If you're installing in 2026 or later, there is no federal residential credit — state incentives are now your primary financial lever.
Last updated: 2026-06-16
What Happened to the Federal Solar Tax Credit
The Residential Clean Energy Credit lived in IRS Section 25D. The Inflation Reduction Act of 2022 extended it at 30% through 2032 — but the "One Big Beautiful Bill" signed into law in 2025 ended the credit for homeowner-purchased residential systems effective December 31, 2025.
For homeowners who purchased and installed solar or battery storage before January 1, 2026, the credit remains claimable on your tax return. Systems installed on or after January 1, 2026 do not qualify.
The credit was never available for leased systems or PPAs — the installing company always claimed those.
If You Installed Before December 31, 2025: How to Claim
The Carryforward Still Works
Even though the credit has expired for new installs, you can still claim unused credit from a qualifying pre-2026 installation. The IRS allows unused credit to carry forward year after year until fully used. If you installed in 2024 or 2025 and couldn't use all of your credit in year one, you continue carrying it forward.
Example: You installed a $30,000 system in 2025. Your credit was $9,000. You owed $6,000 in federal taxes that year. You claimed $6,000 in 2025 and carry $3,000 forward to your 2026 tax return.
What Qualifies (for pre-2026 installs)
- Solar panels, racking, wiring, inverters
- Permitting and inspection fees billed as part of the install
- Electrical panel upgrades required by the solar installation
- Battery storage (standalone or paired) — 3 kWh minimum capacity
How to File: IRS Form 5695
Claim on IRS Form 5695 (Residential Energy Credits), attached to your Form 1040. Line 1 is your qualified costs; the form calculates the 30% credit automatically. If you're claiming a carryforward from a prior year, enter the prior year's unused amount.
Keep all of the following in your records:
- Signed installer contract
- Itemized final invoice
- Proof of payment
- Permit approvals and inspection certificates
For New Systems in 2026: What's Available
State Incentives Are Now Your Primary Lever
With the federal credit gone, state incentives matter more than ever — and they vary enormously by state.
States with significant solar tax credits in 2026:
- New York: 25% state credit (up to $5,000) + NY-Sun Megawatt Block incentive + retail-rate net metering
- Massachusetts: SMART program performance payments + state credit up to $1,000
- Maryland: $1,000 state grant
- South Carolina: 25% state credit (up to $3,500)
- Connecticut: Active PURA incentive programs
States without a state income tax (no state solar tax credit possible): Texas, Florida, Tennessee, Washington, Nevada. For these states, the financial case for solar relies entirely on utility rates, net metering policies, and equipment cost — no tax credit offset available.
The fastest way to see every incentive available in your zip code is to get quotes through EnergySage, which shows itemized state and utility incentives for each installer's proposal.
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Lease and PPA: Section 48E May Still Apply
If you are considering a solar lease or PPA (power purchase agreement), the installer company may still qualify for the Section 48E commercial ITC — but only if construction begins by July 4, 2026. That deadline is imminent as of this writing.
Lease/PPA providers who qualify under 48E can pass some of that credit value through to you as lower monthly rates or upfront pricing. However, you as the homeowner do not receive a tax credit directly under this arrangement — the credit belongs to the company that owns the system.
The lease vs. buy calculus has shifted: With no federal credit available to purchased-system owners, the gap between leasing and buying has narrowed slightly. But leasing still means no equity, no ownership, and complications at resale. Run the numbers both ways.
Quick Reference: Federal Solar Tax Credit Status in 2026
| Question | Answer |
|----------|--------|
| Section 25D credit for purchased systems | EXPIRED as of December 31, 2025 |
| Credit rate for pre-2026 installs | 30% (still claimable; carryforward allowed) |
| Credit for new 2026 purchased systems | $0 — not available |
| Section 48E for lease/PPA | Still available; construction must begin by July 4, 2026 |
| Battery storage credit (new 2026 purchases) | $0 — Section 25D expired |
| IRS form for pre-2026 carryforward | Form 5695 |
| Income limit | None |
| Primary vs. secondary home | Both qualified (for pre-2026 installs) |
State Incentives: The New Baseline
Net metering — the policy that credits you for excess solar electricity sent to the grid — remains the most significant ongoing financial benefit in most states, regardless of federal credit status.
For the full picture of what your state offers in 2026, see our State Solar Incentives 2026 Guide.
If you're evaluating whether solar is still worth it without the federal credit, see Is Solar Worth It in 2026? — we've run the numbers for different state scenarios.
Common Questions
Can I amend a prior tax return to claim solar credits I missed?
Yes. If you installed solar before December 31, 2025 and forgot to claim the credit, you can file an amended return (Form 1040-X) within three years of the original filing deadline.
What if I have a solar loan and was counting on the credit to pay it down?
For systems installed before December 31, 2025, the credit still applies — you'll receive it when you file and can apply it to your loan principal. For new 2026 financed systems, there is no federal credit to apply; factor the full system cost into your financing analysis.
Are there any federal programs left for residential solar?
No federal income tax credit for purchased residential systems. Low-income households in qualifying areas may access programs through HUD or state energy agencies, but these are not tax credits.
Bottom Line
The 30% federal solar tax credit that made solar a no-brainer for most homeowners expired December 31, 2025. For pre-2026 installations, the credit and its carryforward remain fully available. For new purchased systems in 2026, state incentives are the only tax-based financial support — and they vary dramatically by state.
If you're still evaluating solar, get quotes and ask each installer to show you the full incentives stack specific to your state and utility. The federal credit being gone doesn't mean solar is dead — it means running the numbers for your specific situation matters more than it used to.
Ready to see what solar costs in your state after available incentives? Enter your zip code below.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional for guidance specific to your situation.
Frequently Asked Questions
Is the federal solar tax credit still available in 2026?
No. The 30% federal residential solar Investment Tax Credit (Section 25D) expired December 31, 2025. If you installed solar or battery storage before January 1, 2026, you can still claim or carry forward your credit on your tax return. New residential systems installed in 2026 receive no federal credit. State-level incentives are now the primary financial levers for new installations.
Can I still claim the solar tax credit for a 2025 installation?
Yes. If your solar system was installed and operational before December 31, 2025, you can claim the 30% Section 25D credit on your 2025 federal tax return using IRS Form 5695. If your credit exceeds your tax liability, the unused portion carries forward to the next tax year — this carryforward provision was not affected by the ITC expiration. Keep documentation of your installation date, paid invoices, and the installer's completion certificate.
What solar incentives are still available in 2026?
State-level programs are now the primary incentives. Active programs as of 2026 include: California's Self-Generation Incentive Program (SGIP) for battery storage; New York's NY-Sun incentive and storage rebates; Massachusetts' SMART program for solar production income; Maryland's residential solar and storage tax credit; Texas property tax exemption for solar (added value not included in your assessed value); and net metering policies in states that still offer retail-rate credit. Visit DSIRE (dsireusa.org) for a complete database of programs in your state.
Does solar battery storage qualify for any tax credits in 2026?
The federal Section 25D credit that previously covered standalone battery storage also expired December 31, 2025. Batteries installed in 2026 do not qualify for federal credits. However, California's SGIP rebate specifically targets battery storage (rebates of $200–$1,000+ per kWh depending on application type), and several other states maintain battery-specific incentive programs. Consult a tax professional for commercial installations, where the ITC Section 48 commercial credit status may differ.
How do I claim the solar tax credit for my 2025 installation?
Claim the Section 25D credit on IRS Form 5695 ('Residential Energy Credits') filed with your 2025 federal tax return. Enter your qualified solar expenditures in Part I, multiply by 30%, and apply the resulting credit against your tax liability. The credit is non-refundable — it can reduce your tax bill to zero but cannot generate a refund. Any unused credit carries forward to your 2026 tax return. Qualified expenditures include hardware, labor, permitting, and electrical upgrades required for the installation.
Does the solar tax credit apply to leased solar panels?
No. The Section 25D credit was only available to homeowners who purchased their system outright or financed it with a loan — meaning they took ownership of the equipment. For leased systems or PPAs, the installing company claimed any available credits. If you signed a lease before January 1, 2026, the terms of your lease were not affected by the ITC expiration; the installer was already claiming the credit on their side.
What is IRS Form 5695 and who needs to file it?
IRS Form 5695 ('Residential Energy Credits') is the tax form used to claim the Section 25D solar and energy storage credit. For 2025 installations, any homeowner who purchased and installed a qualifying solar or battery storage system before December 31, 2025 should file Form 5695 with their 2025 federal tax return. The form calculates your credit amount (30% of qualified expenditures), determines how much of your current-year tax liability it offsets, and calculates any carryforward to future years.
Can I still get net metering credits for my solar panels in 2026?
Yes — net metering policies are set by state utility commissions and were not affected by the federal ITC expiration. Whether you receive full retail-rate net metering, a reduced rate, or no net metering depends entirely on your state and utility. States currently offering full retail-rate net metering include Florida, Texas, Illinois, and New York. California's NEM 3.0 reduced the export credit rate significantly (from ~$0.30/kWh to ~$0.08/kWh). Check your utility's current interconnection tariff for your specific rate.