The federal solar tax credit in 2026: what changed

Public Law 119-21 (signed July 4, 2025) changed the Residential Clean Energy Credit under Internal Revenue Code Section 25D. According to the IRS:

• The credit "will not be allowed for any expenditures made after December 31, 2025." (IRS FAQ)
• An expenditure is treated as made when the original installation is completed, so paying in 2025 for a system finished in 2026 does not qualify. (same FAQ)
• For qualifying property installed 2022 through 2025, the credit was 30% of eligible costs. (IRS: Residential Clean Energy Credit)
• Unused credit from a 2025 installation can be carried forward on Form 5695. (Form 5695 instructions)

What it means for you

• Run payback math for a 2026 install without the federal 25D credit unless a tax professional confirms otherwise.
• State, local and utility incentives may still apply: check your state.
• If you lease or sign a PPA, any tax benefits belong to the system owner, not you (FTC). Ask how the price reflects them.

This is general information, not tax advice. Consult a tax professional about your situation.