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The 30% Solar Tax Credit Ended December 31, 2025: What 2026 Pitches Get Wrong

Updated September 2, 2026. Quick answer: The 30 percent residential solar credit ended for expenditures made after December 31, 2025. Paying in 2025 does not preserve it if the installation finishes later, because the statute treats the expenditure as made when the installation is completed.

The statute

26 U.S.C. s. 25D(h), as amended: “The credit allowed under this section shall not apply with respect to any expenditures made after December 31, 2025”.

The IRS says the same thing in its own table of accelerated termination dates: “25D Residential clean energy credit The credit will not be allowed for any expenditures made after December 31, 2025.”

The prepayment question, answered directly

The obvious workaround is to pay before the deadline for a system installed after it. The IRS addressed that: “If installation is completed after December 31, 2025, the expenditure will be treated as made after December 31, 2025, which will prevent the taxpayer from claiming the section 25D credit.”

That answer comes straight from the timing rule at s. 25D(e)(8)(A): “Except as provided in subparagraph (B), an expenditure with respect to an item shall be treated as made when the original installation of the item is completed.” The relevant date is completion, not the date on the cheque or on the contract.

What a 2026 pitch that still uses the credit is doing

A 30 percent credit is a large part of any solar proposal’s math. Remove it and the payback period the presentation showed is wrong by roughly that much. A proposal in 2026 that still lists a 30 percent federal credit – as a line item, a footnote, or an assumption inside a savings estimate – is not offering an aggressive read of the law. It is quoting a repealed provision.

If you are looking at a proposal now, the first thing to do is find where the credit appears in it and re-run the numbers without it.

A self-installed kit was eligible; the new leasing denial is narrower than its own heading

Two things 2026 pitches get wrong, in opposite directions.

Who held the drill never mattered. Section 25D ran on an expenditure, not on an installer. It allowed a credit equal to “the sum of the applicable percentages of … the qualified solar electric property expenditures”, with s. 25D(g)(3) fixing that percentage at 30 percent for property placed in service after December 31, 2021. A qualified solar electric property expenditure was in turn “an expenditure for property which uses solar energy to generate electricity for use in a dwelling unit located in the United States and used as a residence by the taxpayer”. No licensing condition appears in the section, so the equipment cost of a self-installed kit counted. Paid labor counted as well, because s. 25D(e)(1) takes in “labor costs properly allocable to the onsite preparation, assembly, or original installation of the property” – but a weekend you work yourself is not an expenditure, so there was nothing there to claim. The completion rule then lands the same way on both paths: a kit finished after December 31, 2025 is worth zero federal credit, exactly like a contractor install finished that day.

The new leasing denial does not cover what its heading says. The same July 4, 2025 act that terminated s. 25D added a subsection to the business-side credit at s. 48E, headed “Denial of credit for expenditures for wind and solar leasing arrangements”. Read the heading alone and you would conclude that a leased rooftop array no longer earns anyone a credit. The operative text is narrower. It denies the credit only “with respect to property described in paragraph (1) or (4) of section 25D(d) … if the taxpayer rents or leases such property to a third party during such taxable year”. Paragraph (1) is solar water heating property. Paragraph (4) is small wind energy property. Solar electric – the photovoltaic panels on almost every residential roof – is paragraph (2), and s. 48E(i) does not name it. The subsection applies to taxable years beginning after July 4, 2025.

What that does and does not settle: it does not mean a leased array is assured of earning its owner a credit, because s. 48E carries other conditions this page did not survey. It does mean the credit inside a lease or a power purchase agreement was never yours to begin with – it follows ownership of the equipment – and it reaches you only through whatever the pricing reflects, if anything. What that pricing does across a full term and what happens to it when you sell or die are the two questions that outlive the tax question.

If the kit route is the one you are now pricing – with no federal credit on either path – this site’s solar kit matcher is a four-step sort by project type, utility situation, load range and storage, and it returns a starting category rather than a system design. Actual sizing still needs measured loads. If the kit in question is an off-grid one, what a worst-month load actually needs is the step before the category.

What this does not touch

This is the residential credit at section 25D. State credits, utility rebates and net-metering arrangements are separate programs with their own rules and their own end dates. A leased system was never yours to claim in the first place – the credit follows ownership.

What this page does not settle

Scope: federal residential credit under 26 U.S.C. s. 25D only, read at law.cornell.edu with the IRS’s own OBBB guidance. State and utility incentives were not surveyed and no claim is made about them. The construction-related timing rule at s. 25D(e)(8)(B) works differently and is not covered. General information, not tax advice.

Sources

Related: The Solar Loan Dealer Fee · Solar Lease Escalator Clauses · what other liens on a home cost.

General information drawn from the primary statutes, regulations and filings named above, not legal, tax or financial advice. Read your own governing documents or contract before relying on any general description, including this one.

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