Is There a Solar Tax Credit in 2026?

Short answer: if you're a homeowner buying solar with cash or a loan in 2026, there is no 30% federal solar tax credit anymore. The federal Residential Clean Energy Credit (Section 25D) — the 30% credit homeowners have claimed for years — is not available for any property placed in service after December 31, 2025. A cash or loan purchase that goes live in 2026 earns $0 in federal credit.

There is nuance worth knowing: one narrow federal path is still open (a lease or PPA, which runs through a commercial credit, not your tax return), and your state may still offer real incentives. Below is exactly what ended, what survives, and how to figure out your real number.

Federal solar credit: 2025 vs. 2026 for homeowners

Two things that can still mislead homeowners

If you've been told the credit is alive, you weren't being unreasonable. Two things can trip you up right now.

Trap 1: The IRS's own page contradicts itself. The operative rule is on the main Residential Clean Energy Credit page: "The credit is not available for any property placed in service after December 31, 2025." But that same page also still carries leftover boilerplate telling you that you can claim the credit "every year that you install eligible property until the credit begins to phase out in 2033." That 2033 phase-out language describes the schedule that existed before the 2025 law repealed the credit early — and it has not been scrubbed. It is stale. Do not rely on it. The legally operative date is December 31, 2025, full stop.

Trap 2: "Claim your 30% before it ends!" offers are still circulating. A year ago that pitch was accurate. Today it isn't. As we'll explain next, you cannot rescue a 2026 installation by signing a contract or prepaying in 2025 — the IRS rule keys off when installation is completed, not when you sign or pay. Be wary of any offer promising a federal 30% credit for a system that goes live in 2026; that credit ended for systems placed in service after December 31, 2025.

What exactly died — Section 25D in plain English

Section 25D was the federal residential solar credit: 30% of qualified costs. It applied to systems placed in service from 2022 onward and was originally scheduled to run at 30% through 2032 before stepping down — which is exactly the "phase-out in 2033" schedule the stale IRS boilerplate still describes. The One Big Beautiful Bill (OBBB), Public Law 119-21, signed July 4, 2025, scrapped that timeline and repealed the credit early, ending it for property placed in service after December 31, 2025.

The IRS's OBBB guidance FAQ states the credit "will not be allowed for any expenditures made after December 31, 2025." And here's the trap that catches people who think they planned ahead:

An expenditure with respect to an item is treated as made when the original installation of the item is completed.

In other words, prepaying in December 2025 for a system your installer finishes in February 2026 does not qualify. The clock is the installation-completed / placed-in-service date, not the contract date or the payment date. If your system goes live in 2026, no federal residential credit — regardless of when you signed.

One thing that survives if you already went solar — the carryforward

If your system was placed in service on or before December 31, 2025, there's good news worth knowing. The 25D credit is nonrefundable, meaning it can only reduce the tax you owe — it never pays out as a refund beyond that. But if your credit was larger than your tax bill, you don't lose the excess.

Per the IRS, "you can carry forward any excess unused credit and apply it to reduce the tax you owe in future years." The IRS materials state no expiration on that carryforward, and the Congressional Research Service reaches the same conclusion. So a 2025 buyer who couldn't absorb the whole credit in one year can still apply the remainder on a 2026 or later return.

The catch: this only applies to credit you already earned from a pre-2026 installation. You cannot earn any new 25D credit in 2026. If you bought in 2025, talk to a tax professional about Form 5695 and your carryforward. If you're buying in 2026, this provision doesn't help you.

The one federal path still open to homeowners — lease or PPA

There is exactly one way a 2026 rooftop system can still touch a federal credit: third-party ownership. Under a solar lease or power-purchase agreement (PPA), a solar company owns the panels on your roof. Because they own the equipment, they — not you — can claim the surviving commercial credit, Section 48E.

Here's how 48E works, per the IRS Clean Electricity Investment Credit page: a 6% base rate, rising to up to 30% if prevailing-wage and apprenticeship (PWA) requirements are met, plus +10 percentage points for meeting domestic-content rules and +10 percentage points for siting in an energy community. Crucially for rooftop solar, the IRS recognizes a one-megawatt exception: a facility "that has a maximum net output of less than one megawatt (as measured in alternating current) is eligible for the increased credit amount without satisfying the prevailing wage and apprenticeship requirements." Nearly every home-sized system is well under 1 MW — so a third-party owner can reach the higher rate without PWA paperwork.

But read these caveats carefully, because this is where the "lease and you still get 30%" pitch goes wrong:

• You don't own the system and you don't file for any federal credit. The provider claims 48E. You sign a lease or buy the power.
• Any pass-through to you is not guaranteed and varies by provider. A provider may reflect some of that credit value in a lower lease payment or PPA rate — or may not. There is no fixed percentage you "get back." Treat any "you'll save the full 30%" claim as a sales line, not a fact.
• This path is on a closing clock. Under IRS Notice 2025-42, the 48E credit is terminated for a solar facility placed in service after December 31, 2027 — unless its construction began on or before July 4, 2026 (the Notice phrases the deadline as establishing construction "before July 5, 2026"). And for these wind and solar facilities the IRS allows only the Physical Work Test to lock in that start date — the old "5% safe harbor" doesn't apply here. This is a window that is actively closing, not a stable, permanent benefit.

Own vs. lease/PPA in 2026

If you want to see what owning actually costs you in 2026 — with no federal residential credit in the math, because there isn't one — our residential solar estimate runs the numbers on 2026 rules.

What's actually left for most homeowners — state and local programs

With the federal residential credit gone, the state and local layer is now your primary incentive. That includes state tax credits, utility rebates, SRECs, and net metering — and these vary enormously by state and even by utility.

A quick definition: an SREC (Solar Renewable Energy Certificate) is created for each megawatt-hour (1,000 kWh) of solar generation, and in states with SREC markets you can sell them (EPA). But SRECs only exist where a state has built that market — most states haven't.

Because every figure here is state- and utility-specific, dollar amounts depend entirely on where you live. The authoritative place to look up what your address qualifies for is DSIRE, the Database of State Incentives for Renewables & Efficiency, run by the N.C. Clean Energy Technology Center at NC State — searchable by ZIP code. You can also start with our best states for solar breakdown and our state-by-state pages, and we keep the broader policy picture current in our 2026 solar incentives guide.

A note for farms and rural property

If you run a farm or rural small business, your usual federal route was USDA's Rural Energy for America Program (REAP). For 2026, the status is this: REAP grants are paused, not eliminated. USDA rescinded its prior grant funding notice and has said it will make no further grant awards until new regulations are in effect, with previously submitted applicants given a chance to reapply once new rules land. REAP guaranteed loan applications are still being accepted.

So: grants are on hold, loans are open. If you're a rural or agricultural reader, our farm solar page goes deeper, and businesses can compare on our commercial page.

How to figure out your real number in 2026

1. If you bought in 2025: confirm your placed-in-service date and review Form 5695 and any carryforward with a tax professional. Credit you already earned doesn't disappear.
2. If you're buying in 2026: compare two scenarios — own (no federal credit) versus lease/PPA (provider claims 48E, value pass-through varies) — and look up your state's programs on DSIRE and our state pages.
3. Be wary of any offer promising a 30% federal credit for a 2026 purchase. The credit ended for systems placed in service after December 31, 2025.

Solar can still make financial sense in 2026 — but only if you run the numbers on what's actually available, not a federal credit that no longer exists. Get a free residential estimate built on 2026 rules.

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Sources verified June 2026. This article is general information, not tax or legal advice — confirm your situation with a qualified tax professional.