Solar Tax Credits are Ending
The Solar Tax Credit Is Ending—Here’s What That Really Means to You
If you’ve been considering solar for your home, now’s the time to act. The 30% federal tax credit that’s made solar affordable is officially going away—but when exactly, and for whom?
What’s Ending and When
• Under the newly signed “One Big Beautiful Bill” (signed July 4, 2025), the residential solar tax credit (Section 25D)—the one homeowners claim for systems they own—ends on December 31, 2025. If your solar panels or solar-plus-battery system isn’t fully installed and generating power by then, you’ll lose that 30% savings.
• Installers typically say the full process—from design to inspections—takes 60 to 90 days, assuming no major delays. That means installations need to start very soon if you’re hoping to qualify.
There’s Still Some Hope for Leases and PPAs
• If you lease your solar system or have a Power Purchase Agreement (PPA), the tax credit is claimed by the leasing company under Section 48E, not you directly. That version of the credit extends through the end of 2027.
For Commercial or Utility-Scale Solar
• Commercial solar projects that begin physical construction by July 4, 2026 can still qualify for the 30% credit—and many qualify under a four-year “safe harbor” completion window through 2027.
• But starting construction after that puts you at risk. New Treasury guidance (as of August 2025) tightens what counts as “starting construction,” favoring actual physical work over early-stage financial moves.
Why This Matters Now
For homeowners, losing that 30% credit could stretch the payback window on solar from about 7 years to 11—or even 15–21 years—especially in states without other incentives. That’s a big shift in the financial case for rooftop solar.
No wonder homeowners are racing to install before the deadline. One report puts the number of households applying for the credit around 1.2 million—over $6 billion in savings are on the line.
What You Should Do (Now)
1. Get quotes and lock in installation schedules ASAP. You need your system operational by December 31, 2025, to claim the credit.
2. If a lease or PPA suits you better, that's your alternative—but limited to leasing arrangements and only through 2027.
3. Commercial developers and installers must begin physical work by July 2026—and it has to be substantive.
What Happens After 2025?
• Homeowners lose their 30% credit.
• Leases and PPAs still qualify through end of 2027.
• Commercial projects? Still possible—but under tighter rules and sooner deadlines.