For two decades, almost every residential solar conversation in the United States started with the same number: 30%. The federal Residential Clean Energy Credit — Section 25D of the Internal Revenue Code — knocked nearly a third off the net cost of a rooftop system, and installer quotes, payback calculators, and financing products were all built around it. That era is over. The One, Big, Beautiful Bill Act (OBBBA, P.L. 119-21), signed July 4, 2025, repealed Section 25D for expenditures made after December 31, 2025, along with the Section 25C Energy Efficient Home Improvement Credit. If you are getting solar quotes in mid-2026, the 30% federal credit is no longer part of your math — and any sales pitch that still includes it is a red flag, not a bonus.
This guide covers what actually changed, who can still claim something on a federal return, what incentives genuinely remain for 2026 buyers, and how to evaluate quotes in the first post-credit buying season.
What OBBBA Actually Repealed
The repeal hit both of the major residential energy credits at once:
- Section 25D (Residential Clean Energy Credit) — the 30% credit for solar PV, battery storage of 3 kWh or more, solar water heating, geothermal heat pumps, and small wind. Under the Inflation Reduction Act this was scheduled to run at 30% through 2032, with step-downs in 2033 and 2034. OBBBA terminated it for expenditures made after December 31, 2025.
- Section 25C (Energy Efficient Home Improvement Credit) — the annual credit of up to $2,000 for heat pumps and heat pump water heaters, plus smaller caps for insulation, windows, and panels. Also terminated for property placed in service after December 31, 2025.
One detail matters enormously for anyone whose project straddled the deadline: the IRS treats a Section 25D expenditure as made when the original installation is completed — not when you signed the contract, not when you paid a deposit, not when panels were delivered to your driveway. A homeowner who signed in October 2025 but whose system was not finished until February 2026 is ineligible for the federal credit, full stop. The IRS published FAQ guidance on the OBBBA changes to Sections 25C and 25D confirming this treatment; the IRS Form 5695 page carries the current instructions for affected tax years.
What OBBBA did not repeal is Section 6417 elective pay (“direct pay”) — but that provision only ever applied to tax-exempt applicable entities like nonprofits, municipalities, tribes, and rural co-ops. It has never been available to individual homeowners, despite occasional sales-floor claims to the contrary.
If You Installed in 2024 or 2025: The Credit Still Matters to You
The repeal is forward-looking. Systems completed and placed in service on or before December 31, 2025 remain fully eligible, and two groups still have live filing work to do:
2025 installers filing now. If your system was finished in 2025, you claim the 30% credit on Form 5695 with your tax-year 2025 return. Nothing about OBBBA reduces that credit. Keep your interconnection approval, final inspection sign-off, and paid invoices — the placed-in-service date is the fact that matters if the return is ever examined. Our Form 5695 walkthrough covers the line-by-line mechanics.
Carryforward filers. Section 25D was always non-refundable: it could zero out your tax liability but not generate a refund beyond it, with unused amounts carrying forward. Homeowners who installed in 2023-2025 and could not absorb the full credit in one year continue to carry the remainder forward on subsequent returns. The repeal terminates new expenditures, not the carryforward of credits already earned. If you have unused credit from a 2024 install, you keep applying it.
If you are unsure how the original credit worked — basis rules, what equipment qualified, how rebates reduced the eligible cost — our federal solar tax credit guide documents the program as it operated for pre-2026 installations and remains the reference for anyone still filing or amending those years.
What 2026 Buyers Can Still Claim
With the federal layer gone, the incentive picture is now entirely state, local, and utility — which means it varies more by ZIP code than at any point since 2005. The remaining categories:
State income tax credits. A handful of states run their own credits independent of the federal code. These were never tied to Section 25D and survive the repeal. Amounts, caps, and carryforward rules differ widely, and several state programs have their own sunset dates or annual funding caps, so verify current-year status before counting on one.
Utility and state rebates. Upfront rebates from utilities and state energy offices continue where funded. With the federal credit gone, a $1,500 utility rebate that used to be a rounding error is now a meaningful share of your incentive stack — and rebate programs in high-demand territories can exhaust annual budgets mid-year.
SREC and performance-based markets. Solar renewable energy certificate markets in states like New Jersey, Maryland, Pennsylvania, and the District of Columbia pay for production over time and are unaffected by the federal repeal.
Property and sales tax exemptions. More than 30 states exempt solar equipment from property tax reassessment, and more than 25 exempt it from sales tax. These quiet incentives are now a larger fraction of total support.
Net metering and export compensation. Your utility’s bill-credit structure remains the single biggest driver of lifetime savings, repeal or no repeal.
The authoritative, continuously updated source for all of this is the DSIRE database maintained at North Carolina State University — search your state and utility before believing any incentive line on a quote. For a framework on how the state-level pieces fit together, see our state solar incentives overview.
How Quotes Are Repricing in 2026
The first half of 2026 is the market’s first real price discovery period without federal support, and quotes are behaving in three observable ways:
Net cost went up; gross prices are drifting down. A $28,000 system that netted to $19,600 after the 30% credit now nets to $28,000 minus whatever state and utility incentives apply. Installers know payback periods lengthened overnight, and competitive pressure is pushing gross pricing and margins down — but hardware, labor, and permitting costs set a floor. Expect single-digit percentage discounts, not a 30% give-back.
Financing products are being restructured. Many 2024-2025 solar loans were built around a balloon re-amortization that assumed you would apply the federal credit as a lump-sum paydown in month 18. Those structures make no sense for 2026 installs. Read any loan offer carefully for a phantom “expected tax credit payment” — its presence means the lender’s paperwork has not caught up with the law.
Lease and PPA pitches are louder. Third-party ownership is being marketed harder because commercial-side incentives differ from the repealed residential credit. Whether a lease or PPA actually beats a cash or loan purchase in your situation still comes down to escalator rates, buyout terms, and your utility’s compensation structure — run the comparison the same way you would have before.
The honest math for a 2026 buyer: solar still pencils in states with high retail electricity rates, strong net metering or export compensation, and meaningful state incentives. It pencils more slowly — often two to four additional years of payback — in states where the federal credit was doing most of the work. The U.S. Department of Energy’s homeowner solar resources remain a useful neutral grounding for the non-tax fundamentals: siting, sizing, and contractor selection have not changed.
A 2026 Buyer’s Checklist
- Strike the federal credit from every quote. If a proposal dated 2026 shows a 30% federal credit, ask the installer to reissue it. If they push back, walk.
- Verify every remaining incentive on DSIRE and on the administering agency’s own page — funding status, caps, and deadlines.
- Recalculate payback yourself using net cost after only the incentives you verified. Treat any payback under 7 years in a no-state-incentive market with skepticism.
- Scrutinize loan structures for tax-credit-shaped balloon payments that no longer apply.
- Document placed-in-service timing if you are filing for a 2025 install — completion date, not contract date, controls eligibility.
Frequently Asked Questions
I signed my contract in November 2025 but the system wasn’t finished until 2026. Can I claim the credit?
No. The IRS treats the expenditure as made when the original installation is completed. A system placed in service after December 31, 2025 is ineligible regardless of when you signed or paid a deposit. Check the IRS OBBBA FAQ guidance before filing, and talk to a tax professional if your completion date is documented ambiguously.
I claimed the credit for a 2024 install but couldn’t use all of it. Do I lose the carryforward?
No. The repeal applies to new expenditures after 2025. Credit you already earned from an eligible installation continues to carry forward to future tax years until exhausted, under the same non-refundable rules that always applied.
Are there any federal incentives left for homeowners adding solar in 2026?
Not as a direct personal tax credit. Section 6417 direct pay survives but applies only to tax-exempt entities, not individuals. For homeowners, the incentive landscape is now state tax credits, utility and state rebates, SREC markets, property and sales tax exemptions, and net metering — all of which vary by state and utility.
Does the repeal mean solar no longer makes financial sense?
It means the answer depends more on your state and utility than ever before. In high-rate states with strong export compensation and state-level incentives, returns remain solid with longer paybacks. In low-rate states with weak net metering, the case is now marginal for many homes. Run your own numbers with verified inputs rather than relying on a sales projection.