Payback pillar: incentives

Solar tax credit status: what ended, what remains

If a quote, article, or calculator still subtracts a 30 percent federal credit from the price of a system you would install in 2026, it is using a rule that no longer exists. The residential clean energy credit under Section 25D was terminated for expenditures made after December 31, 2025. This page states exactly what ended, the IRS rule that decides borderline 2025 cases, and the incentive channels that still exist, so you can rebuild any payback figure on current rules.

Payback by state, credit-free Check your state page

IRS rule, not installer marketing
Carryforward of earlier credits unaffected
State programs verified in DSIRE

What ended

Public Law 119-21 terminated the Section 25D residential clean energy credit at the end of 2025: the credit does not apply to expenditures made after December 31, 2025. Before termination it paid 30 percent of the cost of qualifying residential clean energy property, including rooftop solar and battery storage of 3 kWh or more. There was no phase-down for this change; the schedule that would have held 30 percent through 2032 is gone. For a homeowner buying a system whose installation is completed in 2026 or later, the federal credit on that purchase is zero, and any payback math that includes it understates the payback period by years. Every figure in this site payback pillar is therefore computed with no federal credit.

The borderline rule: paying early does not preserve it

Section 25D treats an expenditure as made when the original installation of the item is completed. The IRS confirmed the consequence in its 2025 guidance summary: if installation is completed after December 31, 2025, the expenditure is treated as made after that date and the credit cannot be claimed, even if a deposit or the full price was paid in 2025. The reverse also holds: a system whose installation was completed on or before December 31, 2025 is a 2025 expenditure, claimed under the rules and filing steps for that year. One protection did survive: the ability to carry forward unused credit amounts from earlier years is unaffected by the termination, per the Congressional Research Service summary of the law. If your situation sits on either side of that line, confirm it against the IRS residential clean energy credit page and your tax adviser before relying on it; this page is education, not tax advice.

What remains

State and utility incentives. State tax credits, rebates, performance programs, and utility incentives continue in a number of states, and they now carry more of the payback weight than they did when a federal credit existed. They change through legislation and program budgets, so this site never prints them as guaranteed values: each state page names the incentive context and points to the live DSIRE listing and your utility tariff as the verification step. Export compensation. Net metering or net billing does not reduce your cost, but it sets the value of exported energy every year of the system life, which is why the net metering guide belongs in any payback calculation. Financing structure. In a lease or power purchase agreement the company owns the system and claims any incentives available to it as owner, and may or may not pass that value through in the price you pay. That is a contract question, answered in the agreement, not a credit you claim yourself; the lease, buy, or PPA guide shows how to compare the structures on total collected cost.

How to audit a quote for stale credit math

Ask for the price build in writing: gross price, each incentive line, and net price. Check every incentive line for a source and a date. A line labeled federal credit, ITC, or 30 percent on a 2026 installation is a red flag for the whole quote, because the same spreadsheet usually carries the payback claim built on it. Rebuild the division yourself with the calculation guide: verified net cost divided by honestly valued first-year savings. If the seller will not itemize, the quote red flags guide lists the other patterns worth walking away from.

Frequently asked questions

Is there a federal solar tax credit in 2026?

Not for a homeowner purchase whose installation is completed after December 31, 2025. The Section 25D credit was terminated for expenditures after that date, and an expenditure counts as made when installation is completed.

My system was installed in December 2025. Can I still claim it?

An installation completed on or before December 31, 2025 is a 2025 expenditure under the IRS rule summarized here. Claim it under the 2025 filing rules, and confirm the details on the IRS residential clean energy credit page or with a tax adviser.

I paid a deposit in 2025 but installation finished in 2026. Do I qualify?

Based on the IRS position summarized by the Congressional Research Service, no: the payment date does not control, the installation completion date does. Treat any quote promising otherwise as unverified until you have checked it against the IRS guidance yourself.

What about unused credit I carried forward from an earlier year?

The Congressional Research Service summary states that taxpayer's ability to carry forward unused credit amounts is unaffected by the termination. Keep your prior-year records and confirm the carryforward on your return.

Claim it in the right order: a tickable checklist

Work these in order. Ticks are saved on this device only. Print this section to keep with your quote and tax records.

1. Confirm the install year: note the date installation was completed, not only the date you paid a deposit.
2. Check claim timing: if installation was completed after December 31, 2025, do not expect a federal residential credit for that purchase. If it was completed on or before that date, confirm the filing steps for that year.
3. Check state programme deadlines: open your state's programme entry in the incentives directory and confirm its current status and any deadline in DSIRE and your utility tariff before relying on a value.
4. Get the price build in writing: gross price, each incentive line with a source and date, and net price.
5. If you carried forward an unused credit amount from an earlier year, keep the prior-year records with this checklist and confirm the carryforward on your return.

Your state's programmes →

Sources

Congressional Research Service, Expiration and Carryforward Rules for the Residential Clean Energy Credit (IN12611), summarizing Public Law 119-21 and IRS FAQ FS-2025-05 on when an expenditure is treated as made; Internal Revenue Code Section 25D(e)(8). State incentive status: DSIRE listings as referenced in each state page record, checked October 4, 2026, with the program directory re-checked October 18, 2026. Page checked October 18, 2026: the termination, the installation-completion rule, and the carryforward position were re-confirmed against the Congressional Research Service summary and the IRS guidance it cites. Figures for your own installation should be verified against the IRS residential clean energy credit page, which controls over any summary, including this one.

Next: payback by state and how payback is calculated.