What does placed in service mean for the solar tax credit?

The credit was tied to the date your installation was completed and ready for use, not the date you signed a contract or paid a deposit. A system finished after December 31, 2025 does not qualify for the 25D credit even if you paid earlier.

Can I still carry forward an old solar tax credit?

Yes. If you installed solar before the deadline and could not use the full credit, unused Section 25D amounts can generally be carried forward to later tax years, including 2026 and beyond. Confirm specifics with a tax professional.

The Federal Solar Tax Credit in 2026: What Expired (and What Still Counts)

Q: Is there a federal solar tax credit in 2026?

Not for homeowners who buy their system. The 30% residential Clean Energy Credit (Section 25D) was repealed by the One Big Beautiful Bill Act and expired for systems placed in service after December 31, 2025. Cash and loan buyers in 2026 receive $0 federal credit. Third-party-owned systems (lease/PPA) can still benefit because the owner claims a separate business credit.

The short version: the 30% federal credit that made home solar a no-brainer for the last decade is gone for homeowners who buy as of 2026. But the picture is more nuanced than "solar is dead" — here's exactly what changed, and where value still exists.

What exactly expired?

For years, homeowners who installed solar could claim 30% of the system's cost as a federal tax credit under Section 25D (the Residential Clean Energy Credit). On a $25,000 system, that was a $7,500 reduction in what you owed the IRS — often the single biggest factor making solar "worth it."

The One Big Beautiful Bill Act (OBBBA) repealed that credit. It expired for systems placed in service after December 31, 2025. There is no phase-down for homeowners — it went from 30% to 0% at the deadline.

The "placed in service" trap

This catches people out, so it's worth being precise: the credit was tied to when your system was completed and ready to use — not when you signed the contract or paid a deposit. The IRS treats the expenditure as made when installation is finished. So a homeowner who paid in late 2025 but whose panels were switched on in January 2026 does not qualify. If someone tells you otherwise, be skeptical.

What it means for your numbers

Losing a 30% credit doesn't just make solar 30% more expensive — it lengthens your payback period, because you're now recovering the full cost from electricity savings alone. In high-rate, sunny states the math can still work in well under a decade. In low-rate states, payback can stretch past 15–20 years, which changes the decision entirely.

This is exactly why most older solar calculators are now wrong — they still bake in the 30% credit. Our solar calculator models the 2026 reality, and you can see the difference by state on our solar-by-state comparison.

What still counts in 2026

Lease & PPA (third-party owned): When a solar company owns the panels on your roof, they can claim a business-side clean-energy credit (Section 48/48E) and pass some of that value to you through lower monthly payments. You don't own the system or capture its full lifetime value, but you avoid the upfront cost — often the most sensible path in 2026 where buying payback is long.
Carry-forward of old credits: If you installed before the deadline and couldn't use the whole 25D credit against your tax bill, the unused portion can generally be carried forward into 2026 and later years.
State & local incentives: Many states still offer rebates, performance payments (SRECs), property-tax exemptions, and net-metering rules that materially improve the economics. These vary enormously — check your state.
Rising electricity prices: The credit is gone, but grid rates keep climbing. The more you pay per kWh, the more every solar kWh is worth.

So — should you still go solar?

It now depends far more on where you live and how you pay than it did a year ago. The honest framework:

High electricity rate + good sun + paying cash: often still a solid investment.
Average rates: run the numbers carefully — payback is the deciding factor.
Low rates: buying is a tough financial case; a $0-down lease/PPA may be the only version that pencils out.

The single best thing you can do is run your actual numbers before talking to any salesperson, so you know whether their quote is reasonable.

Calculate your 2026 solar payback →

Frequently asked questions

Is there a federal solar tax credit in 2026?

Not for homeowners who buy. Section 25D expired for systems placed in service after Dec 31, 2025, so cash and loan buyers get $0 in 2026. Third-party-owned (lease/PPA) systems can still benefit because the owner claims a business credit.

Did the solar tax credit really get repealed?

Yes — the residential 30% credit was repealed by the One Big Beautiful Bill Act, with no phase-down for homeowners. It ended at the close of 2025.

What about the credit if I already have solar?

Credits earned from a pre-2026 installation can generally be carried forward if you couldn't use them all at once. This is a tax-timing question — confirm with a professional.

This article is general information, not tax or financial advice, and reflects our understanding as of June 2026. Tax law is complex and changes; confirm your specific situation with a qualified tax professional and the IRS before making decisions.