Solar Panel Federal Tax Credit: The 30% IRA Credit Expired December 2025
What the 30% credit covered (for 2025 returns)
If you installed qualifying clean energy systems before December 31, 2025, you may still claim the Section 25D credit on your 2025 federal return. The credit covered:
| System | Credit Rate | Status in 2026 |
|---|---|---|
| Solar photovoltaic (PV) panels | 30% of total installed cost | Expired Dec 31, 2025 |
| Battery storage (≥3 kWh) | 30% of cost | Expired Dec 31, 2025 |
| Geothermal heat pumps | 30% of cost | Expired Dec 31, 2025 |
| Solar water heaters | 30% of cost | Expired Dec 31, 2025 |
| Small wind turbines | 30% of cost | Expired Dec 31, 2025 |
What solar incentives remain in 2026
The expiration of the federal credit doesn't end all solar incentives. Significant savings opportunities remain at the state and utility level:
State solar tax credits
Many states have their own solar tax credits independent of federal law. Strong state programs include:
- New York: 25% state tax credit, up to $5,000 (still active)
- Massachusetts: 15% state credit, up to $1,000 (still active)
- Colorado, Maryland, Montana, Utah, South Carolina: various state-level credits and incentives
Check your state energy office or the DSIRE database (dsireusa.org) for current state programs in your area.
Net metering
Net metering — where your utility credits you at retail rates for excess solar power sent to the grid — remains widely available. It dramatically improves the economics of solar even without the federal credit. Check your utility's net metering policy, as rates and rules vary significantly.
Utility solar rebates
Some utilities offer upfront rebates for solar installation, independent of federal tax credits. These are funded by state ratepayer programs or utility efficiency mandates. Search DSIRE or your utility's website.
SREC markets
In states with Solar Renewable Energy Certificate (SREC) programs (New Jersey, Massachusetts, Ohio, DC, and others), solar owners earn certificates for each megawatt-hour generated. SRECs can be sold to utilities for additional income — $50–$400 per SREC depending on state supply/demand.
Claiming the 25D credit for 2025 solar installations
If you had solar installed and placed in service before December 31, 2025, you can still claim the full 30% credit on your 2025 federal tax return:
- Keep all documentation: installer contracts, invoices, permits. Note the system size and total cost.
- File IRS Form 5695 (Residential Energy Credits), Part I for the Residential Clean Energy Credit.
- Transfer to Schedule 3, Form 1040.
- If credit exceeds your tax liability: the unused portion carries forward to future years.
Major tax software (TurboTax, H&R Block, TaxAct) handles Form 5695 automatically. The credit is non-refundable but carries forward indefinitely until used.
Should you still go solar in 2026?
The math has changed, but it hasn't necessarily broken. Without the 30% federal credit, solar payback periods are longer — typically 8–14 years instead of 5–10 — but solar still makes financial sense in many situations:
- Strong net metering in your state (retail rate credits)
- High electricity rates (California, Hawaii, Northeast)
- Available state tax credits or utility rebates
- Long-term energy security against utility rate increases
Run the numbers for your specific location, roof, and utility rate — our California, Texas, and New York rebate pages cover state-specific solar incentives in detail.
Is there a federal solar tax credit in 2026?
No. The 30% Residential Clean Energy Credit (Section 25D) expired December 31, 2025 under the One Big Beautiful Bill Act (OBBBA, P.L. 119-21). Solar panels installed in 2026 do not qualify for the federal residential credit. State incentives and net metering remain available in many states.
What solar incentives are still available in 2026?
State solar tax credits (New York 25%, Massachusetts 15%, others), utility solar rebates, net metering programs, and SREC markets remain available independent of federal law. Check DSIRE (dsireusa.org) for current programs in your state.
Does the 30% credit apply to battery storage in 2026?
No. Section 25D — which covered standalone and solar-paired battery storage at 30% — expired December 31, 2025. Battery storage installed in 2026 does not qualify for the residential federal credit.
Can I still claim the solar credit for a 2025 installation?
Yes. If your solar system was installed and placed in service before December 31, 2025, claim the 30% credit on your 2025 federal return using IRS Form 5695, Part I. The credit carries forward if it exceeds your 2025 tax liability.
When did the 30% solar tax credit expire?
December 31, 2025, under the One Big Beautiful Bill Act (OBBBA, P.L. 119-21). The IRA had previously extended it through 2034, but OBBBA changed that effective December 31, 2025.