Federal Solar Tax Credit 2026: The Residential Credit Has Ended
The 30% federal residential solar credit has ended. Under P.L. 119-21, the §25D Residential Clean Energy Credit terminated for expenditures made after Dec 31, 2025 — a system installed in 2026 cannot claim it. So the honest question in 2026 is: does solar still pay in your state without the federal credit? Run the math with $0 federal credit plus your state's incentives.
Reviewed Oct 2026. General information, not tax advice. Sources: IRS OBBBA FAQ (P.L. 119-21); IRS Residential Clean Energy Credit page; 26 U.S.C. §25D(h); CRS IN12611.
What the law says
Section 25D(h), as amended by section 70506 of P.L. 119-21, states that the credit does not apply to any expenditures made after December 31, 2025. The same law removed the old 2033 and 2034 step-down. A residential system installed in 2026 cannot claim this credit.
The IRS OBBBA FAQ (question 7) confirms that paying in 2025 does not preserve the credit if original installation is completed after December 31, 2025. For a home under construction, the expenditure is treated as made when the taxpayer begins original use of the structure.
What this page used to say
Earlier copy on this site said the residential credit returned 30 cents on the dollar with no cap, and that the rate was locked for years to come, claimed on Form 5695. That description does not apply to a system installed in 2026. Form 5695 was the form for a credit that has terminated for new residential expenditures.
The IRS Residential Clean Energy Credit page now states that the credit equals 30% for qualified property installed from 2022 through December 31, 2025, and is not available for property placed in service after that date. A later sentence on that same IRS page still mentions a 2033 phase-out; that sentence conflicts with §25D(h) and with the IRS OBBBA FAQ. This site follows the statute and the FAQ.
Carryforward is a different question
CRS Insight IN12611 explains that P.L. 119-21 did not change the carryforward rule. A homeowner who made a qualifying expenditure on or before December 31, 2025, and could not use the whole credit that year, may still carry the unused amount forward. That does not create a credit for a system installed in 2026.
Commercial solar is a different credit
Commercial solar (§48E) is different — but the clock moved. Projects that missed the Jul 4, 2026 beginning-of-construction deadline generally must be placed in service by Dec 31, 2027. Figures on this page are general information, reviewed Oct 2026, not tax advice.
Commonly cited commercial percentages are not presented here as a settled rate. Read the commercial page before treating any Section 48E figure as your project's credit.