What is the status of the federal solar tax credit (ITC) in 2026?

The residential federal solar Investment Tax Credit (Section 25D) expired December 31, 2025, under the One Big Beautiful Bill signed July 4, 2025. Homeowners who purchased a solar system with cash or a loan and had it installed by December 31, 2025 can still claim the 30% credit on their 2025 tax return. Systems installed in 2026 or later under homeowner ownership receive no federal ITC. Commercial and third-party-owned systems (leases, PPAs) may still qualify under Section 48E through end of 2027.

Can I claim the solar tax credit if I lease my system?

No — only the system owner can claim the ITC. If you lease or have a PPA, the installer (not you) owns the system and takes the credit. This distinction matters for systems installed before December 31, 2025. The residential 25D credit has now expired for new homeowner-owned installations; however, commercial and third-party-owner credits (Section 48E) continue through 2027.

Is the federal solar tax credit still available in 2025?

The residential federal solar ITC (Section 25D) expired December 31, 2025 under the One Big Beautiful Bill signed July 4, 2025. Systems installed and placed in service by December 31, 2025 still qualify for the 30% credit on your 2025 tax return. For 2026 and later, homeowner-purchased residential systems do not qualify. Commercial systems under Section 48E may still qualify.

What can I include in the solar tax credit cost basis?

The credit applies to the gross system cost including panels, inverter, mounting hardware, wiring, battery storage (if co-installed), labor for installation, and permit fees. Financing costs (loan interest) are excluded. If you receive a utility rebate, it reduces your cost basis before calculating the credit.

Federal Solar Tax Credit Calculator

⚠️ Important update: The residential federal solar ITC (Section 25D) expired December 31, 2025 under the One Big Beautiful Bill (signed July 4, 2025). Homeowner-purchased systems installed in 2026 or later do not qualify for a federal tax credit. This calculator remains useful if you installed solar by December 31, 2025 and are claiming the credit on your 2025 tax return. Commercial systems and third-party-owned systems (leases/PPAs) may still qualify under Section 48E through 2027.

Calculate your federal Investment Tax Credit (ITC) for a solar installation completed by December 31, 2025. See how much of the credit your tax liability covers and how much carries forward to future tax years.

System Cost ($)

Tax Credit Rate (%)

State Solar Credit

About This Calculator

The Federal Solar Tax Credit Calculator helps homeowners who installed solar by December 31, 2025 calculate the value of their 30% federal ITC (Section 25D) credit. The credit is a dollar-for-dollar reduction in federal taxes owed — not a deduction from income. On a $20,000 system, that is a $6,000 credit. The 25D residential credit expired for systems installed after December 31, 2025 under the One Big Beautiful Bill (signed July 4, 2025). If you installed before that date, you can still claim the full 30% credit on your 2025 federal tax return.

The ITC is non-refundable — you can only use it to offset taxes you actually owe. If your federal tax liability is $4,000 but your credit is $6,000, you use $4,000 this year and carry forward the remaining $2,000 to the following tax year. This calculator shows both the full credit value and your carry-forward amount. Note that the carry-forward provision only applies if you are claiming a credit on an installation completed before the December 31, 2025 expiration.

Your annual tax liability is the amount shown on line 24 of Form 1040 (total tax), not your refund or amount owed at filing. A tax professional can help you estimate your liability for the installation year. State credits, where available, are calculated separately and often have their own caps and carryforward rules. Some states still offer their own solar tax credits independent of the expired federal program.

For new solar installations in 2026: while the residential federal ITC no longer applies to homeowner-owned systems, commercial projects beginning construction before July 4, 2026 remain eligible for a 30% federal ITC (Section 48E) through 2027. Homeowners using a solar lease or PPA may also indirectly benefit as third-party system owners can still claim the 48E credit and may pass savings through lower rates.

Calculations based on NREL solar modeling data and industry-standard assumptions, built and maintained by the independent SolarToolsOnline research team.

Estimates only — not financial, tax, or legal advice. Verify important results with a licensed solar installer or financial professional before making decisions.