The federal solar tax credit was terminated after December 31, 2025.
Under the One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025), IRC §25D no longer allows a credit for solar expenditures made after December 31, 2025. Under 25D(e)(8), an expenditure is “made” when the original installation is completed. There is no grandfathering — even if you paid in 2025, if your installation finished in 2026, the credit does not apply.
If your installation was completed on or before December 31, 2025, you can still claim the 30% credit on your 2025 tax return (filing deadline April 15, 2026, or October 15, 2026 with an extension). This page is preserved as a reference for 2025 filers.
For new work in 2026 and beyond, look at state HOMES and HEAR rebate programs instead — those are unaffected by OBBB and are funded through September 2031. Take the quiz to see what you qualify for in your state.
For installations completed on or before December 31, 2025, the federal solar tax credit (IRC §25D) covers 30% of your total solar installation costs — with no dollar cap. For a typical $20,000 system, that's a $6,000 credit. This guide explains exactly how it works, what qualifies, and how to file Form 5695 with your 2025 return. The credit does not apply to installations completed after December 31, 2025.
| Credit Amount | 30% of total installation costs (no cap) — for installations completed on or before Dec 31, 2025 |
| IRS Section | IRC §25D — Residential Clean Energy Credit |
| Status (2026) | Terminated for installs placed in service after Dec 31, 2025 (OBBB, Public Law 119-21) |
| Typical Savings | $4,000 – $12,000 |
| Credit Type | Nonrefundable (reduces tax owed, carries forward) |
| Stacks With | State solar credits, HOMES rebates, utility incentives |
| How to Claim | IRS Form 5695 filed with your annual tax return |
| Official Source | IRS.gov |
The Residential Clean Energy Credit covers the full cost of purchasing and installing a solar energy system on your primary or secondary residence. Here's what counts:
The federal solar tax credit has broad eligibility. There is no income limit and no cap on the credit amount. You must meet these requirements:
You own the solar energy system (leased systems and PPAs do not qualify)
The system is installed on your primary or secondary residence in the U.S.
The system is new or being used for the first time (not previously installed elsewhere)
You have sufficient federal tax liability to use the credit (or can carry it forward)
You file IRS Form 5695 with your annual tax return
Important: Rental properties don't qualify
The Section 25D credit is only for your personal residence. If you install solar on a rental property, you may qualify for the Section 48 commercial credit instead — consult a tax professional.
Claiming the solar tax credit is straightforward. You'll need IRS Form 5695 and documentation from your installer. Here's the step-by-step process:
Complete installation and pass inspection. Keep all invoices, contracts, and receipts — you'll need the total cost.
Your solar company should provide a certificate of completion, itemized invoice, and confirmation that the system meets code requirements.
Enter your total solar costs on Part I of Form 5695. The form calculates your 30% credit automatically.
The credit amount from Form 5695 flows to Schedule 3, then to your Form 1040. It reduces your total tax liability.
If your credit exceeds your tax bill, the unused portion carries forward to future tax years — it doesn't expire.
Yes — and this is where real savings multiply. The federal solar credit stacks with state tax credits, HOMES rebates, utility incentives, and battery storage programs. Here are the best stacking opportunities by state:
The Inflation Reduction Act originally locked in the solar credit at 30% through 2032, stepping down through 2034. The One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025) accelerated that sunset dramatically — the credit now terminates for any expenditure made after December 31, 2025.
| Tax Year | Credit Rate | Example ($25K system) |
|---|---|---|
| 2022 – 2025 (last eligible year) | 30% | $7,500 |
| 2026+ | 0% (terminated by OBBB) | $0 |
If your installation was completed on or before December 31, 2025, you can still claim the 30% credit on your 2025 return (filing deadline April 15, 2026, or October 15, 2026 with an extension).
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Take our free 2-minute quiz to get a personalized estimate that includes the solar credit plus every other credit and rebate you qualify for — HOMES, HEAR, homestead exemption, and more.
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