Did the Federal Residential Solar Tax Credit End?
The 30% federal residential solar tax credit was ended early. Here's exactly what changed for 2026, who can still benefit, and what it means if you own vs. lease.
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Short answer: Yes — for solar you buy with cash or a loan, the 30% Residential Clean Energy Credit (Section 25D) ended for systems placed in service after December 31, 2025. A 2026 cash/loan purchase generally cannot claim it. A federal credit still exists for lease/PPA systems, but the company that owns the equipment claims it, not you.
What changed
For years, homeowners who bought solar could claim a 30% federal tax credit on their taxes. That credit — the Residential Clean Energy Credit, Section 25D of the tax code — was originally set to phase out around 2034. The One Big Beautiful Bill Act (Public Law 119-21), enacted July 4, 2025, moved that end date up dramatically.
According to the IRS, you can't claim the residential clean energy credit for expenditures made after December 31, 2025. The IRS also clarifies that the cutoff is tied to when your installation is completed — not when you pay or sign a contract. So a system finished in 2026 generally doesn't qualify, even if you paid a deposit in 2025.
If your installation was completed on or before December 31, 2025, you may still qualify — and unused credit can generally carry forward to later tax years. Talk to your tax professional.
Own vs. lease in 2026
This is where it matters most. If you own the system (cash or loan), there's no federal residential credit for a 2026 install. If you go with a lease or power-purchase agreement (PPA), a third party owns the equipment and may claim a separate commercial credit (Section 48E) — you'd only see the benefit indirectly, as potentially lower monthly payments. That commercial credit for solar is itself phasing out for projects not under construction by July 4, 2026 or not placed in service by the end of 2027.
What this means for Florida
Florida has no state income tax, so there was never a state solar income-tax credit to gain or lose. Florida's sales-tax exemption on solar equipment and its property-tax exclusion for the added home value are separate state benefits and were not changed by this federal law. The federal credit change is the main financial factor to understand for 2026.
Questions worth asking
- Is this quote for an owned system or a lease/PPA?
- If it's a lease, how is any tax credit reflected in my payment?
- Does your proposal assume a federal tax credit I can actually claim in 2026?
• When this might not make sense
We'd rather lose a sale than put you in the wrong solution. Reasons we might tell you to wait or pass:
- —You were counting on the 30% credit to make the numbers work on an owned system
- —A salesperson is still quoting you a 30% federal credit for a 2026 cash purchase
- —You haven't confirmed the ownership structure (owned vs. lease) of your quote
Sources
- Instructions for Form 5695 (2025) — IRS (2026)Primary
- FAQs on OBBB modifications to §25C/§25D and others (FS-2025-05) — IRS (Aug 2025)Primary
- Third-party ownership as 25D winds down — Utility Dive (Sep 2025)Secondary
Not sure what actually applies to you?
We'll compare owned vs. lease on your real usage and be straight about the 2026 tax picture — no assumptions baked in.