SolarToolsHow This Tool Works
Important: The federal solar tax credit expired on December 31, 2025. The One Big Beautiful Bill Act, signed into law on July 4, 2025, terminated the Residential Clean Energy Credit (Section 25D) early. There is no federal tax credit for residential solar systems placed in service after December 31, 2025. If your system was installed and placed in service by that date, you can still claim the 30% credit on your 2025 tax return.
This calculator now helps you find your true net solar cost using only the incentives that still exist: state rebates, state tax credits, SREC market payments, and any lease/PPA discounts. The federal credit that previously reduced solar costs by 30% is gone, so understanding what state-level support remains is more important than ever.
One related credit survives: Section 48E, a commercial credit, remains available through 2027 for third-party-owned systems (solar leases and PPAs). In that structure, the leasing company claims the credit -- not the homeowner -- but it can lower your monthly lease/PPA payments. Enter any quoted discount in the calculator.
- Enter your gross system cost from your installer quote -- the full price before any incentives.
- Enter your state/utility rebate -- check DSIREUSA.org for current programs in your state. Enter 0 if none.
- Enter your state tax credit -- some states (NY, AZ, NM) still offer state-level solar tax credits. Enter the dollar amount. 0 if none.
- Enter SREC value if applicable -- NJ, MD, PA, DC, and IL have active SREC markets. Check current rates. 0 if not.
- Enter lease/PPA discount -- if you are considering a lease or PPA, the leasing company may pass through part of their Section 48E commercial credit as a lower monthly payment. Enter any quoted discount. 0 if buying outright.
Without the federal credit, your net cost will be higher than pre-2026 quotes suggested. State incentives vary widely -- some states still offer meaningful support, while others offer nothing. Check DSIREUSA.org for the most current programs.
When to Use This Calculator
What happened to the federal solar tax credit?
The Residential Clean Energy Credit (IRC Section 25D) provided a 30% federal tax credit for residential solar and battery storage installed between 2022 and 2025. The Inflation Reduction Act of 2022 originally scheduled it to run through 2032, stepping down to 26% in 2033 and 22% in 2034. However, the One Big Beautiful Bill Act, signed into law on July 4, 2025, terminated the credit early. Systems placed in service after December 31, 2025, do not qualify.
Can I still claim the credit if I installed in 2025?
Yes -- if your system was placed in service (operational and inspected) by December 31, 2025, you can claim the 30% credit on your 2025 federal tax return (filed in early 2026). File IRS Form 5695. There is no retroactive clawback. The credit is non-refundable, so you need sufficient federal tax liability to use it. Unused portions carry forward to future tax years.
What about the commercial Section 48E credit?
A separate commercial credit (Section 48E) remains available through 2027 for third-party-owned solar systems -- leases and PPAs. In a lease/PPA structure, the leasing company owns the system and claims the commercial credit. They may pass some savings to you through lower monthly payments, but you do not claim any tax credit yourself. This is why lease/PPA pricing may look more attractive than outright purchase in 2026-2027.
State incentives that still exist
State and utility incentives are separate from the federal credit and still vary by state. Some states offer: property tax exemptions (30+ states), sales tax exemptions (25+ states), flat rebates ($500-$5,000 in some states), state tax credits (NY 25% up to $5k, AZ 25% up to $1k, NM 10% up to $6k), and SREC markets (NJ, MD, PA, DC, IL). Check DSIREUSA.org for current programs -- these change frequently.
Impact on solar economics in 2026
Without the 30% federal credit, solar payback periods extend by 3-5 years. A $25,000 system that previously cost $17,500 after the credit now costs $25,000 (less any state incentives). In states with good net metering and high electricity rates, solar is still worth it -- payback stretches from 6-8 years to 9-12 years. In states with low rates and no state incentives, solar may not be worth it in 2026. Run the Solar Payback Calculator with your full system cost (no federal credit) to see.
Should I lease instead of buy in 2026?
Leasing is more attractive in 2026 than before because the leasing company can still claim the Section 48E commercial credit through 2027. This means lease/PPA pricing may be lower relative to outright purchase than it was in 2022-2025. However, buying still wins long-term in most cases -- you keep all the savings, build home equity, and avoid 20 years of lease payments with escalators. Use the Solar Lease vs Buy Calculator to compare.
Frequently Asked Questions
No. The federal Residential Clean Energy Credit (Section 25D) expired on December 31, 2025. The One Big Beautiful Bill Act (July 4, 2025) terminated it early. There is no federal tax credit for residential solar systems placed in service after December 31, 2025.
Yes -- if your system was placed in service (operational and inspected) by December 31, 2025, you can claim the 30% credit on your 2025 federal tax return using IRS Form 5695. There is no retroactive clawback.
Section 48E is a commercial tax credit that remains available through 2027 for third-party-owned solar systems (leases and PPAs). The leasing company claims this credit, not the homeowner, but it may result in lower monthly lease/PPA payments. It does not apply to systems you purchase and own yourself.
State incentives vary widely. Some states still offer: property tax exemptions (30+ states), sales tax exemptions (25+ states), flat rebates, state tax credits (NY, AZ, NM), and SREC markets (NJ, MD, PA, DC, IL). Check DSIREUSA.org for current programs in your state.
It depends on your state. In states with high electricity rates and good net metering (Hawaii, Massachusetts, New York), solar still pays back in 9-12 years without the federal credit. In states with low rates and no state incentives, payback may exceed 15 years. Run the Solar Payback Calculator with your full system cost to see.
Leasing is relatively more attractive in 2026 because leasing companies can still claim the Section 48E commercial credit through 2027, potentially lowering your monthly payments. However, buying still wins long-term in most cases. Use the Solar Lease vs Buy Calculator to compare your specific situation.
Further Reading
Deep-dive articles and guides related to this calculator.