Is the 30% solar tax credit gone?
For homeowners who buy: yes. The residential credit (IRC §25D) expired for systems placed in service after 2025-12-31.
For leases and PPAs: no, not yet. The company that owns the system claims the commercial credit (IRC §48E) at 30% and reflects part of it in your price. Those systems must be placed in service by 2027-12-31.
What actually changed
Two federal credits sit behind residential solar. §25D was the homeowner's credit: buy a system, claim 30% against your tax bill. §48E is the commercial credit, claimed by businesses that own energy equipment.
§25D is finished. §48E is not. Because a solar lease or PPA means a company owns the hardware on your roof, that company can still claim 30% — and competition pushes some of it into the price you are quoted. The credit did not disappear from residential solar; it moved to a different party, and you now reach it only by not owning the system.
Why the market moved so fast
Third-party ownership went from a minority of residential sales to the majority within a year of the change. In some states the swing was violent: Michigan went from almost no third-party ownership to roughly two-fifths of sales in a single year.
The contraction that came with it is real. Installation volumes are down sharply against 2025, and several large installers have withdrawn from states, cut staff, or filed for bankruptcy protection. If you are getting quotes, check that the company quoting you will still exist to honour a 25-year warranty.
What this means for your decision
- Buying is now a straight cash-on-cash bet against your utility rate. No credit, no offset — just system cost against avoided bills.
- Leases and PPAs got relatively more attractive, not because they improved, but because the alternative lost 30%.
- Your state programme now decides the answer in many markets. A state credit or performance payment that used to be a bonus can now be the whole case.
- The 2027 deadline is a real constraint, and it is a placed-in-service date, not a signature date.
Common questions
Can I still get the 30% federal solar tax credit in 2026?
Not by buying the system yourself. IRC §25D expired for systems placed in service after December 31, 2025. A 2026 cash or loan purchase receives no federal credit. A lease or PPA can still reach the credit indirectly, because the company that owns the system claims the commercial §48E credit.
What if I signed a contract in 2025 but the system was installed in 2026?
§25D turns on when the system is placed in service, not when you signed. A system energised in 2026 does not qualify, regardless of contract date. Confirm your own case with a tax professional.
How long does the lease and PPA route last?
The system must be placed in service by December 31, 2027. The begin-construction safe harbour for these projects closed on July 4, 2026.
Do state incentives still exist?
Yes, and they now decide the outcome in many places. State credits, rebates and performance payments were secondary while the federal credit existed; with it gone for buyers, the state programme is often the difference between a system that pays back and one that does not.
Run your own numbers
The comparison calculator applies these rules directly: zero federal credit on a purchase, indirect §48E value on a lease or PPA, and every assumption visible in the output.
This page explains public tax rules. It is not tax advice, and your circumstances may differ — check with a qualified tax professional before relying on any of it.