The Residential Clean Energy Credit (§25D) was a 30% federal tax credit for homeowners who installed solar. As of January 2026, it no longer exists for new systems.

What changed

On July 4, 2025, the One Big Beautiful Bill Act (Public Law 119-21) was signed into law. It repealed §25D for systems installed after December 31, 2025. There was no phase-down — the credit went from 30% straight to 0% in one step.

If you buy a solar system in 2026 with cash or a loan, your federal tax credit is $0.

VERIFIED 2026-06 · irs.gov

The 2025 exception

If your system was installed and "placed in service" before December 31, 2025, you can still claim the 30% credit on your 2025 tax return. The mechanism is IRS Form 5695, filed with the return due around April 15, 2026.

If your install slipped into 2026, the §25D credit doesn't carry over.

What about leasing or a PPA?

This is where most solar-seller websites are still misleading buyers. You may see claims like "you still get the 30% credit through leasing!" That is not what's happening.

Under a lease or a power-purchase agreement (PPA), the solar system on your roof is not yours — a third-party company owns it. That company can claim a commercial federal tax credit under §48E (30%) for placing the system in service, and can pass some of that value back to you through a lower monthly payment.

But you, the homeowner, do not get a tax credit. You get a lease contract. And because you don't own the equipment, you lose part of the long-term ownership benefit of having solar on your home.

Telling homeowners "you still get 30%" obscures that trade-off.

We do not sell leases. We do not earn anything when you sign a PPA. We say this plainly because most calculators out there can't.

The §48E credit for third-party-owned systems has its own deadline: construction must begin by July 4, 2026 to qualify under the safe-harbor rule.

VERIFIED 2026-06 · irs.gov

Batteries (storage)

The same logic applies to home battery storage. Bought outright in 2026, on cash or a loan, the federal credit is $0 — §25D was repealed for storage too. Through a lease or PPA, the §48E credit goes to the system owner, not to you.

What to do now

The federal tax credit is gone for new 2026 systems. If you're considering solar this year, run a payback estimate using current numbers — not the marketing-deck version that assumes the 30% is still there.

See how the repeal changes Arizona payback →

This is not tax advice — consult a qualified professional for your specific situation.