Solar Tax Credit 2026: What 25D's Death Means for Your Solar Decision

25D died December 31, 2025. No phase-down. No grandfathering. Cash and loan buyers get zero federal credit on solar installed in 2026. Here is what is still alive — and what installers are quietly hoping you do not check.

If you have read any solar installer's website in 2026, you have probably seen the phrase "take advantage of the federal solar tax credit." Most are still using 2024 marketing copy. The credit they are referring to — Section 25D, the 30% residential ITC — terminated on December 31, 2025. There is no replacement for cash and loan buyers. None.

What 25D was, and what happened to it

Section 25D of the Internal Revenue Code provided a 30% nonrefundable tax credit against the cost of a qualified residential solar electric system. The credit applied to systems "placed in service" in tax year 2024 or 2025. For systems placed in service in 2026 or later, 25D returns to zero. No phase-down. No transition.

The One Big Beautiful Bill (OBBB), signed in 2025, did not extend 25D. The political negotiation around OBBB resulted in 25D's expiration date being honored without renewal. This was widely under-reported in solar trade press through Q4 2025.

What is still alive: 48E for TPO/PPA

The 48E investment tax credit applies to commercial solar — including third-party-owned residential systems leased or sold via PPA. 48E pays 30% (plus bonus adders) to the OWNER of the system. In a TPO/PPA, the owner is the installer or financing partner.

The 48E credit can pass through to the homeowner as a lower lease rate or PPA price. It does not arrive as a tax refund — it arrives as a discount on the monthly payment.

Two conditions apply to 48E in 2026:

  1. Installer must "begin construction" before July 4, 2026 (regulatory definition; safe-harboring physical work counts)
  2. Installer must certify Foreign Entity of Concern (FEOC) compliance — equipment manufactured by certain non-US/non-allied entities is disqualifying

If either condition is missing, 48E disappears. The PPA rate the installer quoted assuming 48E will not pencil if they cannot actually claim it. Always ask for a written 48E compliance attestation before signing a TPO/PPA in 2026.

State-level credits and incentives still alive

Federal is the big number, but several states still pay meaningful incentives in 2026:

  • New York: 25% personal income tax credit, capped at $5,000
  • Massachusetts: SMART program ($5–10k production-based, 10 years)
  • New Jersey: SuSI program ($85–90/MWh for 15 years)
  • Illinois: ABP / SRECs ($4–8k upfront present-value lump)
  • California: Self-Generation Incentive Program (SGIP) for battery storage; no current incentive for solar-only
  • Texas: Some municipal utility rebates (Austin Energy, CPS); no state-level
  • Florida: Sales-tax exemption + property-tax exclusion (no direct credit)

What this means for your 2026 decision

If you are paying cash or financing with a solar loan: you get zero federal credit. Run your payback math without it. If it still works, fine. If it does not, consider TPO/PPA.

If you are considering TPO/PPA: verify 48E in writing. Construction-start date + FEOC compliance attestation are non-negotiable. Without them, your "lower lease rate" is built on a federal credit the installer cannot claim.

Honest broker take: Most installer websites in 2026 are running stale marketing copy that implies 25D is still alive. It is not. Get a contract reviewed by someone independent before signing. reviewingsolar.com does this for free.