The Federal Solar Tax Credit Is Gone: What 2026 Buyers Need to Know

The IRS counts a solar expenditure as made when installation is completed. The credit will not be allowed for any expenditures made after December 31, 2025^[1], so a system paid for in 2025 but finished in 2026 does not qualify. If a salesperson tells you otherwise, ask them to show you the IRS guidance.

When a company owns the panels on your roof, it may still claim a business credit, the Business credit for leased and PPA systems (48E)^[2]: Claimed by the system owner, not the homeowner; solar must begin construction by July 4, 2026 or be in service by December 31, 2027^[2]. That can make leases and power purchase agreements look relatively cheaper this year. Our lease vs. buy guide explains how to compare them fairly.

Losing the credit lengthens payback for buyers, but solar can still pay off where electricity is expensive or exports are credited well. State incentives now matter more: Arizona's 25% of the cost of the device, up to $1,000 (lifetime cap per residence); unused credit carries forward up to 5 years^[3], and New York's 25% of qualified solar equipment expenditures, up to $5,000; non-refundable; excess carries forward 5 years^[4]. Utilities add rebates in some places, such as Austin Energy's $4,000 flat rebate per qualifying residential solar system^[5]. Your state's incentive page lists what still applies.

• Loans with a large lump-sum payment due after a set number of months that assume a tax refund you will not get.
• Quotes that show a "net price after tax credit".
• "Last chance" deadlines tied to the federal credit, which has already ended for buyers.

Run your own numbers in the calculator, which no longer applies a federal credit for purchased systems.