If you’ve been putting off a solar quote because you figured you’d eventually get 30% of it back at tax time, I’ve got some news that’s probably going to change your math: that credit is gone. Not reduced, not phased out slowly the way these things usually go. Gone, for anyone buying or financing a system in 2026.
Short version: The 30% federal residential solar tax credit expired December 31, 2025, with no phase-down period, so homeowners who buy or finance a system in 2026 get $0 back from the federal government. Solar can still make financial sense, but the payback period is now longer, typically 8 to 14 years depending on your state’s electricity rates, and the decision comes down to how long you’re staying and what you’re currently paying the power company, not resale value.
What actually changed
For nearly two decades, the federal government let homeowners claim 30% of a solar system’s cost as a direct credit against their tax bill. That credit, officially the Residential Clean Energy Credit under Section 25D of the tax code, was locked in through 2032 under the Inflation Reduction Act. Then the One Big Beautiful Bill Act, signed into law in July 2025, ended it years early, with a hard cutoff of December 31, 2025, and no transition period for anyone mid-decision.
If you install and paid for a system by the end of 2025, you can still claim the credit on that year’s return. If your system goes into service in 2026 or later and you own it outright, whether you paid cash or took out a solar loan, the federal credit is zero. That’s a real number, not a technicality: a $25,000 system that would have netted you roughly $7,500 back last year now costs the full $25,000 out of pocket.
The one path that still touches the credit
There’s a narrower option still standing. If you go solar through a lease or a power purchase agreement (PPA) instead of buying, a third-party company owns the system, not you, and that company can still claim a version of the credit through a separate part of the tax code (Section 48E, the commercial credit) through the end of 2027. You don’t get a check from the IRS in this setup, but the leasing company sometimes passes some of that value through as a lower monthly rate.
Worth being clear-eyed about the tradeoff, though. A leased system isn’t an asset you own, it’s a monthly bill you’re swapping for your old electric bill. If you’re thinking about this from a home equity angle, which is the whole reason we’re covering it here, a lease doesn’t add anything to your side of the ledger the way an owned system does. It can also complicate selling the house later, since a buyer either has to qualify to take over the lease or you have to pay it off before closing.
What this costs you in real terms
A typical residential system in 2026 runs somewhere around $20,000 to $28,000 before any incentives, depending on system size and your local installer pricing. Without the federal credit, most homeowners are looking at a payback period, the number of years until your electricity savings equal what you spent, somewhere in the 8 to 14 year range nationally. States with high electricity rates and strong state-level programs (Massachusetts, New Jersey, New York, Connecticut) tend to land on the shorter end, closer to 7 to 9 years. States with cheaper electricity and thinner state incentives (Texas, Maine, New Hampshire) run longer, sometimes past 13 years.
That’s roughly 2 to 5 years longer than the same system would have paid back with the old 30% credit in place. It’s a real shift, not a small one, and it’s worth going in with the current number instead of a number a salesperson or a website hasn’t updated yet.
A separate program that sometimes gets confused with this one
You may come across HEEHRA, sometimes called HEAR, in your research. It’s a real, still-active federal rebate program, but it’s a different thing entirely: it’s income-gated (generally households under 150% of area median income), it’s administered state by state so availability varies a lot, and it covers electrification upgrades like heat pumps, water heaters, and electrical panel upgrades, not solar panels themselves. If your solar install requires a panel upgrade and you qualify by income, that piece might be covered. The panels themselves won’t be.
Does solar still increase your home’s resale value
This is where I’d push back on the assumption a lot of people carry into this decision. Solar got tracked for the first time in the industry’s annual Cost vs. Value Report in 2025, and it posted one of the lowest resale-value returns of any project in the whole report. That sounds like bad news, but it’s measuring the wrong thing for most solar owners. That report measures how much of your project cost you get back the moment you sell. Solar’s real payoff isn’t a resale bump, it’s the decades of electricity bills you don’t pay while you’re living there.
If you’re staying in the house long enough to clear your payback period, the math works in your favor regardless of what a future buyer would pay extra for the panels. If you’re planning to sell in the next few years, treat solar as a utility-savings decision for your remaining time in the house, not an equity play, because the resale premium isn’t reliable enough to count on.
So is it still worth it
For most homeowners, yes, just on a longer timeline than it used to be. The math comes down to three things: what you’re currently paying for electricity, what your state and utility offer beyond the now-gone federal credit, and how many years you’re planning to stay. A system that pays for itself in year 10 and then produces close to free power for another 15 years is still a solid outcome for someone settled in for the long haul. That same system is a much harder sell for someone who might move in three years.
Plug your own numbers into the solar payback calculator to see exactly where your system lands, instead of estimating from these national ranges.
Frequently Asked Questions
As of now, it’s gone with no scheduled return. There’s no pending legislation to reinstate it. Waiting on the chance it comes back means paying your current electric bill in the meantime, so it’s worth deciding based on today’s rules rather than a possible future one.
Sometimes, indirectly. The leasing company can still claim a commercial version of the credit and may pass some savings through as a lower monthly rate. But you won’t own the system, so it doesn’t build equity the way a purchased system does, and it can complicate selling your home later.
HEEHRA (also called HEAR) is a separate, income-gated federal rebate program for electrification upgrades like heat pumps, water heaters, and electrical panel upgrades. It does not cover solar panels themselves, and availability varies significantly by state, some have run out of funding, others haven’t launched yet.
Industry resale-value data shows a fairly small bump compared to project cost. The real financial case for solar in 2026 is the electricity you stop paying for over the years you own the home, not a guaranteed resale premium.
Three things: your current electricity rate, what state or utility incentives you still qualify for, and how many years you plan to stay in the home. Run those numbers against the system cost before deciding, rather than relying on a quote’s assumptions.
The federal incentive is worse, yes, payback periods are running 2 to 5 years longer than when the 30% credit was in place. Equipment prices have also dropped significantly over the past decade, which offsets some of that loss, but doesn’t erase it.
Sources:
https://www.irs.gov/credits-deductions/residential-clean-energy-credit
https://www.energysage.com/solar/solar-tax-credit-explained/
https://zondahome.com/2025-cost-vs-value-report/