Short answer: for most homeowners buying solar in 2026, there is no federal tax credit to chase. The 30% Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025. The IRS states this on its Residential Clean Energy Credit page. A purchase in 2026, with cash or a loan, earns $0 from that credit.
That does not make solar a bad idea. It changes where the savings come from. A federal credit can still reach you through a lease or power purchase agreement (PPA), and state, utility, and net-metering programs can still change your numbers a lot. This guide walks you through a quick check in five steps, with a checklist you can use before you sign anything.
Last updated: October 2026. Tax rules change, so verify the details with the IRS or a qualified tax professional before you decide.
Key takeaways
- Installed and operating by December 31, 2025? You can still claim the 30% credit on your 2025 federal return using IRS Form 5695. Unused credit from an eligible project can generally be carried forward.
- Buying in 2026 (cash or loan)? No federal residential credit. Batteries bought in 2026 are in the same position, because they were covered by the same credit.
- Leasing or using a PPA? The company that owns the system may claim the business credit under Section 48E. Whether that lowers your price is up to the provider's pricing.
- Timing matters: a leased or PPA solar project generally has to be placed in service by December 31, 2027, unless the owner began construction by July 4, 2026.
- Local incentives can matter more than ever: state credits, rebates, utility programs, and net metering vary widely by location.
What you need before you start
- Your last 12 months of electricity bills (or an annual usage total).
- Your installation date, if you already have a system.
- Your state and electric utility names, so you can look up local programs.
- About 30 minutes. That is enough to sort out which situation you are in.
Step 1: Find your bucket
What to do: Match your situation to one row of the table below.
| Your situation | Federal credit status | What to do |
|---|---|---|
| Bought and installed, operating by Dec 31, 2025 | 30% credit still claimable on your 2025 return | File Form 5695 (or check with your tax preparer). Keep invoices and proof of the date the system was operating. |
| Buying in 2026 with cash or a loan | No homeowner credit | Judge the project on its own economics plus state and utility incentives. |
| Leasing or signing a PPA | The system owner may claim the business credit (Section 48E) | Ask how the provider's credit shows up in your monthly payment or per-kWh rate. |
| Not sure yet | Depends on ownership structure | Continue to Step 2 and collect local incentives first. |
Why it matters: People still search for "the 30% solar credit" and assume it applies to any project. It applies to systems that were operating by the end of 2025, and the ownership structure decides who benefits after that.
Common mistake: Assuming a signed contract in 2025 means you qualify. The homeowner credit looks at when the expenditure was made and the system was in service. Ask your installer for the written installation and operation dates, and confirm the treatment with a tax professional.
You're done when: you can say in one sentence which row describes you.
Step 2: List your local incentives
What to do: Write down every program you can find for your state, city, and electric utility. Look for:
- State income-tax credits or deductions for solar.
- Utility or state rebates, and battery incentives where offered.
- Property-tax or sales-tax exemptions for solar equipment.
- Net metering or net billing rules, which decide how much your utility pays you for extra power you send to the grid.
- Renewable energy certificate programs (such as SRECs) in places that have them.
Why it matters: With the federal homeowner credit gone, this list often decides whether the numbers work. Net metering rules in particular can change the value of each kilowatt-hour you export.
Pro tip: Use official sources: your state energy office, your utility's website, and the IRS for federal rules. Programs open, close, and change terms, so note the date you checked each one.
You're done when: you have a short written list with each program's name, what it offers, and any deadline or cap.
Step 3: Compare ownership options
What to do: Look at the four common ways to get solar and note how each treats the federal credit.
- Cash purchase: You own the system and keep all savings. No federal residential credit for 2026 installs.
- Solar loan: You own the system, and interest costs reduce your net savings. Same federal credit status as a cash purchase.
- Lease: The provider owns the system and you pay a fixed monthly amount. The provider may claim the business credit and may or may not pass value to you.
- PPA: The provider owns the system and you pay per kilowatt-hour of solar power used. Same credit logic as a lease.
Why it matters: A lease or PPA is the one path where a 30% federal credit still exists in the background. That does not automatically make it the cheaper path. Ownership gives you control and long-term savings potential, while third-party ownership can reduce upfront cost and shift maintenance responsibilities. Contract terms, escalators, and transfer rules vary by provider.
Illustrative example (not real pricing): Imagine a hypothetical $20,000 system. In 2025, a qualifying owner could have subtracted 30%, or $6,000, from their federal tax bill. The same purchase in 2026 gets $0 from that credit, so the owner has to make the case on bill savings and local incentives alone. A provider offering a lease on a similar system may price in some of its own credit, and the only way to know is to compare written quotes.
Common mistake: Treating a lease as "free solar." You are still paying for the system through monthly payments, and many contracts include annual increases. Read the escalator, the term length, and what happens if you sell your home.
You're done when: you can name which of the four options you want quotes for.
Step 4: Get quotes and ask the right questions
What to do: Request at least two written quotes using the same system size so the comparison is fair. For every quote, ask:
- What is the total price, or the monthly payment or per-kWh rate, and does it increase each year?
- Who owns the system, and who handles repairs, monitoring, and removal if needed?
- For leases and PPAs: does the provider expect to claim the federal business credit, and how does that affect my price?
- What is the expected date the system will be in service? Permitting and utility approval can take weeks to months depending on where you live.
- What happens to the contract if I sell the house?
- How does my utility's net metering or billing rule affect the savings estimate?
Why it matters: A provider's federal credit depends on timing. Under the 2025 law, solar projects that did not begin construction by July 4, 2026 generally must be placed in service by December 31, 2027 to remain eligible. A delayed installation could affect a provider's pricing assumptions, so ask how they handle delays.
Pro tip: Ask for savings estimates in writing, with the assumptions listed (electricity rate growth, panel degradation, export rate). If the assumptions are missing, the estimate is hard to trust.
You're done when: you hold two or more written quotes that answer the questions above.
Try it: quote-readiness checklist
This checklist helps you see whether you are ready to compare solar quotes. It is educational only: it does not decide eligibility or give tax advice. Tick each item you have done.
0 of 6 ready
Educational checklist only. It is not tax, legal, or financial advice.
Troubleshooting
My installer says I can still get the 30% credit for a 2026 purchase.
Ask for the specific tax provision in writing and take it to a tax professional. The IRS says the Section 25D credit is not allowed for expenditures made after December 31, 2025. A claim that sounds like a homeowner credit for a new purchase deserves a second look. It may actually describe a lease or PPA where the provider claims a business credit.
My system went live in early 2026, but I paid a deposit in 2025.
This is a gray area where the details matter, including when the system was installed and operating. Ask your installer for dated records, and have a tax professional review your situation before you file.
I had a 2025 system but my tax bill was too small to use the whole credit.
Unused credit from an eligible project can generally be carried forward. Confirm how that works on your return with a tax preparer or the Form 5695 instructions.
The lease or PPA price barely changes compared with last year.
That can happen. Providers decide how much of their credit to pass through, and rate changes may reflect other costs. Compare against your current electric rate and at least one other written quote.
My state has no solar incentives.
Then your savings rest mostly on electricity prices, usage, and your utility's export rules. A smaller system sized closer to your usage can reduce risk if export rates are low.
The numbers still do not work.
It is fine to wait. Solar equipment costs, incentives, and utility rates change, and you can revisit the decision with fresh quotes later. Just keep in mind that the lease and PPA path has a hard federal timing window for projects that did not begin construction by July 4, 2026.
Your next step
Collect your last 12 months of electricity bills and request two written quotes for the same system size, one for ownership and one for a lease or PPA. Then run both through the checklist above. That single comparison will tell you more than any headline about the tax credit.
This article is general information, not tax, legal, or financial advice. Whether and how any credit applies depends on your individual situation, so confirm details with the IRS or a qualified tax professional.