Solar Tax Credit 2026: What Changed and What Remains

If you are researching the solar tax credit in 2026, here is the short answer: the federal residential solar tax credit — IRS Section 25D, the Residential Clean Energy Credit — expired on December 31, 2025. Federal budget legislation passed in 2025 terminated the credit early for homeowner-owned systems, so solar panels installed and placed in service in 2026 no longer qualify for the 30% federal credit. Systems installed in 2025 or earlier can still be claimed on your taxes, and meaningful state, local, and utility incentives remain — especially in Florida.

This guide explains exactly what changed, who can still claim the old credit, what incentives are left in 2026, and how to decide if solar still pencils out. For a broader view of every program, see our solar incentives hub.

Is the Solar Tax Credit Still Available in 2026?

No — not for homeowner-purchased residential systems. Here is the current landscape:

• Residential credit (Section 25D): expired. The 30% credit applied only to systems placed in service on or before December 31, 2025. New residential installations in 2026 receive no federal tax credit.
• Commercial credits (Section 48E): separate schedule. Business-owned systems — including the third-party owners behind solar leases and PPAs — follow a different, later phase-out timeline. This is why some lease and PPA providers may still advertise federally-supported savings in 2026.
• State, local, and utility programs: unaffected. The federal change did not touch Florida's property tax exemption, sales tax exemption, or net metering rules.

The phrase "solar tax credit going away" surged in search volume throughout 2025 for good reason — this was the largest change to residential solar economics since the credit was created in 2005.

What Happened to the Federal Solar Tax Credit

The federal solar tax credit, also called the solar investment tax credit (ITC), has a long history:

The Inflation Reduction Act had locked in a 30% credit through 2032. The 2025 legislation overrode that schedule and ended the homeowner credit roughly seven years early. According to the Solar Energy Industries Association (SEIA), more than 5 million American homes have gone solar — and the ITC was a primary driver of that growth, making its early expiration a genuine inflection point for the industry.

Systems Installed in 2025 or Earlier: You Can Still Claim It

If your system was installed and placed in service by December 31, 2025, you keep the full 30% credit. Key points from IRS guidance:

• Placed in service means the system was installed and operational — permission to operate from your utility is the cleanest evidence. A signed contract or deposit alone does not qualify.
• Claim the credit with IRS Form 5695 (Residential Energy Credits) on the return for the year the system was placed in service.
• The credit is nonrefundable — it reduces your tax bill but won't generate a refund beyond what you owe. Unused amounts carry forward to future tax years, so you don't lose the credit if your liability is small.
• Eligible costs included panels, inverters, racking, labor, permitting, and battery storage with at least 3 kWh of capacity.

If you went solar in late 2025 and haven't filed yet, don't leave money on the table — a typical 2025 system in the $25,000–$30,000 range generated a $7,500–$9,000 credit. Consult a tax professional for your specific situation.

Solar Incentives That Remain in Florida (2026)

The federal credit is gone, but Florida solar incentives still meaningfully cut the cost of going solar:

Property tax exemption

Florida law exempts 100% of the home value added by a solar energy system from property taxes. On a typical installation, that saves homeowners hundreds of dollars per year, every year, for as long as they own the home.

Sales tax exemption

Solar energy systems are exempt from Florida's 6% state sales tax. On a $28,000 system, that is roughly $1,680 saved at the point of purchase — and unlike the old credit, you don't wait for tax season to get it.

Net metering

Florida's major investor-owned utilities — FPL, Duke Energy Florida, and TECO — offer net metering, crediting you for excess power your system sends to the grid. Credits roll over month to month and are typically trued-up annually. Net metering remains the single biggest driver of solar savings in Florida now that the federal credit is gone.

Local and utility rebates

Some Florida municipalities and utilities run their own rebate or efficiency programs, and these change frequently. The DSIRE database (Database of State Incentives for Renewables & Efficiency, operated by NC State University) is the authoritative source — search it by ZIP code before you sign anything.

What the Credit's Expiration Means for Solar Costs and ROI

Losing a 30% credit undeniably changes the math — but not as catastrophically as headlines suggest:

• Equipment prices keep falling. National solar pricing has dropped substantially over the past decade, softening the blow of losing the credit. Our guide to how much solar panels cost breaks down current per-watt pricing.
• Payback periods stretch, but stay reasonable. In sunny Florida, a well-priced system with net metering still typically pays for itself within its warranty period — it just takes a few years longer than it did with the credit.
• Financing matters more now. Without a 30% credit to recoup at tax time, the difference between cash, loan, and lease economics is larger. Run your own numbers with our solar ROI calculator before committing.

What Homeowners Should Do Now

1. Check DSIRE for your ZIP code. Incentive availability is hyper-local, and DSIRE is the most complete, current database of state, local, and utility programs.
2. Ask your utility about net metering terms and any active rebate programs before sizing your system.
3. Get multiple quotes. Installer pricing varies widely, and competitive bids matter more than ever without a federal credit to mask inflated pricing. Compare vetted installers in our solar installer directory.
4. Model the payback honestly. Use real utility rates and realistic production estimates — a good installer will show their math.
5. If you installed in 2025, file IRS Form 5695. The credit for last year's systems is still yours to claim.

Frequently Asked Questions

Is the federal solar tax credit still available in 2026?

No. The residential clean energy credit (IRS Section 25D) expired for systems placed in service after December 31, 2025, under 2025 budget legislation. Homeowners installing solar in 2026 cannot claim the 30% federal credit, though state, local, and utility incentives remain.

Did systems installed in 2025 still get the 30% credit?

Yes. Systems installed and placed in service on or before December 31, 2025 qualified for the full 30% credit. Homeowners claim it on their 2025 federal return using IRS Form 5695, and any unused portion can carry forward to future tax years.

What solar incentives remain in Florida?

Florida still offers a 100% property tax exemption on the home value added by solar, a 6% sales tax exemption on solar equipment, and net metering through major utilities like FPL, Duke Energy Florida, and TECO. Some cities and utilities also offer local rebates — check DSIRE for your address.

Was there an income limit for the solar tax credit?

No. The Section 25D credit had no income cap. The only requirement was enough federal tax liability to use the credit, since it was nonrefundable — but unused amounts could be carried forward to later years.

Do leased solar systems qualify for anything?

With a lease or PPA, the third-party system owner — not the homeowner — claims any available credit. Commercial credits under Section 48E follow a separate phase-out schedule, so some lease providers may still pass credit savings through as lower monthly pricing. Ask providers directly how their 2026 pricing reflects this.