The federal tax credit
is gone. Solar still
makes sense. Here's why.
The 30% federal residential solar tax credit expired December 31, 2025. But lease and PPA programs still access the commercial ITC - and pass those savings to you. Sol Country explains every option.
Before you sign - 10 questions to ask your installer →
The credit expired.
The savings didn't.
The Section 25D federal residential solar tax credit - which gave homeowners 30% off their solar installation - expired on December 31, 2025. This affects homeowners who purchase their own system with cash or a loan.
It does not affect lease programs (Palmetto LightReach), PPAs (Power Purchase Agreements), community solar subscriptions, or balcony solar kits. Lease and PPA providers still own the systems and claim the commercial ITC - passing those savings to you through lower monthly payments.
- Cash purchase of rooftop solar
- Solar loan (homeowner-owned)
- DIY solar installations
- Lease programs (LightReach)
- Power Purchase Agreements
- Community solar subscriptions
- Balcony solar kits
- Battery storage (separate credit)
- Heat pump HEAR rebates
Many states still offer solar tax credits independent of the federal program. Colorado, Maryland, and Massachusetts all have active state incentives. Sol Country checks your state's credits automatically in Find My Power.
What happened to the 30% solar tax credit - and what it means for how you finance
The Section 25D Residential Clean Energy Credit - the 30% federal tax credit that made buying solar attractive for over a decade - was permanently terminated by the One Big Beautiful Bill Act, signed July 4, 2025. It does not apply to any solar system placed in service after December 31, 2025.
If your installer, a solar sales representative, or any website tells you that you can claim a 30% federal tax credit on a solar system you install in 2026, that is incorrect. Verify with a licensed tax professional before making any financial decision based on federal solar credits.
- Section 48E commercial investment tax credit: still active through 2032 for third-party owned systems (leases and PPAs). The benefit flows to the leasing company, not you directly - but can result in lower monthly lease payments.
- State tax credits: Colorado, and some other states, have their own state-level solar tax credits that are separate from the federal credit and were not affected by the OBBBA. Check your state's specific program.
Approximately 25-30% of US census tracts are designated as "Energy Communities" by the IRS — former coal, oil, gas, or industrial areas. In these areas the commercial investment tax credit that leasing companies use increases from 30% to 40%.
If you're considering a solar lease or PPA and you live in a former coal or industrial community, ask your installer specifically about the Energy Community bonus — leasing companies in these areas receive a higher credit which often translates to better rates for you.
Check whether your address qualifies at energycommunities.gov.
Solar lease and PPA companies claiming the 48E commercial investment tax credit must comply with new domestic manufacturing requirements that took effect January 1, 2026. The federal government has not yet issued final guidance on exactly which components and percentages are required to be domestic vs foreign-manufactured.
Before signing any solar lease or PPA, ask your leasing company:
“How are you handling the domestic content requirement for the 48E credit? Does your equipment currently qualify?”
If they cannot answer clearly, that is a red flag. The answer affects whether they actually receive the tax credit — and whether their promised lease rate is financially sustainable.
Source: EnergySage, January 2026; Insurance Journal, January 2026.
Highest long-term return. No monthly payment. No interest cost. No federal tax credit in 2026. Best for homeowners with the cash available who plan to stay in their home long-term.
Monthly payment but you own the system. Loan interest offsets some savings. No federal tax credit in 2026. Best for homeowners who want ownership without tying up cash.
Fixed monthly payment, leasing company owns the system. May benefit from leasing company's 48E tax credit passed through as lower payments. No ownership stake. Best for homeowners who want predictable low payments and are not concerned with ownership.
Pay per kWh generated. Variable monthly cost. Same 48E advantage as lease. Best for homeowners where savings certainty matters less than starting costs.
Many solar installers and websites still describe the 30% federal tax credit as if it is available in 2026. It is not - it was terminated effective December 31, 2025. If you received a solar quote that includes the 30% federal credit as part of the payback calculation for a 2026 installation, ask the installer to provide the quote without that credit. Sol Country is not a tax advisor - verify any tax credit claim with a licensed CPA before signing a contract.
Loan. Lease. PPA.
Which is right for you?
Three ways to go solar in 2026. Each has different upfront costs, long-term value, and flexibility. Sol Country breaks down the honest math on all three.
| Solar Loan | Cash Purchase | Lease (LightReach) | PPA | |
|---|---|---|---|---|
| Upfront cost | $0 down | $15,000-25,000 | $0 down | $0 down |
| Federal tax credit | No (expired 12/31/25) | No (expired 12/31/25) | Provider claims - passed to you | Provider claims - passed to you |
| Monthly payment | $80-150/mo typical | None | ~$89-130/mo (LightReach) | Per kWh produced |
| Long-term savings | Highest | Highest | Moderate | Moderate |
| System ownership | You own it | You own it | Provider owns | Provider owns |
| Flexibility | Transfer with house | Transfer with house | Transfer or buyout | Transfer or buyout |
| Best for | Homeowners building equity | Best long-term ROI buyers | Want $0 down + no risk | Pay per production model |
The best solar financing
options in 2026.
Does solar still make sense
without the tax credit?
Short answer: yes - especially in high-rate states. Use this calculator to see your break-even point with and without the credit.
Difference: 3.9 more years to payback without the credit. A $0-down lease avoids this entirely - no upfront cost, provider takes the credit.
Loan vs lease vs PPA.
And what the credit change means.
Honest answers to the questions homeowners are asking Sol Country most in 2026.
Get your financing
options in 30 seconds.
Find My Power checks your address, your utility rate, and your state's available incentives - then shows you which financing option makes the most sense for your situation.