The Section 25D Repeal: What Homeowners Actually Lost (and What's Left)
Executive Summary
"The 30% federal credit for owner-financed home solar and battery systems ended December 31, 2025 with no phase-down. Here is exactly what changed, what might still be available through third-party financing, and what to check locally."
For nearly two decades, the federal Residential Clean Energy Credit under Section 25D gave homeowners a straightforward deal: buy or finance a solar or battery system, claim 30% of the cost back on taxes. That deal ended for good on December 31, 2025. The One Big Beautiful Bill Act, signed in July 2025, repealed Section 25D outright rather than phasing it down on the schedule originally set years earlier — and the change is now the single biggest shift in the numbers behind any solar or battery purchase.
What's Actually Gone
For any home solar or battery system placed in service on or after January 1, 2026, there is no federal tax credit at all for a homeowner who buys the system outright or finances it with a standard loan. This isn't a reduced rate — it's a full repeal, and it applies based on when the system was actually operational, not when it was ordered or a contract was signed. A system installed and running by December 31, 2025 still qualifies under the old 30% rule; a system contracted in 2025 but not fully installed and operational until 2026 does not. That distinction carries real financial weight, and it's worth confirming directly with an installer rather than assuming.
What Might Still Apply: Third-Party Ownership
The repeal only touched the residential, homeowner-owned side of the code. A separate commercial credit under Section 48E, aimed at businesses and third-party system owners, is still standing — with new sourcing and construction-timing rules attached, but standing. In practice, that means a homeowner who leases a system or signs a power purchase agreement (PPA), rather than buying it outright, has the system owned by a third-party company that can still claim the 48E credit on its own return. Some of that value may get passed through as a lower monthly lease or PPA payment — but "may" is doing real work in that sentence. How much value actually reaches the homeowner depends entirely on how a given company structures its pricing, and it is not automatically equivalent to receiving the full 30% credit directly. Ask any leasing or PPA company how the 48E credit factors into the quoted price, in writing, before signing anything.
The Line That Matters: Placed-in-Service Date
Before Dec 31, 2025: System installed and operational — the old 30% credit still applies for owner-financed systems, even if the tax return isn't filed until 2026.
Jan 1, 2026 onward: No Section 25D credit for owner-financed systems, regardless of when the contract was signed. Third-party-owned (lease/PPA) systems may still carry some 48E value through to pricing — confirm directly, not by assumption.
What to Check Locally
The federal repeal doesn't touch state and utility programs, many of which still exist independently: state tax credits or rebates, sales-tax or property-tax exemptions for solar installations, and utility-specific rebate or net-metering programs. These vary enormously by state and even by utility territory, and they change often enough that whatever applied to a neighbor's install a few years ago isn't a safe assumption today. A state energy office or a utility's own program page is a more reliable starting point than a solar salesperson's pitch.
None of this necessarily makes 2026 a bad year to go solar — it means the math changed, and the credit that used to do a lot of the heavy lifting for homeowner-owned systems no longer exists. Running the numbers with today's real inputs matters more than it used to.
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