Short answer: Homeowners who buy a rooftop solar system no longer get the federal Residential Clean Energy Credit (Section 25D) if the installation is completed after December 31, 2025. The credit was 30% of qualifying costs before it ended.
Corrected November 6, 2026: an earlier version of this article described new Treasury guidance on the domestic-content bonus and said the residential credit was unchanged. We could not confirm that guidance in IRS or Treasury publications, and the residential credit statement was wrong. Both claims have been removed. See our corrections page.
The status in one table
| Item | Status | Source |
|---|---|---|
| Residential Clean Energy Credit (25D) | Not allowed for expenditures made after Dec. 31, 2025 | IRS FS-2025-05 (Aug. 21, 2025) |
| Rate before termination | 30% of qualifying costs | CRS Insight IN12611 (Sept. 25, 2025) |
| Unused credits from 2025 expenditures | Can still be carried forward | CRS Insight IN12611 |
| When an expenditure counts as “made” | When original installation is completed | IRS FS-2025-05, FAQ 7 |
What changed
Public Law 119-21 (signed July 4, 2025) ended the 25D credit for expenditures made after 2025. The IRS says an expenditure is treated as made when the original installation of the item is completed. If your installation is finished in 2026, the cost is treated as a 2026 expenditure, even if you signed a contract or paid in 2025.
What it means for a homeowner
- Installed and finished by Dec. 31, 2025: the credit applies to that year’s return, and any unused amount can be carried forward under the existing rules.
- Installation completed in 2026 or later: 25D is not available. Quotes that still assume a 30% federal credit need a written explanation of which rule the installer is relying on.
- Payback math changes. See solar payback without the federal tax credit.
What we could not confirm
- Whether Treasury has issued new guidance narrowing a domestic-content bonus credit. We did not find it in IRS or Treasury publications we could read.
- How the commercial-side credits (for example, Section 48E) apply to leased or third-party-owned residential systems after the 2025 law. The sources above do not cover it, so we do not state a rule here.
What to verify before you sign
- Ask the installer in writing which federal credit, if any, their price assumes, and under which section.
- If a lease or power purchase agreement is offered, ask the provider how any federal credit it claims affects your monthly price.
- Confirm state and utility incentives separately. They are unaffected by this change.
- Check your situation with a qualified tax professional. This is not tax advice.
