Policy and tariff

The federal solar tax credit ended

What the 2025 budget act did to Section 25D, the timing test it uses, and what survives. A reading of the statute, not tax advice.

Updated September 2026 · Data as of enacted public law text and the US Code read on 3 September 2026

Written by HyreSolar Research team Research and analysis

Audited by HyreSolar Research team Data audit and fact check

31 Dec 2025 the cutoff, on expenditures made PL 119-21 § 70506(a)

0 step-downs left to catch The 26% and 22% tiers were deleted

Survives the carryforward for earlier installations 25D(c) was not amended

The short answer

Section 25D, the 30% residential clean energy credit, was terminated for expenditures made after 31 December 2025. It did not phase down and it was not left to lapse.

The 2025 budget act struck the old end date out of the statute and replaced it, in the enacted words, with "with respect to any expenditures made after December 31, 2025". The same act deleted the scheduled step-downs to 26% and 22% entirely, so there is no taper to catch.

The detail that matters is the test: the statute says expenditures made, and elsewhere deems an expenditure made "when the original installation of the item is completed".

So the practical question is whether your installation was finished on or before 31 December 2025, not whether you paid a deposit in 2025 and not whether you switched the system on in 2026.

One thing did survive: if you qualified and could not use the whole credit, the carryforward provision was not amended.

Read this before anything else on this page

What follows is a description of statutory text, not tax advice. We are not accountants, we do not know your tax position, and whether you may claim anything depends on facts we have not seen.

If you installed a system around the end of 2025 and the answer matters to you, take this page to a tax professional rather than acting on it. The value here is in knowing precisely which question to ask them, because the question is narrower and more specific than the coverage we read suggests.

What the statute actually did

Section 25D of the Internal Revenue Code was the residential clean energy credit: 30% of qualifying expenditures for solar electric property, solar water heating, fuel cells, small wind, geothermal heat pumps and battery storage of at least 3 kWh, on a dwelling in the United States used as a residence by the taxpayer.

It was scheduled to run to the mid-2030s with step-downs along the way. The budget act enacted on 4 July 2025 removed that schedule, and the amendment is short enough to quote in full.

"Section 25D(h) is amended by striking 'to property placed in service after December 31, 2034' and inserting 'with respect to any expenditures made after December 31, 2025'."

A second subsection did the tidying: it deleted the paragraphs that would have reduced the credit to 26% in 2033 and 22% in 2034. There is no taper. The credit was 30% and then it was nothing.

This matters for how you read older material. An article written before July 2025 describing a credit that runs into the 2030s is not out of date by degree, it is describing a schedule that no longer exists in the statute.

Four terms that are doing real work here

Expenditure made: The statutory trigger. Section 25D provides that an expenditure is treated as made when the original installation of the item is completed, which is why the date on your invoice is not the date that matters.
Placed in service: A different concept, used in the old version of the provision and in the IRS page’s paraphrase. It can coincide with completion of installation and is not defined identically. Where they diverge, the statute’s words govern.
Non-refundable credit: A credit that reduces tax owed but does not produce a refund beyond it. This is why the carryforward exists and why so many households had unused credit in the first place.
Carryforward: The provision that carries an unused excess to the succeeding taxable year and adds it to that year’s credit. Untouched by the 2025 act, which amended only the rate schedule and the termination date.
Step-down: A scheduled reduction in a credit rate over time. The 26% and 22% tiers for 2033 and 2034 were deleted outright rather than accelerated, which is why there is nothing left to taper into.

The test is "expenditures made", and that is not the same as "placed in service"

The timing test decides individual cases, and it is the reason to read the statute rather than a summary of it.

The old text keyed to property "placed in service". The replacement text keys to "expenditures made". Those are different tests, and the statute defines the second one elsewhere: "an expenditure with respect to an item shall be treated as made when the original installation of the item is completed."

So the chain is: no credit for expenditures made after 31 December 2025, and an expenditure is made when installation is completed. The practical test is therefore whether the original installation was completed on or before 31 December 2025.

That formulation satisfies both readings and it is the only one this page uses. Two things it rules out, both of which circulate:

Paying in 2025 is not enough on its own. A deposit, a progress payment or even payment in full during 2025 does not make the expenditure "made" if the installation was not completed. The statute ties the timing to completion of the installation, not to when money moved.

And switching on in 2026 is not obviously fatal, nor obviously fine. Completion of installation and permission to operate are different events, sometimes months apart, and we are not going to tell you which side of the line a system installed in December 2025 and energized in February 2026 falls on.

That is exactly the question to put to a tax professional, and it is a real question rather than a technicality.

Two problems with the IRS page you will land on

We are flagging these because anyone checking our work will go to the IRS page, and it will not say quite what we have said.

First, its wording differs from the statute. The page describes the cutoff as property "placed in service after December 31, 2025". The enacted statute says "expenditures made after December 31, 2025".

The two can land in the same place, because the statute deems the expenditure made on completion of installation. They are not literally the same test, and where a case is close the statutory language is the one that governs.

Second, and more concretely, the page carries a stale sentence. As reviewed on 4 July 2026 it still said that you can claim the credit each year "until the credit begins to phase out in 2033". That describes law that was repealed. The act deleted the 2033 and 2034 step-downs outright a year earlier.

We are not making a point about the IRS. Agency pages carry a lot of text and updating all of it takes time. The point is practical: if you find a page saying the credit phases out in 2033, it is describing superseded law, whoever published it. A great deal of solar marketing still does.

What changed, and what did not

Element	Position now	Provision
The credit itself	Terminated for expenditures made after 31 December 2025	PL 119-21 § 70506(a) amending 25D(h)
The step-downs	Deleted. The 26% and 22% tiers no longer exist in the statute	PL 119-21 § 70506(b) amending 25D(g)
The rate, while it applied	30%	25D(g)(3), now a flat "30 percent"
Carryforward	Survives. Unused credit from a qualifying installation still carries to the succeeding taxable year	25D(c), not amended
What counted as an expenditure	Including labor properly allocable to onsite preparation, assembly or original installation, and piping or wiring to interconnect	25D(e)(1), unchanged
Solar shingles and solar-as-roof	Did not fail to qualify solely because the property was a structural component	25D(e)(2), unchanged
Business use	Where less than 80% of use was non-business, only the non-business portion counted	25D(e)(7), unchanged
Which home	A dwelling in the US used as a residence by the taxpayer, and it did not have to be the principal residence for solar	25D(d)(2), unchanged

Public Law 119-21 § 70506 read from the enrolled text, against 26 U.S.C. § 25D. Read 3 September 2026.

The carryforward row is the one worth acting on. The termination changed when you could generate a credit; it did not touch the provision that lets an unused credit roll forward, and the amending section touched only subsections (g) and (h).

The carryforward, the live question for earlier installations

For anyone who installed before the cutoff, the practical question may be less whether the credit existed than whether they could use all of it.

25D is a non-refundable credit, meaning it reduces tax owed and does not generate a refund beyond that. A household whose credit exceeded its liability could not take the excess in cash.

What the statute provides instead is that the excess "shall be carried to the succeeding taxable year and added to the credit allowable... for such succeeding taxable year".

That subsection was not amended. The act touched subsections (g) and (h) of section 25D and nothing else, which we verified by reading the enacted text rather than inferring it. So a homeowner sitting on unused credit from a qualifying installation is in the same position they were in before.

What we are not going to tell you is how many years that can roll, because the statute carries the excess to "the succeeding taxable year" one year at a time and the interaction with your other credits is a question about your return rather than about the statute.

Your accountant can answer it in minutes with your actual numbers.

What replaces it, and the asymmetry that follows

Nothing replaces 25D for a homeowner buying their own system. There is no successor residential credit in the act.

But there is an asymmetry worth understanding, because it changes what the market will offer you.

25D was a personal credit, claimed by the individual who made the expenditure on a home they use as a residence.

Under a lease or a power purchase agreement, the homeowner makes no qualifying expenditure at all: the third party owns the equipment.

That third party is a business, and businesses claim a different credit under a different section, which the same act treated on a different and later timetable.

The consequence is that as things stand, a homeowner-owned rooftop system attracts no federal credit while a third-party-owned system on the same roof can still be built with one behind it. That is not a loophole; it is two provisions with two schedules.

But it is likely to shape what you are offered, and it is the reason to expect more lease and PPA proposals than you would have seen in 2024.

We cover that credit, its own deadlines and a widely misreported detail about leasing, on a separate page.

What to do, depending on where you are

If your installation was completed in 2025 or earlier

You are on the right side of the statutory test as written. Gather the documentation showing when the original installation was completed, not just when you paid, because completion is what the statute keys to. Then talk to whoever prepares your return.

If it straddles the year end, get advice rather than a view

Installation completed in December and energized in February is a genuine question, not a formality. It turns on when the original installation was completed, which is a factual matter about your job. This is worth an hour of a tax professional’s time.

If you have unused credit from an earlier year, do not assume it lapsed

The carryforward provision was not amended. Whether you can use it this year is a question about your liability and your other credits, and it is a normal part of preparing a return.

If you are quoting a system now, delete the credit from the arithmetic

Any proposal that shows a 30% federal credit for a system installed today is modeling law that no longer exists. Ask for the numbers without it, and check whether the payback figure was calculated with it in.

Check what state or utility incentives you have

The federal position changed; state credits, rebates, property tax treatment and utility programs did not automatically change with it. Those are separate regimes with their own rules, and they are where the remaining incentive is.

Treat any page saying "phases out in 2033" as out of date

That schedule was repealed. It is a fast way to work out whether the source you are reading has been updated since July 2025, and a surprising amount of solar marketing has not.

Method and limitations

What was read

The enrolled text of the public law itself, from the Government Publishing Office, for the amending language quoted above. The text of section 25D from the United States Code, also from GPO, for the definitions of qualifying expenditure, the timing rule, the carryforward and the unchanged provisions.

We quote the statute rather than the agency summary throughout, because on this subject they differ and the statute governs.

The limit on our verification, stated plainly

We confirmed the termination from the enacted public law, and we confirmed that the IRS’s own page as reviewed in July 2026 still described the credit as ending after 31 December 2025.

What we could not do is enumerate every public law enacted since, to prove that no later act revived the credit. The congressional site refused every request from our environment.

The July 2026 agency page is strong corroboration that nothing did, and it is corroboration rather than proof. If you are relying on this, that is a five-minute check for a tax professional with access to a current code service.

What this page does not do

It does not tell you whether your specific installation qualifies. That turns on when the original installation was completed, on documentation, and on your tax position, none of which we know.

It gives no view on the December-completed, February-energized case, which is the hardest close question. We can tell you the statutory test is completion of the original installation. We cannot apply it to your job, and anyone who does so confidently without seeing your paperwork is guessing.

And it is not tax advice. We have said that twice deliberately.

Questions

Is the 30% federal solar tax credit gone?

For residential expenditures, yes. The 2025 budget act amended section 25D so that it does not apply with respect to any expenditures made after 31 December 2025. It was terminated rather than phased down, and the same act deleted the scheduled reductions to 26% and 22% entirely, so there is no remaining taper.

What is the exact cutoff test?

The statute says no credit for expenditures made after 31 December 2025, and separately provides that an expenditure is treated as made when the original installation of the item is completed. The practical test is therefore whether your original installation was completed on or before 31 December 2025. Paying in 2025 is not by itself sufficient.

The IRS page says "placed in service". Which is right?

The statute says "expenditures made", and the statute governs. The two can reach the same answer because an expenditure is deemed made when installation is completed, but they are not literally the same test and the difference could matter in a close case. Use the formulation that satisfies both: installation complete by 31 December 2025.

My system was installed in December but turned on in February. Do I qualify?

We do not know and we are not going to guess. The statutory test is when the original installation was completed, which is a factual question about your particular job, and permission to operate is a separate event that can come months later. This is precisely the case to put to a tax professional with your paperwork in front of them.

I could not use the whole credit. Have I lost the rest?

Not on the face of the statute. The carryforward provision, which carries an excess to the succeeding taxable year, was not amended by the act; the only subsections touched were the two dealing with the credit’s rate schedule and its termination. Whether you can use it in a given year depends on your liability and your other credits.

Is there a replacement credit for homeowners?

Not in this act. There is no successor residential credit. What exists is a separate business credit on a different and later timetable, which is why third-party-owned systems can still be built with a federal credit behind them while an owner-purchased system on the same roof has none.

Should I still install solar?

That is now a question about electricity prices, your consumption, your roof and your state or utility incentives rather than about a federal credit. What has definitely changed is the arithmetic: any payback figure calculated with 30% knocked off is wrong for a system installed today. Ask for the numbers without it.

How do I tell whether an article about this is current?

Look for the 2033 phase-out. Those step-downs were repealed in July 2025, so a page describing a credit that reduces to 26% in 2033 has not been updated since. It is a quick and reliable freshness test for anything written on this subject.

Written and audited by

HyreSolar Research

Primary-source research, data analysis and fact checking

We are a research desk, not a sales floor. We read the statute, the tariff, the code section, the federal filing or the manufacturer data sheet ourselves, and we publish the figure with the document it came from and the date we retrieved it.

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160: primary sources read and cited
228: figures with a retrieval date
115: federal and state government sources
66: researched pages published

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Sources & retrieval dates

Public Law 119-21, § 70506, Termination of Residential Clean Energy Credit, Enacted 4 July 2025. Read from the enrolled text at the Government Publishing Office. Source for the amendment striking "to property placed in service after December 31, 2034" and inserting "with respect to any expenditures made after December 31, 2025", and for the conforming amendment deleting the scheduled 26% and 22% step-downs. Verified by reading the section in full that its only amendments to section 25D are to subsections (g) and (h). Retrieved 3 September 2026.

26 U.S.C. § 25D, Residential Clean Energy Credit, United States Code, 2024 edition, from the Government Publishing Office. Source for the rule that an expenditure is treated as made when the original installation of the item is completed, the carryforward provision, the treatment of labor and interconnection wiring, the solar-as-roof provision, the business-use apportionment, the residence requirement, and the list of qualifying expenditures. Retrieved 3 September 2026.

IRS, Residential Clean Energy Credit, Reviewed by the agency on 4 July 2026. Cited here for two things stated on this page: that it describes the cutoff as property "placed in service after December 31, 2025", which differs from the statutory language, and that it still contained a sentence describing a phase-out beginning in 2033, which the 2025 act repealed. Retrieved 3 September 2026.

Was your payback figure calculated with the credit in it?

Rerun the payback without the 30% credit before you rely on any proposal, and check what state or utility incentives still apply. When you are ready to compare proposals, Get Solar Options connects you with solar professionals serving your area. Nothing is shared until you agree.

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