The federal solar tax credit is gone in 2026. Here's what still works.

The short version: the 30% federal tax credit for homeowner-purchased solar systems — known as 25D — expired on December 31, 2025. It did not step down gradually; it ended outright. If a solar company is still quoting you "30% back from the IRS" on a system you'd own in 2026, they are describing a credit that no longer exists.

That's a big change, and it deserves a straight explanation — not a sales workaround. Here's what happened, what's still available, and how to think about solar math in the post-credit era.

What exactly expired?

The Residential Clean Energy Credit (Section 25D of the tax code) let homeowners who purchased solar panels, batteries, and related equipment claim 30% of the cost against their federal income taxes. Under the One Big Beautiful Bill Act, signed July 4, 2025, that credit ended for systems placed in service after December 31, 2025.

Two details worth knowing:

• No step-down. Earlier law would have tapered the credit gradually (26%, then 22%). Instead, it went from 30% to zero at the year boundary.
• "Placed in service" was the test. Systems installed and operational by the 2025 deadline still qualify on 2025 tax returns. A system installed in 2026 does not, regardless of when it was signed or paid for.

What federal support survived?

One meaningful pathway remains: the commercial credit (Section 48E) did not expire on the same schedule. Businesses that own solar systems — including the companies behind residential leases and power purchase agreements (PPAs) — can still claim it for residential installations — on a clock that tightened in mid-2026. Projects a provider began (or safe-harbored equipment for) before July 4, 2026 have a multi-year window to come online; anything started after that date must be placed in service by December 31, 2027.

In practice, that means a third-party-owned system on your roof can still capture federal credit value — the leasing or PPA company claims it and competes for your business by passing some of it through as lower monthly payments. In 2026, this is the only route by which federal credit dollars reach a homeowner's solar project.

What else is still on the table in 2026?

Federal law changed; state and local incentives did not disappear with it. Depending on where you live, the stack can still include:

• State tax credits or rebates — several states run their own solar credit or rebate programs.
• Utility programs — rebates for solar and especially for batteries, plus demand-response programs that pay you for grid support.
• Property tax exemptions — many states exclude solar's added home value from property tax assessments.
• Sales tax exemptions — some states waive sales tax on solar equipment.
• Net metering / export credits — not an "incentive" on paper, but the rate your utility pays for exported power is one of the biggest inputs to your payback math.

For Texas homeowners specifically: there's no state income tax, so no state credit — but solar's added home value is exempt from property taxes statewide, and because the market is deregulated, your choice of solar buyback plan functions as the biggest "incentive" you control. We compare plans as part of every quote.

Is solar still worth it without the credit?

Sometimes yes, sometimes no — and any company that answers without looking at your bills is guessing. Here's the honest frame:

What got worse: upfront cost for purchased systems is effectively ~30% higher than it was in 2025, which stretches payback periods — often by several years.

What's still working in solar's favor:

• Residential electric rates have kept climbing in most markets — every rate hike shortens solar's payback.
• Equipment prices have continued to fall over the long run; panels are dramatically cheaper per watt than a decade ago.
• Batteries paired with time-of-use rates or weak net metering can improve the economics beyond what panels alone deliver.
• Lease/PPA structures still carry federal credit value into 2027 — increasingly dependent on the provider’s pre-July-2026 pipeline, so sooner beats later if this path fits your household.

The result: in strong-sun, high-rate, good-incentive markets, purchased solar can still clear a sensible payback bar. In weaker markets, it may not — and a trustworthy installer should be willing to say so to your face. That's our policy: all four financing paths priced honestly, and a "not yet" when the math says not yet.

How to protect yourself from stale (or shady) pitches

• "You'll get 30% back from the government" on a purchase in 2026 — outdated at best. Ask them to put the claim in writing with the tax code section. Watch what happens.
• Rushed "the incentive is ending, sign tonight" pressure — the big deadline already passed. Deadline theater is a sales tactic, not a fact.
• Quotes that hide dealer fees — "low APR" solar loans often bury a 20–30% dealer fee in the system price. Demand itemization.
• Lease terms nobody explains — escalator percentage, term, buyout schedule, and transfer-on-sale terms. Four numbers. Insist on them.

The bottom line

The 25D era is over, and solar marketing hasn't fully caught up. The honest 2026 picture: purchased systems compete on their own economics now; leases and PPAs carry the last federal credit value on hard 2027 deadlines; and state, utility, and rate dynamics decide whether your specific roof pencils out. Get the math done on your actual usage — not a national average, and definitely not a 2025 brochure.

We'll run those numbers free, itemized, with every path side by side. If it doesn't pencil, we'll tell you that too.