The short answer
- The 30% Residential Clean Energy Credit (Section 25D) ended for systems installed after December 31, 2025.
- There's no phase-down. Homeowner-owned systems installed in 2026 get 0%.
- Third-party-owned systems (leases, PPAs) may still qualify for a business credit through 2027.
What the credit was
For years, homeowners could subtract 30% of the cost of solar panels, batteries and installation from their federal income tax. On a $30,000 system, that was $9,000 back.
What changed
Federal legislation passed in 2025 moved the end date for the residential credit up to December 31, 2025. Systems had to be installed by then to qualify. Systems installed in 2026 or later don't qualify, regardless of when you signed.
If your system was installed in 2025
You may still claim the credit on your 2025 tax return using IRS Form 5695. Keep your contract, invoices and proof of the installation date. Talk to a tax professional.
What about leases and PPAs?
The company that owns a leased system can claim the commercial clean electricity investment credit (Section 48E) on qualifying projects placed in service by the end of 2027. That benefit goes to the provider, not to you, but competition means some of it shows up in lower monthly rates.
Is solar still worth it without the credit?
For many California homes, yes. High retail rates and battery storage do most of the work. Read Is solar still worth it in California in 2026? and see what incentives remain.
This is general information, not tax advice. Consult a qualified tax professional about your situation.