2026 Midterm Election Outcomes: How Will the Blue Wave Impact Solar?

It’s the day after the midterms, and even though there are still several races yet to be decided, the outcome is well known. Democrats have outperformed and will take control of both the House and the Senate. The US solar industry has been whiplashed by policy changes under both Biden and Trump, so it’s fair to ask: with political winds shifting in D.C. what does this mean for the US solar industry?

Will the 25D Homeowner Tax Credit be Restored?

The premature expiration of the homeowner tax credit at the end of 2025 has had a significant negative impact on the health of the US residential solar industry. From installers going out of business, to equipment manufacturers struggling financially, to homeowners losing a valuable tool to lowering their electricity costs. So it’s fair to ask: will the tax credit be restored?

Solar.com’s policy analysis is that it’s unlikely, but possible (perhaps single-digit percentage probability).

The reasons are two-fold; because it has already expired and isn’t transitioning out, there’s less of an imperative to restore it. In theory, the industry is already evolving to a post-tax-credit world. And, unfortunately, the tax credit enabled some pretty bad industry behavior by sectors of the industry that used the confusion around the tax credit to scam unwitting customers.

Finally, the belief is that any extension of tax credits will likely be tied to Domestic Content or Foreign Entity of Concern (“FEOC”) rules, which are confusing even to industry insiders who have access to professional counsel in tax and legal advisory firms. It’s likely entirely unworkable to introduce domestic content or FEOC provisions in a restored 25D. That’s not to say it’s impossible, but its unlikely as of November 2026.

What about the 48E Business Solar Tax Credit?

Almost an inverse scenario exists on the business tax credit side of the industry (of note: homeowners can still benefit from the 48E tax credit through products like leases, power purchase agreements, and prepaid leases). These tax credits were set to expire at the end of 2027, so they’re still in effect and the market hasn’t yet transitioned business models away from them. Accessing 48E tax credits is already bound by FEOC rules and the market is adapting.

48E is also what drives the economics behind large solar projects and the US needs net new power generation. Large banks, construction companies, and manufacturers are all aligned in the need to continue to build large-scale power plants. Solar represents speed to market. And with all of the tariffs and restrictions in US solar the tax credit somewhat normalizes the cost of power.

For these reasons and more, we think the commercial tax credit will be extended through at least 2032.

Tariffs and Other Odds and Ends

One of the key drivers in the electoral shift was voters’ frustrations with inflation and the economy, which is driven by the war in Iran and tariffs. Solar tariffs for anti-dumping and countervailing duties can’t be undone by Congressional action. The Section 232 tariff is done at the President’s discretion and sets a “minimum import price” of $0.38 per watt plus an additional tariff. Our analysis is that Section 232 likely sticks through 2027 and then its durability will be tethered to whether or not the 232 was “successful.” Success here is defined by increased manufacturing capacity.

The net outcome

Homeowners considering going solar are likely assessing the election outcomes to question whether they should wait to see if policy will be restored. Solar.com’s takeaway is that now is a good time to go solar. With interest rates continuing to increase and a homeowner’s ability to still monetize the tax credit through “third-party owned” structures, going solar now will have a lower cost basis before the 48E restrictions move up in 2027 and product is still accessible pre 232.

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