Before diving into our frequently asked questions about the One Big Beautiful Bill and solar, we recommend you start with our definitive guide to policy changes for solar under the One Big Beautiful Bill (OBBB). You can also explore our OBBB resource guide:
Solar.com OBBB Resource Center
The solar.com is not providing legal or tax advice and the information presented on this site is for information purposes only. Individuals should consult tax and/or legal counsel about their own individual circumstances.
Q: When do the solar tax credits end?
A: The solar and energy efficiency tax credits phase out on different schedules based on whether a consumer or a business is claiming the tax credit. For consumers claiming under section 25D, the tax credit can be claimed against eligible expenditures made during calendar year 2025.
The business tax credit, including businesses that own solar arrays on residential rooftops, under Section 48E are eligible through 2027, but have a “commence construction” element that allow projects to start before July 4, 2026 and then have four years to complete. This tax credit is indirectly available to homeowners through lease and Power Purchase Agreements (PPAs) arrangements, in which the business claims the tax credit and passes on the savings via lower lease payments.
Q: What was the Executive Order issued on July 7 and how does this impact things?
A: The Executive Order relates to how Treasury defines “commencing construction” for 48E (business claimed) tax credits. Nothing changes for 25D projects (consumer claimed tax credits). And the Executive Order itself doesn’t really say anything definitively. It simply directs agencies to deliver a report to the President within 45 days related to safe harboring. What this will effectively do is freeze the market during this period, as companies don’t want to “bet wrong” on their safe harbor strategy. What can be assumed is the more “loosey goosey” ways companies had been safe harboring are certainly at higher risk.
The President and agencies can not change established law, which the One Big Beautiful Bill now is. They can simply influence how the law is interpreted and implemented.
For residential solar, including third-party owned projects, the 48E tax credit is in law until the end of 2027, so there’s still time. Safe harboring before July 4, 2026 is simply a mechanism to extend the ability to access those credits. Given the faster cycle times in residential solar, that side of the industry can adapt relatively quickly to new rules—whatever they might be.
Q: What constitutes an eligible expenditure for 25D? Can I place a deposit in 2025 and finish the project in 2026?
A: Update on July 8: After discussing this question with tax counsel and an accountant, solar.com believes that the safest way to claim the tax credit is to reach “Permission to Operate” before the end of the year. If your project is mechanically complete but is awaiting Authority Having Jurisdiction (AHJ) sign off and/or utility sign off, then you’ve likely passed the “expenditures made” test. Anything less—including fully funding a project—is likely insufficient to qualify for the full 30% tax credit.
This is not legal or tax advice and every situation is unique. Please use counsel provided to you by a retained professional and do not solely rely on this opinion provided to solar.com.
Q: Is there a chance project completed in 2025 does not receive the tax credit?
A: There is no retroactive element to the ending of the tax credits. Projects that meet the definitions and guidelines for qualification will receive the tax credit.
Q: Are Leases (and PPAs) Still Eligible to Receive the Tax Credit
A: Yes, through 2027, although projects that Commence Construction within 1 year of OBBB enactment have 4 years to be placed in service.
Are you sure? I’ve read the text and it specifically disallows leases
This is a source of confusion online. Earlier versions of the One Big Beautiful Bill specifically excluded residential solar leases if the property would otherwise qualify for 25D (which created a bit of a circular logic error with the 25D credit going away). The final bill, which was signed into law, does not contain this restriction.
Online people are pointing to this text:
A simple reading of it seems to point to a disallowance of tax credits for leases. However, you must look into the referenced sections. Paragraph 1 refers to solar water heating (or solar thermal) and paragraph 4 references residential wind.
Q: Why did Trump and the GOP kill the tax credits?
A: This is a question with political undertones and the solar.com team strives to be editorially neutral. With that said, it’s an important question and one that is being talked about a lot online. This answer is based on first-hand conversations with elected officials and their staff.
While many are blaming improper sales practices by parts of the industry as leading to the tax credit demise, that amounts to victim blaming. It’s true, scammers and unethical business tactics have plagued solar in the US, but those represent a very small percentage of the overall industry. More heavily regulating sales practices and putting consumer protections in place could have addressed this issue–even if more regulation doesn’t allow for efficient markets.
The reality is simply budget related. The GOP, and Trump, wanted to preserve the tax cuts passed in 2017 during his first term, in perpetuity. And these tax cuts are expensive. The CBO projects they will add several trillion more to the Federal deficit, which means the GOP had to cut back on Government spending. And the OBBB did this through several vehicles, including Medicaid, but also by carving back several provisions of Biden’s Inflation Reduction Act. This was relatively low-hanging fruit because that law was just starting to realize economic benefit, so repealing parts of it would contribute to savings with minimal near-term voter perception issues—even if the IRA had yielded significant job creation and investments in manufacturing in the strategic clean energy sector.
Specifically, consumer tax credits are ideologically opposed by the GOP, which is why we saw them removed from several sectors (like EVs).
Trump campaigned on repealing the “Green New Scam” and often makes factually incorrect statements about the solar industry. Again, this seems to be more ideological than anything. Most people who look at the facts understand that installing solar, whether it’s on a residential rooftop or a massive field in the desert, provides the grid with reliable and inexpensive electricity.
Q: What is the solar excise tax?
A: The excise tax was proposed in an earlier Senate draft of the OBBB, which contemplated taxing solar tax credit claimants for using a proportion of components from “FEOC” entities above the threshold of that year. This was intended to protect US investments in solar manufacturing after the tax credits go away (and thusly the FEOC restrictions), but it was not ultimately included in the final bill, which was signed into law.
Q: If solar is so cheap why did it need the tax credit?
A: A lot of people in the industry acknowledge that the tax credits weren’t needed in the long term. Offering them simply made more projects, in more areas, economically viable. An industry had developed that assumed the tax credits would be available, and so business models were built accepting that fact as it was law.
The challenge is that the abrupt ending of the tax credits doesn’t allow businesses and the market to adjust. Many called for a 3-year phase-out of the tax credits, which was assumed would provide sufficient time for the market to adjust.
Solar competes against all other energy sources and can be competitive against them on an unsubsidized basis. But the OBBB retains tax credits for oil, nuclear, certain types of coal, and other energy generation sources.
The only thing worse than an industry that became overly reliant on subsidies is “rug pulling” those subsidies. There will undoubtedly be job losses and canceled investments because of the One Big Beautiful Bill.
Q: Will solar prices just drop by 30% after the tax credit goes away?
A: Unlikely. Every sector of the residential solar industry is financially compressed. Just this year, we’ve seen major manufacturers file for bankruptcy, major installers go out of business, and finance companies falter. There’s simply not enough margin available to just discount out of the tax credit.
But, over time, things will stabilize and improve. Every point the Fed drops interest rates is equal to roughly $0.15/watt in solar installation costs. And with the rapid increase in utility rates solar economics will likely start to close the gap between pre- and post-tax credit.
Q: Will the US Solar industry survive with OBBB as law?
A: Yes. There will be job losses and project cancellations, but the industry will survive. The biggest impact will be in residential solar where small mom and pop contractors that dot every Main Street American town will bear the brunt of significantly reduced near-term demand. Not every contractor or area offers—or allows—Third-Party Owned (TPO) solar, which still has access to the 48E tax credit through 2027.
There will be a contraction of solar deployment, but the extent of it is still being quantified. The unfortunate reality of the OBBB is it will cause wholesale and retail electricity rates to climb faster than previously modeled and far faster than inflation. This will impact industrial investments as well as homeowners’ pocketbooks.
Eventually, those wholesale and retail rate increases will tip the economics of solar post tax credit into returns on investments that consumer demand for solar picks back up again. What will emerge will be a stronger, more resilient solar industry immune to the whims of politicians in DC.
A Final Note
The solar.com editorial team has gone to great lengths to provide accurate and approachable information. See something we missed or find an error? Please CONTACT us at newsroom@solar.com. If you’re doing research on the OBBB and found this article helpful, please link back to this article to help others find it.
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