July 3 Update: Congress has officially passed the “One Big Beautiful Bill” and an early termination of the 25D solar tax credit at the end of 2025. Homeowners will need to have their solar and/or battery systems installed by December 31, 2025 to qualify for this tax credit before it’s gone.

June 30 update: The Senate released its latest version of the “One Big Beautiful Bill” featuring a December 31, 2025 termination date for the 25D solar tax credit claimed by homeowners. If passed as written, homeowners will need to have their systems installed before the end of the year to claim this credit before it is gone.

In May, solar.com reported that the House passed a Reconciliation Bill that calls for the elimination of the Residential Clean Energy Tax Credit (the 30% solar tax credit) effective December 31, 2025. If signed into law as written, homeowners who would like to be eligible for the 30% tax credit would need their solar and/or battery systems “placed in service” (installed and passed inspection) by midnight on New Year’s Eve.

Given the longer lead times for residential construction, homeowners should start their projects quickly to allow sufficient time to reach the “placed in service” milestone by this deadline.

Previous versions of this bill included an elimination of the 48E tax credit for leased solar arrays, which would have close the “loophole” in the original House proposal that allowed homeowners to lease a solar array and indirectly receive the benefit of the tax credit. This has since been removed by the Senate and the 48E tax credit for residential leases and PPAs is likely to remain available for several more years.

The Reconciliation Bill is currently with the Senate, where a final vote is expected before July 4 before going to the President’s desk for signature.

What You Can Do to Support Solar Tax Credits

Whether you’re a homeowner or solar professional, today is the day to get involved. It’s important to let your Elected Officials know that the solar tax credits are important. The easiest thing you can do is visit save25d.org and use the form to send an automated email to your elected officials. 

A more powerful action is to attend town hall events and meetings in your district and let your voice be heard. Encourage your friends and neighbors to join, too.

Key Messages

Why should Washington care about residential solar? 

• Jobs: The solar industry now employs nearly 300,000 people, and residential solar accounts for a significant percentage of those jobs
• Energy choice and energy dominance: Consumers benefit from a choice in how they source their electricity. And when neighbors go solar, this benefits the entire community by reducing the utility’s transmission and distribution costs for all ratepayers. 
• Supports US manufacturing: Significant investments have been made to reshore the US solar industry. By significantly reducing demand, this supply is endangered. 

Residential solar is broadly supported by Americans of every political affiliation and has historically been bipartisan. The current versions of the tax credits were first passed by George W Bush and have been extended and supported by every subsequent administration, including during Trump’s first term. 

Can residential solar exist without tax credits?

Yes, it can and it should. But the drastic changes proposed in the House bill leave very little time for the industry and consumers to adapt to the new reality—especially as the industry faces increased costs due to tariff and supply chain uncertainty, as well as high interest rates.

A less disruptive solution? Phasing out tax credits beginning in a few years will allow the industry to adjust and thrive without the requirement for government support, while avoiding the widespread job losses and unnecessary threat to US solar manufacturing.

July 4 Update: The “One Big Beautiful Bill” (OBBB) was signed into law by President Trump and includes a December 31, 2025 end date for the 30% solar tax credit. Homeowner-owned solar systems need to be installed by the end of 2025 to qualify for the 25D tax credit before it’s gone.

For more information about the OBBB’s impact on residential solar, check out Solar.com’s OBBB Resource Center:

• The OBBB is Now Law: Here’s How It Impacts Solar
• Frequently Asked Questions About Solar and the OBBB
• Homeowner’s Guide to Going Solar in the OBBB Rush
• What You Need to Know About Leasing Solar post-OBBB

June 30 Update: The Senate released its bill text that keeps the end date of the 25D residential solar tax credit at December 31, 2025. In order to claim this 30% tax credit before it’s gone, homeowners will need to have their systems installed by the end of 2025.

This latest, and likely final, version of the “One Big Beautiful Bill” also allows for lease and PPA companies to continue claiming the 48E tax credit for several more years, after previous versions of the bill had blocked companies from claiming this credit and passing the savings onto homeowners.

Original article as follows: The House of Representatives voted on May 22 to approve the Budget Reconciliation Bill, including the measure to terminate the 30% Residential Clean Energy Credit for solar and battery storage on December 31, 2025. Residential projects placed in service (installed & inspected) by this date will still be eligible for the 30% tax credit. The bill will now head to the Senate, where it is expected to pass in some form before the August recess.

The federal solar tax credit or “Investment Tax Credit (ITC)” is, in many cases, the most valuable solar and battery incentive available to residential solar owners. Claiming the credit can reduce your federal tax liability by 30% of the total cost of installing solar and/or battery storage. For instance, investing $30,000 in solar would allow you to claim a $9,000 credit on your federal tax return for the year it is installed and inspected.

As part of the Inflation Reduction Act (IRA), the federal solar tax credit is currently scheduled to remain at 30% through 2032 before gradually phasing out by 2035. The Budget Reconciliation Bill measure to eliminate this credit almost 10 years early is not set in stone, as it still needs approval from the Senate before heading to President Trump for a signature.

Let’s take a look at what’s next for the “Big, Beautiful” Budget Bill and the fate of the 30% residential solar tax credit.

What happens next for the residential solar tax credit?

With approval from the House of Representatives, the Budget Reconciliation Bill heads to the Senate.

Most pundits think the Senate will pass the budget reconciliation bill before the summer recess in early August, but it’s unclear if an abrupt end to the residential solar tax credit will still be included as currently proposed. The budget reconciliation bill includes cuts to several clean energy tax incentives created by the Inflation Reduction Act—both for businesses and homeowners—many of which have bipartisan support and have boosted manufacturing in Republican-held districts.

There will almost certainly be resistance to IRA cuts from swing-state Senators and changes to the reconciliation bill before it is signed into law. However, homeowners don’t have the luxury to wait and find out if the residential solar tax credit survives. Solar projects typically take several months from design to installation, and starting the process in August puts their project at risk of not being installed by December 31 and losing their tax credit eligibility.

Over the summer, the solar industry and everyone who cares about a consumer’s choice to save money with solar should reach out to their federally elected representatives and let them know that they support the Residential Clean Energy Tax Credit (25D). 

What happens to residential solar without a homeowner tax credit?

The budget reconciliation passed by the House in May not only terminates the 30% solar tax credit claimed by homeowners (known as 25D), it also restricts businesses from claiming the 48E tax credit on third-party-owned residential solar installations, such as leases and power purchase agreements (PPAs).

If signed into law as written, this would effectively remove any path for homeowners to access a federal tax credit for installing solar and/or battery storage and reduce the savings potential of adopting these technologies. The residential solar industry would certainly experience a substantial contraction, especially among smaller contractors who aren’t able to survive the market downturn.

Industry veteran Brian Lynch joined us to discuss what the near- and long-term looks like for residential solar with tax credits.

How to claim the solar tax credit before it’s gone

If you’ve been thinking about solar, now is absolutely the best time to go forward with your project. Solar projects typically take several months from design to installation. However, as we’ve seen across the country, every time there is a negative change to policy, homeowners rush to grab the last of the incentives, and projects get delayed due to backlogs. So, we expect installation times to grow as the year progresses.

Because the system needs to be placed in service (i.e., installed and inspected), this means projects contracted after the summer are at risk—so don’t delay. Start a project on solar.com today to compare solar quotes quickly and put your project on track for installation in 2025.

We’ll update this article and post new ones as updates are made. 

And finally if you care about small businesses in your community, and the choice to have access to clean energy that you own instead of relying on a bank to sell you power (or buy it from your utility) reach out to your federally elected representatives and let them know you care about the Residential Clean Energy Tax Credit!