Trump and the Fate of the 30% Solar Tax Credit in 2025

May 22 update: The House of Representatives passed the budget reconciliation bill, including the measure to terminate the 30% residential solar tax credit at the end of 2025. The “big, beautiful” budget bill will head to the Senate, where a final vote is expected before the August recess, and possibly before July 4. If passed as currently written, residential solar and battery systems placed in service by December 31, 2025 will still qualify for the Residential Clean Energy Credit.

May 13 update: The House Ways and Means Committee is proposing an end to the residential solar tax credit as part of the reconciliation process. If passed, systems placed in service (i.e., installed and inspected) by December 31, 2025 will still qualify for a 30% tax credit.

*This content is for informational purposes only and does not constitute legal or tax advice.

 

 

Why Are People Concerned about the Residential Solar Tax Credit Going Away in 2025?

As part of the Budget Reconciliation process (known in headlines as Trump’s “One Big, Beautiful Bill”), Congress has proposed terminating the 30% tax credit for residential solar and battery storage, known as 25D. This bill has been passed by the House and currently sits with the Senate, where a vote is expected in July.

If passed as currently written, residential solar systems “placed in service” (i.e., installed and passed inspection) by midnight on December 31, 2025 would still qualify for a 30% federal tax credit. In 2026 and after, there would be no residential tax credit for homeowners to claim for their investment.

The current form of the Reconciliation Bill also closes off the 48E tax credit for leased solar systems, in which the installation company claims a 30% tax credit and the homeowner indirectly benefits from lower pricing. Abruptly removing access to both the 25D and 48E tax credits threatens the broad spectrum of the residential solar industry, with negative effects for both the industry and homeowners seeking lower bills, energy choice, and environmental benefits.

20-year solar industry veteran Brian Lynch joined me to discuss the threat to residential solar tax credits and what the near and long-term future looks like for the solar industry.

What can we do about the residential solar tax credit going away?

If you believe solar is the power of choice for your home, get proposals quickly to put your project on track for installation and inspection by the end of the year. Get started today on solar.com to get multiple quotes from vetted local installers.

We’ve also created a resource page with other ways to support the solar tax credits before the Senate votes to remove them.

Why is Congress proposing to remove the residential solar tax credits?

During the campaign, President Trump and Republican elected officials called for the “repeal of the Green New Deal” — a name Trump uses to refer to the Inflation Reduction Act (IRA). The IRA was the Biden administration’s cornerstone policy and was a broad bill that included several pieces of favorable policy for the solar industry and, most importantly, extended the solar tax credit through 2034.

During Trump’s first week in office, he published an Executive Order that directed the Federal Government to suspend spending funds under the “Green New Deal.” This Executive Order was broadly worded and ultimately legally unenforceable, and it was rescinded a week later. However, it caused many people to question whether the IRA, and the solar tax credit, would be dealt an untimely fate.

Even as President, Trump himself can not cancel an existing law. He can, however, work with his legislative bodies in the House and Senate to repeal the law or pass a superseding law that alters the IRA.

 

What is the 30% tax credit for solar?

Officially named the “Residential Clean Energy Credit,” it allows solar system owners to receive a tax credit worth up to 30% of the eligible cost basis of a solar installation. A project with an eligible cost basis of $30,000 would entitle the owner to receive a $9,000 tax credit in the year the project was placed in service.

This incentive actually originated during the oil crisis in 1978. It was then brought back in 2005 and, with some tweaks and changes, has persisted ever since. It’s often referred to as the “Solar Investment Tax Credit” or ITC for short.

The Inflation Reduction Act of 2022 extended the tax credit at the 30% rate through 2032, at which point the tax credit declines 4% per year through 2034. The solar tax credit has been a relatively durable piece of policy and has survived both Republican and Democratic administrations, recessions, wars, and other policy uncertainty. Trump himself extended the solar tax credit at the end of his first term (the COVID year).

 

 

Is the Inflation Reduction Act (IRA) at Risk?

Yes. Republicans are making drastic cuts to the IRA through the budget reconciliation process as a way to pay for the Tax Cuts and Jobs Act (TCJA) extension. In May 2025, the House Ways and Means Committee introduced a measure that would weaken or remove several parts of the IRA, including a full removal of the 30% solar tax credit for homeowner-owned solar and battery systems at the end of 2025. That measure was passed by the full House on May 22 and is headed to the Senate.

It’s possible that Residential Clean Energy Credit termination—and other IRA cuts—are softened as the Senate debates and votes on the reconciliation bill. The first would be a more gradual phase-out of the solar tax credit starting in 2026 or 2027, most likely with the 4% reduction in tax credit value glide path, instead of an abrupt termination.

Another scenario is tying the tax credit eligibility to a certain domestic content threshold. Although this would likely be sound policy as a way to encourage US investment and reward buyers for purchasing US-made equipment, there would be significant challenges in the implementation, especially for residential projects claimed by individual taxpayers, and would cause massive disruption if not implemented at some point in the future (2+ years out).

However, if you plan on powering your home with solar and/or battery in the future, there is no time to see if either of these scenarios play out. In order to claim the credit on your 2025 taxes, your system needs to be installed and inspected by December 31, 2025. It’s typical for solar projects to take several months from design to installation, and we can expect a rush of homeowners to try to claim the tax credit before it’s gone, which will further increase project timelines.

Our best advice: Get proposals now to put yourself on track for a 2025 installation and tax credit eligibility.

 

 

Will projects built in 2025 qualify for the residential solar tax credit?

Yes. Based on the measure passed by the House, projects installed and inspected in 2025 will qualify for the 30% solar tax credit.

It would be politically very difficult and would cause substantial economic havoc for the Trump Administration to retroactively rescind a tax credit that’s part of established law. Any attempt to do this would undoubtedly face substantial legal challenges.

The tax credit industry is much larger than a homeowner tax credit and it’s been sized at hundreds of billions of dollars under the IRA helping support hundreds of thousands of jobs directly and indirectly. A retroactive repeal would shake the foundation of investor confidence, not just in solar but just about everything that’s tied to policy.

Risks of Waiting for Policy Certainty

Homeowners understandably might want to take a “wait and see” approach to see exactly how the House and Senate alter the reconciliation bill. However, this is a risky proposition. The Senate is expected to vote on this before its August recess, possibly before July 4.

Waiting until after a Senate vote would absolutely put your project at risk as, on average, it takes 10 weeks after a contract is signed for it to be built (and, depending on where you live you might have to wait longer for it to be placed in service). Any change to the tax credit would cause a rush in the market, extending timelines and putting projects’ eligibility to claim the tax credit at risk.

 

 

Is 2025 a Good Time to Go Solar?

If you’ve been considering going solar but not yet signed a contract, right now is absolutely the best time. Material to build projects is mostly sitting in warehouses on a pre-tariff basis and there’s a high probability the project will qualify for the full 30% solar tax credit. Although interest rates are stubbornly high, they likely won’t be substantially lowered in 2025. If they’re lowered in the future solar loans can easily be refinanced. And, your utility won’t be slowing down their rate increases anytime soon.

Let a solar.com Energy Advisor develop a proposal for you and work with local contractors to competitively price your project. Get started today with no obligation so you’re ready to claim your tax credit.