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

With Trump in office and Republican majorities in the House and Senate, many of the clean energy credits created by the Inflation Reduction Act will be weakened or removed through the budget reconciliation process (aka the “One Big Beautiful Bill”) passed on July 3. This includes the 30% solar tax credit claimed by homeowners, formally known as the 25D Residential Clean Energy Credit.

In this article, we’ll focus on proposed changes to the 25D solar tax credit and how they impact homeowners who want to go solar.

Jump to a section:

• Latest updates
• Is the solar tax credit going away?
• Is the entire Inflation Reduction Act at risk?
• Is 2025 a good time to go solar?

Latest Updates to the “One Big Beautiful Bill” and How They Affect Residential Solar

July 3 Update: The “One Big Beautiful Bill” has been passed by both Chambers of Congress and is headed to President Trump’s desk to be signed into law. This bill includes an early termination of the 30% solar tax credit claimed by homeowners (25D). Homeowners will need to have their systems installed by December 31, 2025 to qualify for this credit before it’s gone.

Here’s is how this law impacts residential solar:

• The 30% solar tax credit claimed by homeowners (25D) would be terminated at midnight on December 31, 2025. Homeowners who have their systems installed before the end of the year can still claim this credit against their federal tax liability.
• The 30% solar tax credit for leases and PPAs (48E) would be available through the end of 2027. In a lease or PPA arrangement, the installation company claims this tax credit and passes the savings to the homeowner through lower lease payments or a buy-out agreement.
• Home battery storage would qualify for the 48E tax credit through 2032. This credit will be available for retrofits (adding battery storage to existing solar) and standalone systems (installing battery without solar) through lease agreements.

 

 

July 1 Update: The Senate voted on and passed its version of the “One Big Beautiful Bill.” The Senate text now heads back to the House of Representatives. If the House makes further changes, the bill goes back to the Senate (and so forth) until both Chambers agree on a final version and send it to the President’s desk for final signature. We will continue updating this article as new udpates are released.

June 30 update: The Senate updated its bill text over the weekend and included several key changes to the residential solar tax credits. Click here for a more substantial breakdown of these updates, or read the bullet points below for how this affects residential solar.

• 30% Consumer Solar Tax Credit (25d): In the latest Senate draft, the deadline to install residential systems eligible for the 30% tax credit claimed by homeowners is back to December 31, 2025. After this date, the 25D tax credit is terminated, and homeowners will no longer have a solar tax credit to claim directly.
• 30% Solar Tax Credit for Residential Leases and PPAs (48E): The latest Senate draft allows residential installation companies to claim 30% tax credit for residential solar leases and PPAs. Access to the 48E tax credit was explicitly excluded in previous House and Senate drafts, but is now back on the table for several more years. It’s important to note that the 48E credit is claimed by the installation company, and the savings are passed on to homeowners through lower lease payments.
• Foreign Entity of Concern (FEOC) Restrictions The Senate tightened restrictions on using components from FEOC-controlled or influenced companies and created a new excise tax for projects that use these components beginning in 2028. For residential solar, this introduces new risks to using components from Chinese-owned or controlled companies.

These are likely the final updates to energy policy in the “One Bill Beautiful Bill” before it is signed into law (likely before July 4). We strongly encourage homeowners who want solar for their home to get quotes as soon as possible, lock in an installation date, and secure your home’s full savings potential.

June 26 update: We were expecting to see updated bill text from the Senate this week, but it keeps being pushed back. As of writing this, it still seems likely we’ll see a new version of the “One Big Beautiful Bill” prior to the July 4th recess. While the renewable energy provisions are important to all of us, they’re on the margins of the bill’s debate.

The industry has used this time to advocate for a phase-down of the tax credits to allow the market a more natural evolution to a post-subsidy environment, and this message seems to be resonating. We’re hearing that tax credits for residential solar are “in play” in discussions and some of the technical issues in the prior drafts are being addressed. Whether this stays into signed law and what exactly these changes will be are unknown.

What We’re Watching:

• Will the Consumer tax credit (25D) receive a gradual phase-out similar to the Corporate tax credits? Or will they end 180 days after the Bill passes, as is the current language? And if the 25D is preserved, will it have “FEOC” provisions associated with it, similar to the 48E tax credits?
• Will Residential leases once again qualify for the tax credit as part of the phase down? They were explicitly excluded in the House bill and the previously released Senate draft.
• Will the phase-out continue on the previously proposed Senate draft of 16% in 2026 and 6% in 2027?
• Will the domestic content bonus stay on the drawdown or be maintained at 10% for systems that qualify (commercially owned only)? 

What Seems Likely

2025 is still the best time to go solar, and systems that are placed in service this calendar year will be eligible. There is no proposal from either the House or the Senate for a retroactive repeal of the tax credit. 

FEOC restrictions will remain, and they are intensive. FEOC restrictions would disallow companies under Chinese control or influence from benefiting from US taxpayer assistance, and components that receive “material assistance” from Chinese companies have an escalating ramp or requirements in the Senate draft. Note that using components from Chinese companies would potentially disallow the entire project from realizing the tax credits. 

June 16 update: The Senate Finance Committee released its text for the “One Big Beautiful Bill” with proposed changes to phasing out the 30% residential solar tax credit. Instead of ending on December 31, 2025, the Senate is proposing to end the 25D solar tax credit 180 days after the bill is signed into law. Assuming the One Big Beautiful Bill is signed into law sometime in July, we’re this to be in January 2026. Residential solar systems will need to be installed by this deadline to qualify for a 30% tax credit.

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 approved terminating the 30% tax credit for residential solar and battery storage, known as 25D. On July 2, this bill was passed by both Chambers of Congress and sent to the President’s desk for signature.

After some back and forth, both Congress agreed to end the 25D residential solar tax credit after December 31, 2025. Residential solar systems installed by this deadline 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.

Previous versions of this Bill also closed 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. The Senate has since removed this language, allowing leased systems to qualify for this tax credit for several more years.

See 20-year solar industry veteran Brian Lynch and Solar.com lead writer Sam Wigness 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 by the end of the year. Solar projects typically take several months from contracting to installation, but we can expect these timelines to grow as demand increases to install before December 31 and claim the 25D tax credit before it’s gone.

Give yourself the best chance to install in 2025 and claim the 30% tax credit. Get started today on solar.com to get multiple quotes from vetted local installers.

 

 

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—which is exactly what he did with the “One Big Beautiful Bill.”

 

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 sent to the Senate.

After some back and forth, the Senate has kept the termination of the 25D solar tax credit at midnight on December 31, 2025. Residential systems will need to be installed by then to qualify for a 30% tax credit before it’s gone. In a minor win, the Senate also removed language that blocked access to the 48E tax credit for residential leases and PPAs. If signed into law as currently written, homeowners will have indirect access to this 30% tax credit for several more years.

The Senate passed its version of the “One Big Beautiful Bill” on July 1 and sent it back to the House, which passed this version on July 3 and sent it to President Trump for his signature.

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 bill passed by the House and Senate, projects installed 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.

 

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 to lock in your home’s full savings potential. Material to build projects is mostly sitting in warehouses on a pre-tariff basis and there’s still time to 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.