What’s Next for the Residential Clean Energy Tax Credit, and What Can Solar Proponenets Do?
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.
