The Federal Solar Tax Credit Expires Dec. 31, 2025

The 30% Federal Solar Tax Credit Ends Dec 31st, 2025. Here’s How to Claim It.

For decades, the U.S. government has offered a federal solar tax credit to encourage the adoption of renewable energy in the United States. In its current form, qualifying homeowners can recover 30% of the costs of their solar project by claiming the credit when they file their taxes at the end of the year. For example, if it costs you $25k to go solar, you’ll be eligible for a $7.5k credit, which means you’ll owe $7.5k less in taxes when you file for that year.

However, due to recent federal policy changes, the credit is currently scheduled to expire on Dec. 31, 2025 - nearly a decade ahead of the original schedule. The sudden change of course seems to have lit a fire under people who have been considering solar for their homes, as the change effectively means the cost of going solar rises by 30% starting on January 1st, 2026.

Four months out from the deadline, the window to go solar and claim the tax credit is fading fast. This guide will break down the solar tax credit in simple terms and explain exactly what you need to do to be eligible for the program.

Solar Tax Credit Basics

30% of the total costs of your solar project will be refunded as a tax credit. This doesn’t just cover materials - it also includes permitting fees, equipment rentals, labor, and other costs associated with installation.
Eligible expenses for the federal solar tax credit include solar panels, solar water heaters, wind turbines, geothermal heat pumps, and battery storage technology.
Homeowners must own the solar system outright to be eligible for the tax credit. Leased / rented systems are not eligible.
The system must be fully installed and commissioned by Dec. 31st, 2025 to be eligible. In-progress installations will not be eligible.
To claim the credit, you must owe taxes for the year you built the system. If your tax burden is lower than the value of the credit, you can rollover the remainder of the unused credit to be used in future years.

Qualifying for the Solar Tax Credit

With the end of the year fast approaching, we’re working hard to help people get their solar kits installed ahead of the deadline. Going solar is a complex process: it can take a few months to design a system, secure a permit, and finally install your panels. (The permitting process is especially notorious for adding delays.)

Because your system must be fully installed by Dec. 31st, 2025 to claim the credit, we encourage people to start ASAP to leave themselves a buffer before the deadline.

Here’s a quick checklist to determine your eligibility for the solar tax credit:

✓ Solar system must be fully installed by Dec 31, 2025
✓ Homeowners must purchase the system outright (no leases / rentals)
✓ Solar system must be a new installation (not used or refurbished)
✓ The credit applies to improvements made to your principal residence (no rentals or vacation homes)
✓ You must owe taxes to make use of the credit. People with low income / tax burden, like retirees, may find it hard to take advantage of the credit.

Browse featured solar tax credit eligible systems

What Costs Are Covered by the Federal Solar Tax Credit?

The solar tax credit applies to all costs associated with renewable energy improvements to a homeowner’s primary residence. It does not cover costs for non-renewable materials, for example, traditional roofing tiles replaced in the process of a solar panel installation. Here’s what’s covered:

Materials such as solar panels, batteries, racking, inverters, cables, connectors, etc. are covered.
Installation costs, equipment rentals, permitting fees, and other costs associated directly with the installation of the solar system are covered.
Traditional roofing components like shingles do not qualify for the credit, but solar roofing tiles that generate energy do.
Keep all receipts and invoices for the project. You won’t need to submit them to file your tax return, but it’s good to have records of everything spent on the project if you get audited.

Claiming the Federal Solar Tax Credit

Claiming the federal solar tax credit is relatively straightforward. When you file your taxes, simply fill out and include IRS Form 5695, the form to claim residential energy credits. It will ask a few basic questions about your project: your address, installation costs, whether the home is your primary residence, and so on.

If you qualify, the amount claimed on IRS Form 5695 will be deducted from your tax liability, reducing the amount that you owe. If the size of the credit is larger than the amount of taxes you owe, any unused portion of the credit can be rolled over and applied to future tax returns.

Maximize Savings With State & Local Solar Incentives

The federal solar tax credit is available to all qualifying Americans. But in many cases, homeowners can “double up” on savings by claiming incentives offered by their state or city governments as well. Local incentives may come in the form of rebates, property tax breaks, or reduced financing rates for renewable energy projects.

In addition, the government isn’t the only organization that offers incentive programs. Your local utility company may also offer perks for connecting a solar power system to their grid. Because residential solar systems contribute energy to the grid, they help utility companies smooth out the demand curve and prevent outages. Some utilities offer discounted rates or other incentives through their net metering agreement; be sure to check on your local utility’s solar policies to maximize your savings.

Shop Qualifying Solar Kits

Eager to fit your solar project in ahead of the deadline? Shop qualifying solar kits in our storefront. These pre-sized kits are specifically designed to qualify for the tax credit and pass common permitting checks, so you can move forward with your installation as soon as possible.

Looking for something a bit more customized? Reach out to us for a free design consultation. We’ll work together to design a custom solar kit that is tailored to fit your energy usage habits.

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