Solar Tax Credit News: Residential Solar ITC Ends After 2025
- Sarah Lozanova
- 12 hours ago
- 6 min read
Updated: 2 hours ago
In major solar tax credit news, the 30% residential solar tax credit (Section 25D) will officially end after December 31, 2025. This change was signed into law through the One Big Beautiful Bill Act on July 4, 2025, confirming that the solar tax credit is ending with no phase-down. Homeowners must have their systems fully installed and commissioned before the end of 2025 to qualify for the full credit.
The following day, on July 7, a presidential executive order reinforced the law’s intent, directing the Treasury Department to eliminate wind and solar tax credits under Sections 25D, 48E, and 45Y. This executive order underscores a broader policy shift away from clean energy incentives.
The commercial solar ITCÂ remains at 30% for projects that begin construction by July 4, 2026, or are placed in service by December 31, 2027, but these windows are now shorter than previously expected.
For over a decade, GreenLancer has supported solar professionals nationwide with design, engineering, and permitting services. We've completed over 200,000 clean energy projects, helping installers adapt to policy shifts like the changing solar ITC. As the solar tax credit declines, timing and preparation will be key.
Is the Solar Tax Credit Ending?
Yes. The residential solar tax credit is going away after 2025. The final 2025 federal budget, signed on July 4, confirms that the federal solar tax credit for homeowners will expire on December 31, 2025. There is no phase-out.
To receive the full 30% solar tax credit in 2025, systems must be fully installed and commissioned by the end of the year. If not, the credit is lost.
Residential Solar Tax Credit Ends in 2025
This is a major shift in recent solar tax credit news. Earlier versions of the bill included a step-down over several years. The final law removes that option.
There is no partial credit in 2026. Homeowners and installers need to move quickly to secure permits, equipment, and inspections in time.
Commercial Solar ITC Still Available
The solar ITC for commercial and utility-scale systems is still active, but it comes with new rules. Projects that begin construction by July 4, 2026, can qualify for the full 30% commercial solar tax credit. These projects have up to four years to be completed under the standard safe harbor rules.
If a project starts after that date, it must be placed in service by December 31, 2027, to get any solar ITC. Missing these deadlines means losing the incentive.
Executive Order Tightens Rules for Commercial Solar ITC
On July 7, 2025, a new executive order directed the Treasury Department to eliminate tax credits under Sections 25D, 48E, and 45Y, reinforcing the solar tax credit ending. While the commercial solar ITC remains at 30%, the order narrows the rules around what qualifies as "beginning construction."
The Treasury must revise the definition within 45 days, likely excluding early actions like minor equipment purchases. Only projects with clear physical onsite work may qualify for the solar tax credit moving forward.
Installers planning to claim the commercial solar ITC should act quickly. The new interpretation adds urgency and could shorten the timeline for qualifying projects under Section 48E.
Why The Solar Tax Credit Ending Matters
The solar Investment Tax Credit (ITC)Â has been one of the most effective tools for driving adoption of clean energy in the U.S. It has helped millions of homeowners lower upfront costs and enabled commercial developers to expand access to solar power. With the solar tax credit going away, installers, homeowners, and business owners face growing urgency to finalize projects before it ends.
Pushback and Industry Criticism of Solar Tax Credit Ending
The latest solar tax credit news has triggered strong pushback from solar industry leaders, project developers, and lawmakers. Many are voicing concern about the fast expiration of the residential solar tax credit and the new limitations placed on the commercial solar ITC.
Concerns About the Commercial Solar ITC Timeline
Under the final law, commercial solar projects must begin construction by July 4, 2026, to qualify for the full 30% federal solar tax credit. Projects that miss this window must be placed in service by December 31, 2027, to get any credit. This timeline has drawn criticism for being too short, especially for large-scale systems that require extensive permitting, land use approvals, and financing.
Senator John Curtis (R-UT) and several others argue that the deadlines are not realistic. They say it could delay new commercial and utility-scale development, especially in markets with long permitting or interconnection timelines.
Industry Pushback on the Solar Tax Credit 2025 Changes
Clean energy associations and financing partners have warned that the changes to the solar ITC may lead to fewer investments. Projects structured around long-term tax equity financing or third-party ownership models could face disruption. This is especially true for third-party-owned residential systems, which rely heavily on the 30% residential solar tax credit to remain competitive.
Installers Prepare for Solar ITC Reductions
With changes to both residential and commercial credits, solar contractors are shifting into high gear. The solar tax credit going away for homeowners after 2025 has increased pressure across the industry. Installers and EPCs are working quickly to secure projects under current rules.
To stay ahead of the new deadlines, many are doing the following:
Fast-tracking permitting and interconnection paperwork
Finalizing procurement and scheduling before the solar tax credit 2025Â expires
Updating financing options and client expectations to reflect the loss of the residential solar tax credit
Opportunities in Commercial Solar
While residential incentives are ending, the commercial solar ITC remains at 30% for now. Projects that begin construction by July 4, 2026, can qualify, and many may still benefit from the four-year safe harbor, allowing completion as late as 2030.
This presents an opportunity for residential installers to expand into light commercial projects. Schools, churches, office buildings, and municipal sites are all candidates that may still qualify for the federal solar tax credit.
By adjusting strategy and timelines, installers can continue growing even as the solar tax credit changes take effect.
Market Reaction to Solar Tax Credit Going Away
The threat of the solar tax credit going away for homeowners sent shockwaves through financial markets. Following the House vote, investors reacted swiftly to the potential loss of one of the industry's most powerful demand drivers. On the day of the announcement, solar stocks saw steep declines: Sunrun dropped nearly 41%, SolarEdge fell 26%, and Enphase Energy slid 18%.
These companies are deeply tied to the residential sector, where the 30% Residential Clean Energy Credit has helped keep rooftop solar financially viable for homeowners. Analysts point to the risk of a sharp decline in installations starting in 2026 due to the residential solar tax credit going away.
While the residential solar tax credit will disappear after 2025, the commercial solar ITC remains in place. Contractors can still secure the full 30% credit on commercial projects that begin construction by July 4, 2026.
This makes light commercial solar an important area for installers looking to adapt. Schools, churches, office buildings, and municipal properties offer potential growth. But commercial jobs are more complex. They often require structural load calculations, fire code compliance, utility interconnection planning, and licensed engineering support.
That’s where GreenLancer can help contractors pivot with confidence. We provide fast, code-compliant commercial solar plan sets, engineering reviews, and PE-stamped drawings nationwide. Whether you're designing a 50 kW system for a school or outfitting a municipal facility, GreenLancer helps you navigate permitting and engineering requirements efficiently.
For residential installers looking to diversify in 2025, now is the time to prepare, and GreenLancer makes it easier to make that leap. Click the link below to learn more about our permit-ready solar plan sets and engineering services.
FAQ: Solar Tax Credit Ending
The recently signed 2025 federal budget makes major changes to the future of the federal solar tax credit. The most urgent update is that the residential solar tax credit is going away much earlier than originally planned under the Inflation Reduction Act. Below are the latest answers based on updated solar tax credit news.
Is the federal solar tax credit still available in 2025?
Yes. The 2025 solar tax credit remains in place. Homeowners can claim 30% of eligible solar costs through the Residential Clean Energy Credit. This includes solar panels, inverters, battery storage (if installed with solar), and labor costs.
The commercial solar ITCÂ also remains active at 30% for projects that start construction and are placed in service during 2025.
Is the residential solar tax credit going away under the new budget bill?
Yes. The residential solar tax credit is going away under the new law. The 30% credit will stay in effect through the end of 2025. After that, it will be eliminated entirely.
There is no phase-out in the final bill. Starting in 2026, homeowners will no longer be able to claim the federal solar tax credit on new residential systems. This marks a major shift from earlier proposals and shortens the timeline established in previous legislation.
Is the commercial solar tax credit going away?
The commercial solar tax credit is still available, but changes are coming. Under the updated law, the 30% commercial solar ITC remains in place for projects that begin construction by July 4, 2026. These projects may also qualify for the four-year safe harbor, giving contractors time to complete installation. Projects that begin construction after July 4, 2026, must be placed in service by December 31, 2027, to receive any credit.
Whether you're a solar contractor looking for fast, code-compliant permit plan sets or a homeowner in need of expert solar repairs or upgrades, GreenLancer has you covered. Our U.S.-based team and nationwide network of licensed professionals deliver reliable support for every stage of your solar projects.