Residential Solar Tax Credit Going Away After 2025
- Sarah Lozanova
- Jul 29
- 7 min read
Updated: 7 days ago
In major solar tax credit news, the 30% residential solar tax credit (Section 25D) will officially end after December 31, 2025. This was signed into law through the Big Beautiful Bill on July 4, 2025, confirming that the solar tax credit is going away with no phase-down period. To qualify for the full credit, homeowners must have their solar systems fully installed and commissioned by the end of 2025.
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 tax credit (Section 48) remains at 30%, but only for systems that begin construction by July 4, 2026, or are placed in service by the end of 2027. These timelines are now tighter than anticipated, increasing the pressure on developers to act fast. As noted by Utility Dive, many developers are scrambling to secure safe harbor under the commercial solar ITC while they still can.
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. Now that the solar tax credit is ending, project timelines matter more than ever.
Is the Solar Tax Credit Going Away?
Yes, the solar tax credit is going away. The residential solar panel tax credit (Section 25D) will expire on December 31, 2025, with no phase-out. This change was confirmed in the final 2025 federal budget, signed into law on July 4, 2025, under the One Big Beautiful Bill Act.
To qualify for the full 30% solar tax credit in 2025, your system must be installed and commissioned by the end of the year. If your solar project misses that deadline, you won’t receive any tax credit.
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.
Homeowners and contractors must act quickly to secure permits, obtain necessary equipment, and complete inspections. Delays could mean losing thousands in solar incentives.
Commercial Solar ITC Still Available With Tighter Deadlines
The commercial solar tax credit (Section 48E) is still active, but recent policy changes have shortened the timeline and narrowed ITC eligibility criteria.
Projects that begin construction by July 4, 2026, are eligible for the full 30% commercial solar Investment Tax Credit. These projects may still qualify for the traditional four-year safe harbor window to be completed — though updated guidance from the Treasury is expected to clarify what qualifies as “beginning construction.”
A presidential executive order issued on July 7, 2025, directs the Treasury to tighten these definitions. Projects that rely on minimal upfront activity, like small equipment deposits or offsite prep work, may no longer meet the standard. Instead, substantial onsite physical work will likely be required to claim the tax credit going forward.
Projects that start construction after July 4, 2026, must be placed in service by December 31, 2027, to receive any federal solar tax incentive. Missing this window means losing access to the ITC entirely.
With these tighter deadlines and evolving interpretations, developers and EPCs need to plan proactively. Starting physical work and documenting progress will be essential to locking in commercial solar incentives under Section 48E.
Executive Order Tightens Rules for Commercial Solar ITC
On July 7, 2025, an executive order instructed the Treasury Department to tighten eligibility requirements for solar tax credits under Sections 25D, 48E, and 45Y. This move further reinforces that the solar tax credit is going away.
The Treasury has 45 days to update what counts as “beginning construction.” Sources expect the new definition to exclude minor actions, such as purchasing a single inverter or submitting an interconnection application. Projects will likely need to show tangible physical work on site to qualify.
Solar EPCs, installers, and developers are now racing to start real construction work, not just paperwork, to meet new IRS expectations under the updated commercial solar ITC rules.
Why The Solar Tax Credit Going Away Matters
The solar Investment Tax Credit (ITC) 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.
Now, with the solar tax credit ending, both residential and commercial solar customers face urgent timelines. Installers must act fast to design, permit, and complete projects before the incentive disappears. If you’re considering going solar or taking on new commercial projects, now is the time to act.
Pushback & Criticism of Solar Tax Credit Going Away
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 Tax Credit Going Away
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 2025 expires
Updating financing options and client expectations to reflect the loss of the residential solar tax credit
Opportunities in Commercial Solar
With the residential solar tax credit going away, the commercial solar ITC remains a compelling option for now—but with tighter deadlines. Projects that begin construction by July 4, 2026, still qualify for the full 30% solar tax credit, and may benefit from the four-year safe harbor, allowing completion by mid‑2030. After that date, projects must be placed in service by December 31, 2027, to receive any incentive.
This is a golden opportunity for residential installers to pivot into light commercial work—think schools, churches, office parks, and municipal sites. These projects continue to qualify for valuable solar incentives. By adjusting your strategy and planning for new timelines, you can keep growing even as consumer tax credits disappear.
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 Going Away
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 ITC 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 in place—for now. But under the updated rules passed in July 2025, changes are on the horizon. The 30% commercial solar ITC remains available for projects that begin construction by July 4, 2026. These systems may also qualify for the standard four-year safe harbor, allowing completion as late as mid-2030.
However, projects that start after that deadline must be fully placed in service by December 31, 2027, to receive any solar tax credit. If they miss this window, they won’t qualify for federal solar incentives at all.
The timeline for claiming the solar ITC is now tighter than in past years, especially following the July 7 executive order that narrows the definition of "beginning construction." Installers and developers should plan carefully to avoid missing out.
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.