Solar Tax Credit Going Away Under Budget Bill?

In a major update to ongoing solar tax credit news, the U.S. Senate has advanced its own version of the “One Big Beautiful Bill,” proposing a full phase-out of the 30% Residential Clean Energy Credit by 2028. This follows the House’s May 2025 bill, which would make the solar tax credit go away for homeowners at the end of this year, well ahead of the 2032 expiration originally set by the Inflation Reduction Act.

The Senate version introduces a more gradual phase-down, but both bills reflect a clear shift: the Trump solar tax credit rollback is gaining momentum. If passed, the changes could sharply reduce residential solar adoption, raising system costs and challenging contractors and financing partners heading into 2026.

For now, the federal solar tax credit in 2025 remains in place, but the clock is ticking for homeowners and installers to take advantage of the full 30% benefit.

Is the Solar Tax Credit Going Away After 2025? House Vote Brings U.S. Closer, But Senate Pushback Emerges

In May 2025, the House of Representatives passed a sweeping budget bill that would make the solar tax credit go away for homeowners starting in 2026. Now, the Senate has introduced its own version of the bill, proposing a full phase-out of the 30% Residential Clean Energy Credit by 2028. Together, both versions represent a major shift away from the long-term clean energy incentives established under the Inflation Reduction Act.

If enacted, the federal solar tax credit 2025 for homeowners would drop to 60% in 2026 from the current 30%, fall to 20% of today's credit in 2027, and be eliminated in 2028.

Senate Proposed Phase‑Out of the Home Solar Tax Credit

• 2025: 30% Residential Clean Energy Credit (under IRA) is in full effect.

• 2026: Proposed to drop to 60% of the current 30% credit (i.e., effectively 18%)

• 2027: Cut further to 20% of today’s credit (equating to a 6% credit).

• 2028: Fully phased out to 0% credit 

  
  

The commercial Investment Tax Credit (ITC) would remain in place through 2028 but begin phasing down after that. These proposals reflect the growing momentum to roll back clean energy support as part of a broader effort to revive Trump-era tax policies.

Industry groups like SEIA warn that repealing the solar credit after 2025 would disrupt a fast-growing sector already strained by high interest rates and tighter margins.

“If Congress does not change course, this legislation will upend an economic boom in this country that has delivered an historic American manufacturing renaissance, lower electric bills, hundreds of thousands of good-paying jobs, and tens of billions of dollars of investments primarily to states that voted for President Trump," according to a statement from Abigail Ross Hopper, president and CEO of the SEIA. 

If the current language passes, homeowners may rush to install solar systems before the solar tax credit going away begins to impact project economics. Industry analysts expect a surge in installations in late 2025, followed by a sharp decline in 2026. For many residential solar contractors, this could mean job losses, project cancellations, and limited access to financing, especially for lower-income households.

While the Senate’s version offers a slower phase-down than the House bill, the final outcome remains uncertain. The clean energy industry is urging lawmakers to reconsider, arguing that eliminating the federal solar tax credit will undermine job growth, energy savings, and continued rooftop solar adoption nationwide.

What the Bill Says About the Commercial Solar ITC

Both the House and Senate budget proposals include a phase-down of the federal solar tax credit for commercial and utility-scale projects under Section 48E. While the solar tax credit for homeowners would be eliminated much sooner, the commercial Investment Tax Credit (ITC) is scheduled for a gradual reduction starting in 2029.

• 2029: 80% of the full credit

• 2030: 60%

• 2031: 40%

• 2032 and beyond: 0%

To qualify, projects must begin construction within 60 days of the bill’s enactment and be placed in service by December 31, 2028. This aggressive timeline has drawn criticism from developers and clean energy advocates, who argue that the deadlines are too compressed for large-scale project planning.

Senate Pushback on Solar Tax Credit Restrictions

While the House version pushes an accelerated repeal of the solar tax credit in 2025 for homeowners and a steep commercial ITC decline, the Senate version offers a slightly more flexible timeline. Senate Republicans, led by Senator John Curtis (R-UT), have voiced concerns over the bill’s 60-day construction start requirement for commercial projects, warning that it could “jeopardize otherwise viable projects.”

According to solar tax credit news from Reuters, several Senate members are advocating for more realistic deadlines that would still reduce incentives but preserve investment confidence and protect the utility-scale project pipeline.

Solar Credit at Risk for Third-Party-Owned Residential Installations

As part of the broader rollback of clean energy incentives, both the House and Senate versions of the 2025 budget legislation propose eliminating the commercial solar tax credit (Section 48 ITC) for third-party-owned (TPO) residential solar systems. If passed, this change would take effect after 2025, cutting off access to a key federal incentive for solar leasing companies like Sunrun and Sunnova.

Under current law, TPO providers can claim the commercial Investment Tax Credit (ITC) for residential systems they install, own, and operate. This structure has played a crucial role in expanding access to rooftop solar through $0-down leases and power purchase agreements (PPAs)—especially for low- and moderate-income homeowners who may not qualify for solar loans or be able to use the federal solar tax credit 2025 directly.

But under the new proposals, these residential TPO projects would no longer be eligible for the commercial solar credit after December 31, 2025. The solar tax credit going away for third-party residential systems could drive up costs, reduce availability, and shrink the market for solar leases in 2026 and beyond.

Industry groups have raised alarms about this provision, warning that it could disproportionately impact solar access for underserved households. As SEIA and other advocates have noted in recent solar tax credit news, the combined rollback of the Residential Clean Energy Credit and TPO eligibility under Section 48 signals a broader shift in U.S. energy policy—moving away from distributed rooftop solar and toward centralized utility-scale investments.

If the legislation is enacted as written, solar leasing providers may face difficult choices: increasing pricing, restricting eligibility, or scaling back operations in certain states. For homeowners considering a solar lease, 2025 could be the final year to benefit from the current solar credit structure.

Industry Responds to Solar Tax Credit News

Industry leaders are sounding alarms after both the House and Senate advanced budget bills that would significantly reduce or eliminate the federal solar tax credit. The solar tax credit is going away for homeowners by 2026, and the proposed phase-down of the commercial solar ITC by 2029 has created major concern across the clean energy sector.

While the solar tax credit 2025 remains in place for now, the Senate's support for ending tax credit eligibility for third-party-owned residential systems has added even more uncertainty for installers, leasing providers, and financial institutions.

SEIA Warns of Dramatic Job and Investment Losses

The rooftop solar tax bill implications could be severe, according to the Solar Energy Industries Association (SEIA). Their analysis (in May from the House version of the bill) estimates it risks losing nearly 300,000 clean energy jobs and $220 billion in planned solar and storage investment by 2030 if enacted.

SEIA President Abigail Ross Hopper emphasized, “Passing this bill would create a catastrophic energy shortfall, cede AI and tech leadership to China, and damage some of the most vital sectors of the U.S. economy.”

Installers Brace for Impact if the Solar Tax Credit is Repealed

With both residential and commercial incentives on the chopping block, solar developers and EPCs must move quickly to preserve current benefits. To mitigate the impact of the solar tax credit going away, contractors may need to:

• Expedite permitting and interconnection applications

• Secure procurement and construction schedules before credit reductions take effect

• Communicate shifting project economics to investors and clients

But even in the face of uncertainty, some see an opportunity to evolve. As the commercial solar ITC remains in place through 2028, contractors who have traditionally focused on residential rooftops may find it’s time to expand into light commercial solar projects, such as small business properties, churches, schools, and municipal buildings.

Market Reaction: Solar Stocks Recede With Threat of the 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, should the federal solar tax credit be repealed or phased out as proposed.

In contrast, the commercial solar ITC remains in place through 2028, making light commercial projects an increasingly important focus for contractors planning ahead. However, commercial systems come with added complexity, requiring detailed structural load analysis, site-specific fire code compliance, and utility coordination for interconnection.

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.

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Historical Context of the Solar Tax Credit

The solar tax credit is part of a long-standing bipartisan policy that has helped drive solar adoption in the U.S. for nearly two decades. The solar ITC was first created in 2005 under President George W. Bush as part of the Energy Policy Act. Originally set to expire after just two years, it has been extended several times by both Republican and Democratic administrations.

During Trump’s first term, the solar tax credit remained in place. Although the administration focused less on expanding renewable energy, it did not attempt to repeal or weaken the credit. In fact, in December 2020, Trump signed a bipartisan COVID-19 relief and spending bill that included a two-year extension of the solar ITC, delaying the phase-down schedule and keeping the credit at higher levels.

Now, in Trump’s second term, the policy continues for now. Because the 30% tax credit is written into federal law, it can’t be changed by executive order. However, proposed legislation in Congress could make the solar tax credit start tapering down years ahead of schedule. If passed, the rooftop solar tax bill implications would be far-reaching, impacting residential adoption, contractor pipelines, and long-term investment strategies.

Until the bill becomes law, the Trump-era solar tax credit remains a critical incentive for residential and commercial solar projects across the country.

FAQ: Solar Tax Credit Going Away?

The solar tax credit remains one of the strongest incentives for residential and commercial projects, but recent legislative updates from both the House and Senate have introduced real uncertainty. Here’s what you need to know based on the latest solar tax credit news and the potential rooftop solar tax bill implications.

Is the solar tax credit under Trump still available?

Yes, for now. Under current law, the federal solar tax credit 2025 is available at 30% for both the Residential Clean Energy Credit and the commercial solar ITC. It applies to solar panels, inverters, racking, battery storage (when installed with solar), and installation labor.

Is the solar tax credit going away?

It likely is. In May 2025, the House passed a bill that would make the solar tax credit go away for homeowners after December 31, 2025, well before its scheduled 2032 end under the Inflation Reduction Act. The Senate followed with its own version in June, proposing a phased reduction: the Residential Clean Energy Credit would drop to 60% in 2026, 30% in 2027, and be eliminated entirely by mid-2028.

The commercial solar ITC would remain at 30% through 2028, then phase down through 2031 under both bills. These changes create serious rooftop solar tax bill implications, encouraging homeowners to install systems in 2025 and pushing developers to fast-track commercial projects while full incentives still apply.

What is the federal solar tax credit expiration date in 2025?

Under current law, the federal solar tax credit 2025 remains available at 30% through December 31, 2032 for residential systems and 2033 for commercial solar. However, if Congress passes the proposed legislation, the solar tax credit expiration date could change significantly.

The House bill would make the solar tax credit go away for homeowners after December 31, 2025, while the Senate version phases it out by mid-2028. Both proposals would also begin a phasedown of the commercial solar ITC, with reductions starting as early as 2026 under the Senate plan.

For now, the full 30% Residential Clean Energy Credit and commercial ITC still apply to qualifying systems placed in service in 2025, but the window to act is narrowing.

What’s the latest solar tax credit news?

The most significant solar tax credit news as of June 2025 is that both the House and Senate have introduced legislation that would roll back key clean energy incentives. The House bill calls for the solar tax credit going away for homeowners after December 31, 2025, while the Senate version proposes a phased reduction, dropping the Residential Clean Energy Credit to 60% in 2026, 30% in 2027, and ending it entirely by mid-2028.

Both versions also include a phasedown of the commercial solar ITC, with reductions beginning as early as 2026 in the Senate plan and 2029 in the House version. These developments have sparked industry-wide concern about the long-term viability of rooftop solar incentives.

Organizations like SEIA warn of significant job losses and investment declines. Many contractors are advising homeowners to move quickly before the solar tax credit repeal becomes law, citing serious rooftop solar tax bill implications if the full 30% credit disappears.

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.

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