Solar Tax Credit Going Away? House Bill Update

In major solar tax credit news, the House of Representatives passed a bill in May 2025 that would eliminate the residential solar tax credit at the end of this year. If the legislation becomes law, the 30% Residential Clean Energy Credit would expire on December 31, 2025, cutting it off years before its scheduled 2032 sunset under the Inflation Reduction Act (IRA).

The solar tax credit under Trump currently includes two major incentives: the Residential Clean Energy Credit for homeowners and the Investment Tax Credit (ITC) for commercial and utility-scale projects. Both provide a 30% federal tax credit on eligible solar installation costs, including panels, inverters, racking, and battery storage installed with solar. Under current law, the residential credit runs through 2032, and the commercial ITC remains at 30% through 2033, with reductions beginning in 2034.

However, the new House bill treats these credits differently. While it proposes a full solar tax credit repeal for residential systems at the end of 2025, the commercial solar ITC would remain temporarily intact but begin phasing down in 2029. Under the proposal, the commercial credit would drop to 80% of its full value in 2029, then 60% in 2030, 40% in 2031, and be fully eliminated by 2032.

With the solar tax credit going away for homeowners and a future phase-down looming for commercial projects, the cost of going solar could rise sharply. This policy shift has created deep uncertainty across the industry, especially for residential contractors and financing partners, at a time when clean energy deployment is more urgent than ever. The bill now heads to the Senate, where its outcome remains uncertain.

House Passes Bill to Repeal Residential Solar Tax Credit

The House budget bill passed in May 2025 is part of a broader effort to scale back federal clean energy funding while locking in Trump-era tax policies. Alongside cuts to other climate programs, the bill proposes ending the 30% Residential Clean Energy Credit—a move that would make the solar tax credit go away for homeowners starting in 2026.

Industry advocates, including SEIA and the American Council on Renewable Energy, say the proposal would disproportionately impact residential installers, many of whom are already grappling with high interest rates and tightening margins. As reported by Solar Power World, the legislation also comes as the industry faces layoffs and slower-than-expected growth in the residential sector.

“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. 

While the bill passed the House largely along party lines, the Senate’s response remains uncertain. Lawmakers on both sides are under pressure from clean energy advocates and constituents to preserve the credit, which has played a pivotal role in driving solar adoption nationwide.

If the bill becomes law, contractors expect a surge in demand through the end of 2025, followed by a steep drop-off in 2026 as the cost of solar rises without the federal incentive. For many smaller solar companies, that could mean delayed projects, reduced hiring, and thinner pipelines heading into the new year.

What the Bill Says About the Commercial Solar ITC

While the House bill moves to scrap the residential solar tax credit at the end of 2025, it treats the commercial Investment Tax Credit (Section 48E) differently. Under the House plan, the full 30% commercial solar ITC remains available for systems that begin construction or are placed in service through the end of 2028.

However, starting January 1, 2029, the commercial credit begins a sharp phase-down:

• 80% of full value in 2029

• 60% in 2030

• 40% in 2031

• Fully eliminated by 2032 

  
  

That means while the residential solar tax credit is going away at the end of 2025, the commercial solar ITC remains intact for a few more years—but only if development risks are taken before the 2028 cutoff. Beyond that, businesses should expect rapidly decreasing incentives for solar deployments.

Industry voices are already analyzing the implications. Wood Mackenzie notes that the extended full-value window gives large-scale developers some breathing room, but the steep decline starting in 2029 still forces long-term planning.

Third-Party-Owned Residential Solar Could Lose Access to the ITC

In addition to the residential solar tax credit going away, the House bill includes a key provision that would block solar leasing companies, like Sunrun and other third-party ownership (TPO) providers, from claiming the commercial ITC under Section 48. This marks a significant shift in federal solar policy.

Historically, leasing companies have relied on Section 48 to claim the solar ITC for residential rooftop systems they own and operate, offering customers affordable financing options such as $0-down leases and power purchase agreements (PPAs). But under the proposed legislation, third-party-owned residential systems would no longer qualify for the commercial solar tax credit, effectively cutting off a major funding mechanism for residential solar adoption.

This move would hit the residential solar leasing market hard, especially for lower- and middle-income households that depend on financing to access solar. By narrowing access to tax incentives, the proposal threatens to reduce affordability and limit participation in the clean energy transition.

As highlighted in recent solar ITC news coverage, the bill appears to prioritize utility-scale and large commercial solar developments while scaling back support for homeowners. Combined with the repeal of the Residential Clean Energy Credit, this added restriction further shifts federal incentives away from rooftop solar and toward centralized solar infrastructure.

Solar Tax Credit News: Industry Reactions

Industry leaders are sounding alarms after the House passed the budget bill that could see the residential solar tax credit going away, even as the commercial solar ITC faces its own phase-down.

SEIA Warns of Dramatic Job and Investment Losses

The SEIA warned that this legislation could “choke U.S. solar investment.” Their analysis 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.”

Rooftop Installers Sound the Alarm

While many residential solar installers are concerned about the potential impact of the solar tax credit repeal, industry voices are also beginning to explore how to adapt. The elimination of the Residential Clean Energy Credit would certainly change the economics for homeowner-owned systems, especially for smaller contractors who rely heavily on residential volume.

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

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 heavily exposed to the residential sector, where the 30% Residential Clean Energy Credit has long played a crucial role in making rooftop solar accessible and affordable. Analysts noted that the market response reflects investor concerns that project volume, financing demand, and consumer adoption could fall sharply in 2026 if the tax credit repeal becomes law.

Commercial projects, however, often have more complex permitting requirements than residential installations. These can include structural load calculations, site-specific fire code considerations, and utility coordination for larger interconnection loads.

GreenLancer can help streamline this transition. Our team provides fast, code-compliant commercial solar plan sets, engineering reviews, and stamped drawings, helping contractors navigate commercial permitting requirements efficiently. With experience across all 50 states, GreenLancer supports a smooth commercial permitting process, whether you're designing a small commercial rooftop array or a large multi-building system.

For residential installers looking to diversify in 2025, commercial solar offers a path forward, and GreenLancer makes it easier to make that leap.

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Solar ITC News: Commercial Sector Provides a Silver Lining?

Some industry analysts note that maintaining the commercial solar ITC through 2028 provides a buffer for large-scale development. Wood Mackenzie explained that while the delay offers short-term stability, the steep phase-down starting in 2029 still forces accelerated project timelines and financial retooling

Solar Tax Credit Repeal Moves to Senate: What to Watch

With the House passing the bill to eliminate the Residential Clean Energy Credit and phase down the commercial solar ITC, all eyes now turn to the Senate. The legislative process is still unfolding, and the fate of the proposed solar tax credit repeal remains uncertain.

The bill will first be assigned to relevant Senate committees, likely including Finance and Budget. Hearings or markups could happen as early as June or July 2025, with potential floor votes before the congressional recess in August. However, partisan divisions and competing budget priorities may delay or reshape the legislation’s final form.

Key figures to watch include Senate Finance Chair Ron Wyden (D-OR), who has previously defended clean energy tax credits, and swing-vote senators in states with growing solar industries. If the Senate amends or rejects the repeal language, the bill would head to conference for reconciliation.

Until then, the solar tax credit going away remains a proposal—not a certainty—but time is short for stakeholders hoping to influence the outcome.

How Installers and Developers Should Respond to Solar Tax Credit News

With the residential solar tax credit going away at the end of 2025 and a commercial phase-down set to begin in 2029, now is the time for solar companies to act. Whether you focus on residential, commercial, or both, strategic planning in 2025 will be critical to protect margins, secure incentives, and keep pipelines moving.

For residential installers, the most urgent step is to accelerate homeowner installations before the 30% Residential Clean Energy Credit potentially expires on December 31, 2025. That means moving quickly from sale to construction, before supply chain bottlenecks or AHJ delays slow progress.

GreenLancer can help installers move faster and reduce soft costs by streamlining the permitting and engineering process. Our U.S.-based team delivers fast, code-compliant solar plan sets, engineering reviews, and stamped drawings for projects across all 50 states. With GreenLancer, you can scale operations and complete more systems in time to qualify for the full federal incentive.

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 solar tax credit policy continues—for now. Because it is written into federal law, the 30% tax credit can’t be changed through executive order. However, new efforts in Congress could change that. As of May 2025, the ITC is under threat from proposed legislation that would repeal the credit at the end of this year. Until that happens, the Trump solar tax credit remains a vital incentive for residential and commercial solar projects across the country.

FAQ: Federal Solar Tax Credit Under Trump - 2025 Update

The federal solar tax credit remains one of the most powerful incentives for residential and commercial solar in the U.S. As of May 2025, both the Residential Clean Energy Credit and the solar ITC are still available at 30%. However, recent legislation passed in the House has introduced new uncertainty about the credit’s future.

Here’s what you need to know based on the most recent solar tax credit news:

Is the solar tax credit under Trump still available?

Yes—for now. The Trump solar tax credit, which includes the Residential Clean Energy Credit for homeowners and the ITC for commercial solar, is still active at 30% of eligible costs. This covers solar panels, inverters, racking, battery storage (when installed with solar), and installation labor.

Although the Trump administration has frozen or rolled back certain clean energy programs, the federal solar tax credit is written into law and remains unchanged until Congress passes new legislation.

Is the solar tax credit going away?

It might. In May 2025, the House of Representatives passed a bill that would repeal the residential solar tax credit after December 31, 2025, years ahead of its original 2032 expiration under the Inflation Reduction Act (IRA). If the legislation is approved by the Senate and signed into law, the solar tax credit under Trump would be cut off for residential systems starting in 2026.

The solar ITC for commercial projects would remain at 30% through 2028 but begin a phase-down in 2029. This means homeowners have limited time to lock in the full credit, while developers should begin planning around the future commercial ITC reductions.

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

As of now, the official expiration date remains December 31, 2032, for residential and 2033 for commercial solar. However, if the proposed solar tax credit repeal becomes law, the residential credit would expire on December 31, 2025, and the commercial ITC would begin phasing down in 2029.

Until the bill becomes law, the full 30% credit still applies to qualifying systems placed in service in 2025.

What’s the latest solar tax credit news?

The most significant solar tax credit news in May 2025 is the House’s passage of a Republican-led budget bill that includes the early repeal of the residential credit and a commercial phase-down. The bill now heads to the Senate, where debate is expected in the coming weeks.

Industry groups like SEIA have strongly opposed the measure, warning of job losses and reduced solar adoption. Many installers are urging homeowners to move quickly on projects this year to ensure they qualify for the existing 30% federal incentive before the solar tax credit goes away.

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