Solar Tax Credit Under Trump: Is It Going Away Soon?

The Trump solar tax credit—officially known as the Investment Tax Credit (ITC) for businesses and the Residential Clean Energy Credit for homeowners—currently provides a 30% federal tax credit on the total cost of installing solar energy systems. This includes not only solar panels but also inverters, racking, and battery storage when installed alongside solar. These credits are part of the federal tax code and, under existing law, are scheduled to continue through 2032.

However, there’s important solar tax credit news emerging in 2025 that could change that. In May 2025, House Republicans introduced legislation that would repeal the solar tax credit at the end of this year, cutting it off well ahead of the original expiration date. If passed, the solar tax credit under Trump would end on December 31, 2025, eliminating the 30% incentive for both residential and commercial installations starting in 2026.

With the solar tax credit potentially going away, the cost of going solar could rise substantially, potentially deterring homeowners and businesses from moving forward with projects. For many, this change could mean delaying or canceling planned installations, just as clean energy adoption is gaining critical momentum.

Proposed Rollback: Solar Tax Credit Going Away for Homeowners

In May 2025, House Republicans introduced a federal budget proposal that signals a major shift in U.S. clean energy policy: eliminating the 30% residential solar tax credit (Section 25D) at the end of 2025. This change would effectively bring the solar tax credit under Trump to an early end for homeowners, years before its scheduled 2032 expiration under the Inflation Reduction Act (IRA).

The proposal is part of a broader fiscal plan focused on extending the 2017 Trump-era tax cuts and reducing federal climate spending. Supporters of the measure argue it’s a necessary step to curb subsidies, but critics warn that eliminating the residential credit now could reverse significant progress made in home solar adoption.

This is significant solar tax credit news for the industry. If passed, the 30% incentive for residential systems would disappear after December 31, 2025, making solar much less affordable for households beginning in 2026.

Meanwhile, the commercial solar Investment Tax Credit (Section 48E) would remain untouched through 2028, with a planned phase-down beginning in 2029. The proposal’s distinction between residential and commercial credits highlights a shift in federal priorities, favoring utility-scale and commercial solar while putting the future of homeowner-driven installations at risk.

Commercial Solar Tax Credit Still Intact—for Now

While the residential credit faces elimination, the commercial Investment Tax Credit (Section 48E) is not included in the repeal and would remain at 30% through 2028. A gradual phase-down would begin in 2029.

This distinction in the proposed legislation reflects a shift in federal priorities, with more emphasis on large-scale commercial and utility-scale solar, potentially at the expense of widespread residential adoption.

Solar Tax Credit News Sparks Industry Concerns

The potential rollback would deliver a major blow to the residential solar sector, which has relied on the 30% incentive for nearly two decades. If the solar tax credit goes away at the end of 2025, smaller installers and regional solar companies could see steep declines in demand. The loss of the credit could reduce leads, cancel projects, and cut into profit margins, threatening jobs and undermining long-term industry growth.

This is some of the most significant solar tax credit news in years. Industry groups like SEIA warn that eliminating the credit while keeping commercial solar incentives intact could favor large-scale developers and utilities, while pricing out the everyday homeowner and reducing energy equity.

A year-end rush is likely, as homeowners and contractors scramble to qualify for the credit before the deadline. But that could be followed by a sharp drop in early 2026, complicating workforce planning, supply chains, and business stability across the sector.

Historical Context of the Trump Solar Tax Credit

The Trump 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 Investment Tax Credit (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.

Current Status of the Solar Tax Credit Under Trump

Solar Tax Credit Remains in Effect for Now

As of mid-2025, the 30% solar tax credit under Trump remains fully in place. This includes the Residential Clean Energy Credit for homeowners and the Investment Tax Credit (ITC) for commercial solar projects. These credits provide a 30% federal tax credit for qualified solar installations and are a major driver of solar adoption across the U.S.

Why the Trump Administration Couldn't Eliminate the Solar Tax Credit

Although the Trump administration has paused certain clean energy programs and attempted to scale back IRA-related climate funding, it has not changed the federal solar tax credit, and it cannot do so through executive order. These tax credits are written into law and can only be changed or repealed by Congress.

That legal protection has kept the solar tax credit intact under Trump despite broader efforts to reduce federal climate spending. For now, homeowners and businesses still have access to these powerful incentives through at least the end of 2025.

Proposed Changes to the Residential Credit

However, in May 2025, House Republicans introduced legislation that would eliminate the Residential Clean Energy Credit at the end of 2025, years earlier than the 2032 expiration set by the IRA. If the proposal becomes law, the 30% tax credit for homeowner-owned systems would end on December 31, 2025. The commercial ITC (Section 48) would remain at 30% through 2028 and phase down starting in 2029.

This proposed repeal would significantly affect the affordability of solar for homeowners beginning in 2026, especially those planning to install rooftop solar or battery storage systems.

2025 Solar Tax Credit: Trump Administration Overview

The federal solar tax credit under Trump continues to provide major financial incentives for solar energy systems in 2025. Despite shifts in broader clean energy policy, these tax credits remain a reliable and powerful tool for homeowners and businesses investing in solar. With a 30% tax credit still in place, the policy is driving continued solar adoption across the country. However, homeowners and contractors should be aware that this window could close at the end of the year.

Continued Eligibility for Residential and Commercial Solar

As of 2025, the solar tax credit under Trump remains fully in effect. Homeowners can claim the Residential Clean Energy Credit, while businesses can use the Investment Tax Credit (ITC) to deduct 30% of eligible solar installation costs from their federal taxes. This applies to new installations completed during the 2025 tax year, with no cap on the total credit amount.

Qualifying systems include:

• Rooftop solar panel systems

• Solar water heating systems

• Solar batteries and energy storage systems connected to solar

  
  

Both equipment and installation costs are eligible for the credit, making the 2025 solar tax credit one of the most effective ways to reduce the upfront investment in solar. The credit also applies to stand-alone storage if installed in connection with solar energy generation.

Popular Uses of the Tax Credit

The solar tax credit 2025 is being actively used across the country to support a wide range of clean energy investments. Among the most common applications:

• Residential rooftop solar systems – The most popular use of the credit, homeowners reduce upfront costs while locking in long-term utility savings.

• Solar batteries – When paired with solar panels, battery systems like the Tesla Powerwall, LG Chem, or Enphase IQ Battery qualify for the credit. This is increasingly important for energy resilience and time-of-use savings.

• Commercial solar installations – Businesses can leverage the Investment Tax Credit for larger systems, including those on office buildings, warehouses, farms, and retail locations.

Despite broader shifts in federal energy policy, the solar tax credit under Trump has remained one of the most important tools for accelerating solar adoption. It provides certainty for solar customers and companies at a time when other federal programs may be paused or restructured.

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FAQ: Federal Solar Tax Credit Under Trump - 2025 Update

The federal solar tax credit continues to be a critical incentive for residential and commercial solar installations. Here’s the latest information based on updates from May 2025.

Is the solar tax credit under Trump still available?

Yes. As of May 2025, the Trump solar tax credit—officially known as the Residential Clean Energy Credit (for homeowners) and the Investment Tax Credit (ITC) (for businesses)—remains available at 30% of eligible system costs. This matches the levels originally outlined in the Inflation Reduction Act (IRA). Despite broader moves by the Trump administration to freeze or cut certain clean energy initiatives, the solar tax credit under Trump is still active and unchanged, for now.

Is the solar tax credit going away?

Not yet, but there’s growing concern. In May 2025, a bill introduced by House Republicans proposes eliminating the 30% solar tax credit after December 31, 2025, instead of letting it run through 2032 as originally planned. If passed, this would mark a major rollback in federal solar incentives.

The credit remains in effect until this legislation is signed into law. But with uncertainty looming, many in the solar industry are urging homeowners and businesses to install solar in 2025 to secure the full benefit.

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

If the proposed legislation becomes law, the new expiration date for the solar tax credit would be December 31, 2025. That means solar systems installed and placed in service after that date would no longer qualify for the 30% solar tax credit under Trump. As of now, the law still guarantees the 30% credit through 2032, but this could change depending on how the bill progresses through Congress.

What’s the latest solar tax credit news?

The biggest solar tax credit news as of May 2025 is the Republican-led proposal to shorten the credit's lifespan. The bill has not passed yet, but if enacted, it would represent a major shift in solar policy under Trump—cutting billions in projected incentives. Industry advocates, including SEIA and major installers, are lobbying heavily against the change.

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