Important Update — April 2026

The 30% Federal Investment Tax Credit (ITC) under Section 25D expired on December 31, 2025. Systems purchased and installed after that date are not eligible for the federal credit. If you purchased your system in 2025 or earlier, you may still claim the credit on your 2025 tax return.

What Happened to the Federal ITC?

The Residential Clean Energy Credit (Section 25D), commonly known as the Federal ITC, provided a 30% tax credit on the cost of qualifying solar energy systems. This credit was extended by the Inflation Reduction Act of 2022 but expired on December 31, 2025 when Congress did not renew it.

As of January 1, 2026, there is no federal tax credit available for new residential solar purchases, including plug-in solar systems.

Can I Still Claim It for 2025 Purchases?

Yes — if you purchased and placed your plug-in solar system in service before December 31, 2025, you can still claim the 30% credit on your 2025 federal tax return (filed in 2026). The key date is when the system was placed in service (installed and operational), not when you ordered it.

To claim it:

  1. Keep your receipt showing the purchase date (must be 2025 or earlier)
  2. Complete IRS Form 5695, Part I (Residential Clean Energy Credit)
  3. Enter the credit amount on Schedule 3 of Form 1040

If your credit exceeds your 2025 tax liability, the unused portion carries forward to future tax years.

What Does This Mean for 2026 Buyers?

Without the federal credit, the economics of plug-in solar still work — especially in high-rate states. Here's the updated math:

  • $699 system (entry-level, no battery): full cost $699 (no federal credit)
  • $849 system (entry-level with battery): full cost $849
  • $1,099 system (mid-range with battery): full cost $1,099
  • $1,499 system (premium with battery): full cost $1,499

In states with electricity rates above $0.25/kWh (California, Massachusetts, Connecticut, Rhode Island, New York, New Hampshire), payback periods remain 4–7 years even without the federal credit. State incentives can further reduce costs.

State Incentives Still Available

Many states offer their own solar incentives that remain active in 2026:

  • Hawaii: 35% state tax credit (RETITC), capped at $5,000
  • South Carolina: 25% state tax credit, capped at $3,500/year
  • New York: 25% state tax credit, up to $5,000 + NY-Sun rebates
  • Massachusetts: SMART program incentive payments + 15% state credit (up to $1,000)
  • Many states: Sales tax exemptions, property tax exemptions, and net metering credits

Check your state page for the full list of incentives available in your area.

Will the Federal Credit Come Back?

There is no current legislation to reinstate the residential solar ITC. However, several bills have been introduced in the 119th Congress that include clean energy tax provisions. We will update this article if the situation changes.

Important Caveats

  • This is general information, not tax advice. Consult a qualified tax professional for your specific situation.
  • State credits still stack: Even without the federal credit, state-level incentives can significantly reduce your costs.
  • Electricity rates keep rising: The average US residential rate has increased ~6% per year. Higher rates mean faster payback even without tax credits.