25D tax credit

What the 25D credit is

Section 25D of the federal tax code allowed a homeowner to subtract a percentage of the cost of installing solar (panels, inverter, battery and labor) on their home from their taxes. It was a credit, not a deduction: it directly reduced what you owed the IRS. If the credit exceeded your tax for the year, the remainder carried forward.

For years it was the central sales pitch for solar in the United States: “the government gives you 30% back.”

Why it matters in Florida

It no longer applies to new systems. Under the One Big Beautiful Bill Act, 25D ended for systems placed in service after December 31, 2025. A system you buy and install in 2026 does not generate this credit, whatever they tell you at your front door.

That changes the math. Without the 30%, buying with cash or a loan became relatively more expensive, and the 48E credit, still in force for third-party-owned systems through the end of 2027, makes leases, PPAs and subscriptions more attractive. Many solar loans are still structured with a “balloon payment” at 18 months designed around the credit that no longer exists: if you skip it, the payment goes up.

Common mistake

Being sold a system in 2026 “with the 30% federal credit.” That is either misinformation or a lie. Ask for any incentive to be put in writing with the code section behind it and verify it on IRS.gov or with your tax preparer before signing. We explain what remains and what does not in the federal solar tax credit in 2026.