Federal solar tax credit in 2026: the 30% ended for buyers, continues for lessors

In 2026 the 30% federal credit for homeowners who buy panels (Section 25D) no longer exists: the IRS limits it to systems whose installation was completed by December 31, 2025. The commercial 48E credit remains in force for third-party-owned systems (lease, PPA, subscription) through the end of 2027. That changes the math between buying and leasing, but it does not change what fits your house. Confirm your situation with your tax preparer.

What was the 25D credit and when did it end?

The Residential Clean Energy Credit (Section 25D of the tax code) returned 30% of the cost of a homeowner-purchased solar system as a credit against federal tax. The IRS describes it as 30% of the cost of qualified property installed from 2022 through December 31, 2025, and “not available for any property placed in service after December 31, 2025”.

Public Law 119-21, signed July 4, 2025 and known as the One Big Beautiful Bill (OBBB), changed it. Before, the credit was scheduled through 2034. The law cut nine years off in one stroke, with no phase-down.

What does “installation completed” mean?

This is the detail that caught the most people. The IRS FAQs on the law state that an expenditure “is treated as made when the original installation of the item is completed”. And they answer directly whether paying before December 31, 2025 and installing afterward qualifies: no.

Translated: it does not matter when you signed or when you paid. It matters when they finished installing. If your system went live in January 2026, there is no 25D, even if the contract is dated October 2025. If you were sold in December 2025 on the promise of the credit and the install slipped, the problem is real and worth raising with your tax preparer and the installer.

Heads up: proposals still circulate with the line “price after 30% tax credit”. For a system installed in 2026 that you buy, that line is false. If you see it, the installer is using an old template or counting on you not knowing.

What is 48E and why is it still alive?

48E is the clean electricity investment credit on the commercial side. The company that owns a system claims it, not the user. When a third party owns the panels on your roof (lease, PPA, subscription, prepaid lease), that company can claim 48E and, in theory, reflect it in your price.

Per Solar Power World’s analysis of the law, 48E for solar ends for systems placed in service after December 31, 2027, unless construction began before July 4, 2026 (IRS Notice 2025-42 defines how that start is counted). Earlier drafts of the bill excluded residential leasing companies from 48E; the final version kept them in.

SEIA, in its Q3 2025 market report, anticipated the effect: nearly half of the country’s residential installations in the first half of 2025 were customer-owned, and the elimination of 25D contracts that segment, while continued eligibility of third-party-owned systems cushions part of the drop.

What does it mean for buying versus leasing in Florida?

That the scale moved, not that the decision was made.

• Buying (cash or loan) costs the same as in 2025 but without the 30% back. Payback takes longer. It is still the option with the most total savings on high bills with a good roof, because at the end you pay nobody for the energy.
• Leasing (lease, PPA) now holds the only federal incentive. The third party claims it. How much reaches you depends on the contract. Read solar lease and PPA and check the escalator before assuming the discount makes up for 25 years of payments.
• Prepaid lease is the hybrid: the third party claims 48E and you pay about 70% of the price. Detail in prepaid solar lease.
• 3-or-5-year subscription: the partner owns the system and has access to 48E; you claim nothing and you do not commit for 25 years either. Detail in solar subscription.

All side by side in ways to get solar compared. The incentives that do continue in Florida (state taxes, net metering) are in Florida solar incentives 2026.

When you should NOT decide based on the credit

• When the lease with “credit included” has a 2.9% escalator and 25 years: today’s 30% gets paid back several times along the way.
• When your bill is low. Without 25D, a purchased system for a $100 bill does not pay for itself in a reasonable time, and a lease does not save enough to justify the contract either.
• When the roof will not last 10 more years. No credit makes up for removal and reinstall.
• When the salesperson cannot tell you, in writing, who claims which credit and how it shows up in your price.

What to check before you decide

• The actual completed-installation date of any system offered to you as “eligible”.
• If buying: the price with no tax credit line at all. That is your number.
• If leasing: the price of the same system on a loan, to see how much of 48E was passed through.
• Your specific tax situation with your tax preparer. This guide is educational, not tax advice.
• The rest of the proposal with how to read a solar proposal.