The 30% Federal Solar Tax Credit Is Gone for Homeowners — What OBBBA Changed
If a solar quote still mentions "30% off with the federal tax credit," ask when that quote was written. The math changed in 2025.
The federal residential solar tax credit (IRS Section 25D) went from 30% to 0% for any system placed in service after December 31, 2025 — no phase-down, no grace period. This was done by the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025. If you bought or loan-financed your own home solar system and it wasn't placed in service by the end of 2025, there is no federal credit to claim.
What exactly changed
Before OBBBA, homeowners who purchased or loan-financed a solar system could claim 30% of the total system cost as a nonrefundable federal tax credit under Section 25D, an incentive that had been in place in some form since 2006 and was extended through 2032 by the 2022 Inflation Reduction Act. OBBBA reversed that extension for residential purchases specifically — the rate for a system placed in service in 2026 or later is 0%.
This is different from a typical tax-credit sunset, which usually phases down gradually (30% → 26% → 22%, for example). OBBBA didn't do that here — it's a hard cutoff at the end of 2025.
Why so many solar quotes still cite 30%
Solar sales materials, older blog posts, and calculator tools built before mid-2025 routinely cited the 30% figure because it was accurate at the time and had been for years. Some of that content hasn't been updated. If you're getting quotes or reading comparisons that still show a 30% federal credit for a purchased residential system, that source hasn't caught up with the law change.
Does California have a state credit to fill the gap?
No. California has never had an active state-level solar income tax credit in the current era — the federal credit was the only one that ever applied to a straightforward home purchase, and it's now zero. California does have a separate, unrelated benefit: a property tax exclusion that keeps installing solar from triggering a full property reassessment. That's a property tax mechanism, not an income tax credit, and it doesn't offset your purchase price the way the old 25D credit did.
The one path where a credit still applies
If you lease your system or sign a power purchase agreement (PPA) instead of buying or loan-financing it, the company that owns the system (not you) can still claim a separate federal credit — the Section 48E investment tax credit for commercial/third-party-owned systems, which OBBBA did not eliminate. That credit may be reflected in your lease or PPA pricing, but it isn't something you personally claim on your tax return, and it isn't available if you own the system outright.
Check your specific numbers
Run your situation through our Federal Solar Tax Credit Checker to confirm what applies based on your system's placed-in-service date and ownership structure, or start from our California Solar Savings Calculator to see the fuller picture including NEM 3.0 export rates and SGIP battery incentives.
Frequently Asked Questions
Is the 30% federal solar tax credit still available?
Not for a homeowner who buys or loan-finances their own system placed in service after December 31, 2025. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, terminated the Section 25D residential credit with no phase-down — it drops straight from 30% to 0%.
Does California have its own state solar tax credit to make up for it?
No. California has never had an active state-level solar income tax credit in the current era — only the now-terminated federal credit ever applied to a home purchase. California does offer a separate, unrelated property tax new-construction exclusion for solar systems, which is not a credit against income tax.
Is there any way to still get a tax credit on a home solar system?
Yes, indirectly — the commercial/third-party-owned credit (the Section 48E investment tax credit) survives and can still flow through on a solar lease or power purchase agreement (PPA), because that credit is claimed by the system's owner (the leasing company), not the homeowner. It is not available if you buy or loan-finance your own system.
This article is for general information only and is not tax advice. Confirm your specific situation with a licensed tax professional before making a purchase decision based on tax credit eligibility.