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. There was no phase-down and no grace period. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, made the change. If you bought or loan-financed a home solar system and it wasn't placed in service by the end of 2025, there is no federal credit to claim.
What changed
Before OBBBA, homeowners who bought or loan-financed a solar system could claim 30% of the total system cost as a nonrefundable federal tax credit under Section 25D. The credit had existed in some form since 2006, and the 2022 Inflation Reduction Act extended it through 2032. OBBBA reversed that extension for residential purchases. The rate for a system placed in service in 2026 or later is 0%.
Most tax credits that end are stepped down over several years, for example from 30% to 26% to 22%. This one was not. It stopped 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 no state income tax credit for home solar. The federal credit was the only one that applied to a home purchase, and it is now zero. California does offer a property tax exclusion, which keeps a new solar system from raising your home's assessed value. That lowers future property tax bills. It does not reduce the purchase price the way the 25D credit did.
The one path where a credit still applies
If you lease your system or sign a power purchase agreement (PPA), the company that owns the system can still claim the Section 48E investment tax credit for commercial and third-party-owned systems. OBBBA did not eliminate that credit. Its value may show up in your lease or PPA pricing, but you don't claim it on your own tax return, and it isn't available if you own the system.
Check your specific numbers
Our Federal Solar Tax Credit Checker tells you what applies based on your system's placed-in-service date and who owns it. The California Solar Savings Calculator adds NEM 3.0 export rates and SGIP battery incentives to the estimate.
Frequently Asked Questions
Is the 30% federal solar tax credit still available?
Not for a homeowner who buys or loan-finances a system placed in service after December 31, 2025. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, ended the Section 25D residential credit with no phase-down. The rate went from 30% to 0%.
Does California have its own state solar tax credit to make up for it?
No. California has no state income tax credit for home solar. The federal credit was the only one that applied to a home purchase, and it has ended. California does have a property tax new-construction exclusion for solar systems, which is a separate benefit and not a credit against income tax.
Is there any way to still get a tax credit on a home solar system?
Only indirectly. The Section 48E investment tax credit for commercial and third-party-owned systems still exists. On a solar lease or power purchase agreement (PPA), the leasing company owns the system and claims that credit, and it can pass some of the value on through pricing. You cannot claim it 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.