Solar tax benefits in 2026: what's left after the federal credit ended

The short answer: if you buy a solar or battery system that is installed in 2026, there is no federal tax credit for it. The 30% Residential Clean Energy Credit ended for expenditures made after December 31, 2025. What remains are state tax rules (in Florida, no sales tax on solar equipment and no property tax on the value it adds; in California, a property tax exclusion that stops for new systems on January 1, 2027) and, for leased or PPA systems, a federal credit that only the company owning the system can claim.

Last checked: October 26, 2026. We are not tax advisers, and this page is general information, not tax advice. Ask a tax professional about your own situation.

Solar tax benefits at a glance

Benefit	Who gets it	Status in 2026	Source
Federal Residential Clean Energy Credit (section 25D)	Homeowners who bought solar or batteries	Ended. No credit for expenditures made after December 31, 2025 (installation completed after that date)	IRS FAQ
Federal Energy Efficient Home Improvement Credit (section 25C)	Homeowners making efficiency upgrades	Ended for property placed in service after December 31, 2025	IRS FAQ
Federal clean electricity credits (sections 48E and 45Y)	The company that owns a leased or PPA system, not the homeowner	Limited. Solar that began construction after July 4, 2026 must be in service by December 31, 2027; foreign-entity limits apply	Public Law 119-21, Notice 2025-42
Federal credit for a battery you own	Nobody	Ended with section 25D	IRS
Florida sales tax exemption for solar energy systems	Anyone buying solar equipment in Florida	In effect	Fla. Stat. 212.08(7)(hh)
Florida property tax: added value of a renewable energy device not assessed	Florida homeowners	In effect; current text runs through December 31, 2037	Fla. Stat. 193.624
California property tax exclusion for active solar energy systems	California property owners adding solar	Ending. Inoperative January 1, 2027; systems already excluded keep it until the property changes hands	BOE letter 2026/034
California SGIP Residential Solar and Storage Equity incentive	Income-qualified California residential customers	Program exists; funding steps open and close, so check the tracker	CPUC
State income tax credit for home solar	Nobody in Florida or California	None	Fla. Const., FTB

What ended: the 25D and 25C credits

Public Law 119-21, signed on July 4, 2025 and commonly called the One Big Beautiful Bill Act, rewrote the end date of section 25D. The credit now “shall not apply with respect to any expenditures made after December 31, 2025.” Before that change, homeowners could claim 30% of the cost of solar panels, solar water heaters, small wind, geothermal heat pumps, fuel cells and, from 2023, batteries of at least 3 kilowatt-hours.

The timing rule matters more than the payment date. The IRS FAQ on the law change says an expenditure is treated as made when the original installation is completed. If you paid a deposit, or even the full price, in 2025 but the installation was completed in 2026, the IRS says no credit is allowed.

The same law ended section 25C, the Energy Efficient Home Improvement Credit, for property placed in service after December 31, 2025. That credit was for home energy-efficiency upgrades rather than solar panels, but it often comes up in the same conversation.

If a quote, ad or website for a 2026 install still shows a 30% federal credit, treat it as out of date.

Leases and PPAs: the credit goes to the system owner

With a lease or power purchase agreement (PPA), a company owns the panels on your roof. That company, not you, is the one that may claim a federal credit, under section 48E (investment credit) or section 45Y (production credit). These are business credits, and Public Law 119-21 narrowed them for solar:

• Construction deadline. For solar facilities that began construction after July 4, 2026, the credit is available only if the system is placed in service by December 31, 2027. IRS Notice 2025-42 sets out how construction is shown to have started: a physical work test, plus a 5% cost safe harbor for small solar facilities of 1.5 megawatts AC or less. Systems that met the July 4, 2026 deadline generally have to be finished within four calendar years after the year construction began to use the notice’s continuity safe harbor.
• Foreign-entity limits. Facilities and energy storage that begin construction after December 31, 2025 cannot include “material assistance from a prohibited foreign entity”, and companies that are themselves specified foreign entities or foreign-influenced entities cannot claim the credit.
• Leased solar water heating and small wind are excluded. The law denies these credits when the owner leases out property described in section 25D(d)(1) or (4), which are solar water heating and small wind. Rooftop solar electric panels are not in that list.

What this means for you: any federal credit the owner claims is built into its pricing, if at all. Nothing in the law requires a leasing company to pass it on. When comparing a lease or PPA, ask in writing:

1. Is the company claiming a federal credit on my system, and has construction started under IRS rules?
2. If the system is not in service by December 31, 2027, does my price or contract change?
3. What is the monthly payment or per-kWh rate, the yearly escalator, and the buyout and transfer terms?

Then compare the total you would pay over the contract with buying outright. Our solar lease vs buy guide walks through that comparison.

Batteries

A battery you buy for your own home gets no federal credit in 2026. Batteries were covered by section 25D from 2023, and they ended with it.

A battery owned by a leasing company is treated differently. Section 48E, as amended, says the 2027 wind and solar cutoff does not apply to energy storage technology placed in service at a solar facility. The foreign-entity rules still apply. Again, any value goes to the owner, and whether it lowers your payment is up to the contract.

State rules can still help with batteries. Florida’s property tax statute lists power conditioning and storage devices that store or use solar energy as renewable energy source devices, and California’s section 73 counts storage devices as part of an active solar energy system. See home battery costs and backup for what batteries cost and do.

Florida

• Sales tax. Florida Statute 212.08(7)(hh) exempts “solar energy systems or any component thereof” from sales tax. The Florida Solar Energy Center certifies the list of equipment that counts. Ask your installer to show how the exemption appears on your contract.
• Property tax. Under Florida Statute 193.624, the value a renewable energy source device adds to a home “may not be considered” when it is assessed for residential property tax. The section applies to devices installed on or after January 1, 2013. The current wording expires on December 31, 2037 and then reverts to an earlier version that also keeps the added value of a residential device out of the assessment.
• No state income tax credit. Florida’s constitution bars a state tax on the income of residents, so there is no state income tax credit to claim.

More detail: Florida solar tax benefits in 2026 and is Florida solar worth it without the federal credit.

California

• Property tax. Revenue and Taxation Code section 73 says that adding an active solar energy system is not “new construction”, so it does not trigger reassessment. According to the State Board of Equalization’s September 1, 2026 letter to assessors, SB 710 (Stats. 2025, ch. 328) makes this exclusion inoperative on January 1, 2027. Systems already excluded before then remain excluded until the property changes ownership. If your system will be finished close to that date, ask your county assessor how it will be treated.
• No state income tax credit. The Franchise Tax Board’s list of personal credits includes no solar or battery credit.
• SGIP for income-qualified homes. The CPUC’s Self-Generation Incentive Program has a Residential Solar and Storage Equity budget for low-income residential customers, with $280 million authorized. Budgets open, close and waitlist by utility, so check the SGIP step tracker and talk to an approved developer.

More detail: California solar tax benefits and incentives in 2026 and NEM 3.0 and batteries in California.

Other states

We only cover Florida and California in detail. For other states, the DSIRE database, run by the N.C. Clean Energy Technology Center, lists state and utility incentives by state. Check each program’s own page for current status before relying on it.

How this changes payback

Without a federal credit, the price you pay is the amount your bill savings have to earn back. That makes payback longer than it was for the same system in 2025. Your yearly savings themselves have not changed.

Our calculators already assume no federal credit for any 2026 or later install. Run the Florida calculator or the California calculator to see a low, likely and high range for your home. For the bigger picture, read is solar worth it without the tax credit. None of this is a promise of savings.