The Federal Solar Tax Credit Is Dead

Alex Chen

Energy analyst | 6+ years covering renewable policy & renter solar rights | Certified in solar equipment standards (UL 3700, IEC 61730)

✓ Verified by RenterSolar Editorial

The federal residential solar tax credit (Section 25D) expired at the end of 2025. It's gone. And most websites still haven't updated their content. Here's what actually changed—and which savings paths still work for renters.

What Happened

On July 4, 2025, President Biden signed the One Big Beautiful Bill Act (OBBBA) into law. Among its many provisions was the termination of the residential solar Investment Tax Credit (ITC), formally known as Section 25D of the Internal Revenue Code.

What this means: Starting January 1, 2026, residential solar installations no longer qualify for a federal tax credit of any kind. Homeowners who installed in 2025 could claim the credit. Homeowners installing in 2026 and beyond cannot.

Why Did This Happen?

The OBBBA was a broad energy and infrastructure bill designed to balance competing priorities:

• Pro-solar elements: Expanded EV charging, battery storage, heat pump incentives
• Anti-solar elements: Fossil fuel leasing, natural gas infrastructure, coal plant retrofits
• The trade-off: The federal government needed to cut residential solar subsidies to fund other parts of the bill

The political reality: Solar is now cheap enough (especially balcony kits) that it didn't need a federal subsidy. Policymakers decided to spend the money on other priorities.

What's No Longer Available

What STILL Works for Renters

Good news: Renters were never eligible for the federal residential credit anyway. So this change doesn't directly hurt renters. Here's what still works:

1. State Rebates & Incentives

Many states still offer rebates for residential solar—especially for balcony/portable systems. Check your state on our incentives page.

• California: State rebates up to $500 for portable solar
• New York: NYSERDA programs for renters
• Massachusetts: Community solar credits
• Many more (varies by state)

2. Community Solar Subscriptions

Community solar is the fastest-growing way for renters to save on electricity. No federal credit needed:

• Available in 40+ states
• Saves 5-15% on your utility bill
• Zero upfront hardware cost (usually)
• No landlord permission needed

3. Direct Electricity Savings

A $400 balcony solar kit generates 50-100 kWh per month. At current average rates (15¢/kWh), that's $6-15/month in savings.

• No tax credit needed. The savings come from reduced electricity use.
• As rates rise, savings increase. With rates up 4.2% projected in 2026, your savings grow without you doing anything.
• Portable. Takes the kit with you when you move to a new apartment.

4. Utility Rebate Programs

Some utilities offer their own rebates for energy efficiency and solar equipment:

• Varies dramatically by region and utility
• Often $50-200 for portable solar
• Check your local utility's website

What This Really Means

For homeowners: The dead federal credit means a $25K rooftop system now takes 12+ years to pay back instead of 8 years. Less attractive financially.

For renters: This is actually GOOD news. Here's why:

• Homeowners who can't afford solar now have one less option
• Demand for balcony/portable kits is likely to INCREASE as homeowners realize they're the cheapest entry point ($400 vs. $25K)
• More demand = more manufacturers = better products and lower prices for renters
• Renter-focused solar is now the primary market, not a niche

The Takeaway

Don't let outdated websites fool you. Section 25D is dead. The 30% federal tax credit is gone.

But renters never qualified for it anyway. What matters to you:

• State rebates (check your state)
• Community solar (40+ states)
• Direct savings from a $400 balcony kit

As electricity prices keep rising (36% in 5 years, 4.2% more in 2026), these direct savings become MORE valuable every year. The federal government isn't helping anymore, but that doesn't matter when your kit pays for itself in 3-5 years.

Still Confused About Tax Credits?

Here's the simple version:

• Section 25D (Residential): DEAD. Ended 12/31/2025.
• Section 48 (Commercial/Utility): Still active. Doesn't apply to renters.
• Your options: State rebates, community solar, direct savings from portable kits.