If you are reading up on the residential clean energy credit in 2026, start here, because the headline changed and a lot of pages have not caught up. For years, the federal government handed homeowners a 30% tax credit for going solar. That deal is over. Installer ads and older blog posts still promise "30% back," so let us walk through what actually happened, who can still benefit, and what your options look like now.
The residential clean energy credit, often called the solar tax credit, was a 30% federal tax credit under Section 25D of the tax code. The One Big Beautiful Bill Act, signed in July 2025, shut it down. The credit does not apply to systems placed in service after December 31, 2025.
So if you install solar panels on a home you own in 2026, there is no federal residential tax credit waiting for you. That is a big shift, since the credit had no dollar cap and routinely saved people thousands. The IRS lays out the termination dates in its OBBBA energy credit FAQ.
It helps to know what you missed or, if you moved fast enough, what you locked in. The credit covered 30% of the cost of qualified clean energy property at your home, with no upper limit. That included:
The home had to be located in the United States. For most of this equipment, a second home you live in counted too, though fuel cells were limited to your main home. One thing it never covered: rental property you own as a landlord, since the credit was tied to a residence you actually use.
Here is the detail that tripped a lot of people up. For solar and similar property, the tax rules treat the expense as "made" when the installation is finished, not when you sign the contract or pay a deposit. So the system had to be installed and running by December 31, 2025. A project that started in 2025 but wrapped up in 2026 falls on the wrong side of the line and gets nothing.
This was an early exit. Under the old Inflation Reduction Act schedule, the credit was set to stay at 30% through 2032, then step down to 26% and 22% before ending in 2034. The 2025 law pulled that finish line forward by about seven years, with no phase-down and no partial credit for 2026.
Now the part that is still useful today. The residential clean energy credit was nonrefundable, which means it could zero out your tax bill but would not pay you cash beyond that. If your credit was larger than your income taxes for the year, the leftover did not vanish. It carries forward to future tax years.
So if you finished a solar install in 2025 (or an earlier year) and could not use the full credit right away, you can still apply the unused credit on your 2026 return and beyond until it runs out. You figure and claim the credit on Form 5695, the same form that handles both residential energy credits. That carryforward is the one live opportunity left for most homeowners, so do not leave it on the table.
The solar credit had a companion, and it closed on the same day. The energy efficient home improvement credit under Section 25C also ended for property placed in service after December 31, 2025.
While it was around, this one rewarded smaller upgrades rather than full energy systems. It gave you 30% back on qualifying energy efficiency improvements, capped at $1,200 a year, covering things like insulation, ENERGY STAR certified exterior doors, and windows. Heat pumps, heat pump water heaters, and biomass stoves had their own higher limit of up to $2,000. Unlike the solar credit, these home improvement credits reset every year and did not carry forward, so any unused amount was simply lost. For 2026 home improvements, that federal help is no longer there.
The federal residential door is mostly closed, but you are not entirely out of options if you want renewable energy for your home.
The catch is that eligibility now turns on fine print and timing, so it pays to confirm the details before you sign anything. RSM has a clear rundown of the broader energy credit changes if you want the full list of what ended and when. And if you are also looking at other 2025 tax moves, our guide to the new car loan interest deduction covers another change from the same law.
Is the residential clean energy credit still available in 2026?
No. The credit ended for systems placed in service after December 31, 2025. A solar installation completed in 2026 on a home you own does not qualify for the federal credit.
What was the solar tax credit worth?
It was 30% of the total cost of qualifying property, with no dollar cap. On a $30,000 solar system, that came to about $9,000 off your federal tax.
I signed a solar contract in 2025 but it was installed in 2026. Can I claim it?
Generally no. The rules treat the expense as made when installation is complete, so the system needed to be finished and placed in service by December 31, 2025.
Can I still carry forward an unused residential clean energy credit?
Yes. If you installed qualifying property in 2025 or earlier and could not use the whole credit, the unused amount carries forward to future tax years on Form 5695.
What did the residential clean energy credit cover?
Solar panels, solar water heaters, battery storage of at least 3 kilowatt-hours, geothermal heat pumps, small wind turbines, and fuel cells, all at a home located in the United States.
Did the energy efficient home improvement credit end too?
Yes. Section 25C ended on the same date, so energy efficient home improvements placed in service after December 31, 2025, no longer earn the federal credit.
Could a landlord claim the credit for a rental property?
No. The residential clean energy credit applied to a home you live in. A second home you use could qualify for most equipment, but property you rent out as a landlord did not.
Are there any federal solar incentives left in 2026?
Not as a residential credit you claim yourself. The main route now is third-party ownership through a lease or power purchase agreement, alongside state incentives and utility rebates.
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