Is there still a federal solar tax credit in 2026?
Yes for businesses, no for homeowners buying their own system. The 2025 federal tax act moved the two in opposite directions, and most of what is still online describes the old rules.
Short answer
For businesses: yes. The Section 48E clean electricity investment credit remains available, but projects that did not begin construction before July 5, 2026 generally must be placed in service by December 31, 2027, and foreign-entity sourcing rules now apply to equipment. For homeowners buying a system outright: no. The Section 25D residential clean energy credit ended for systems placed in service after December 31, 2025 — eligibility turned on completion, not contract date. A homeowner can still receive indirect benefit through a lease or power purchase agreement, where the third-party owner claims the commercial credit and prices it into the rate. Separately, 100% bonus depreciation was made permanent for qualifying business property acquired after January 19, 2025.
On this page
The one-sentence version
The federal solar tax credit did not disappear — it split. Businesses kept a credit with tighter deadlines. Homeowners buying their own systems lost theirs at the end of 2025.
What changed, and when
| Businesses (Section 48E) | Homeowners buying outright (Section 25D) | |
|---|---|---|
| Status in 2026 | Still available | Ended |
| Key deadline | Begin construction before Jul 5, 2026, or place in service by Dec 31, 2027 | Systems placed in service after Dec 31, 2025 do not qualify |
| What eligibility turns on | Construction start or in-service date | In-service date, not contract or payment date |
| Other conditions | Foreign-entity ownership and material-assistance sourcing rules apply | — |
| Alternative route | — | Lease or PPA, where the third-party owner claims 48E and prices it in |
Why the commercial deadline is tighter than it looks
December 31, 2027 sounds distant. It is not, for a commercial project of any size.
A meaningful commercial system has to move through engineering and structural design, AHJ plan check with at least one round of corrections, utility interconnection review — which on larger systems may include a study with its own queue — procurement, construction, inspection and finally utility permission to operate. Placed in service sits at the end of all of that, not at the end of construction.
Owners who intend to rely on the credit and start the conversation in mid-2027 will, in many cases, be too late. That is not a sales line; it is arithmetic on permitting timelines.
What did not change
- Depreciation. Commercial solar is generally recovered over five-year MACRS, and 100% bonus depreciation was made permanent for qualifying property acquired after January 19, 2025. For a profitable entity this can be worth as much as the credit.
- California’s property tax exclusion under R&TC §73 — separate from federal law, and with its own deadline of completion before January 1, 2027. Detail here.
- SGIP storage incentives — a California program, unaffected by federal changes. Detail here.
- Net metering rules — set by the CPUC, or by your municipal utility. Detail here.
Not tax or legal advice
Current Energy is a licensed contractor. This page summarises publicly available rules as they stood on August 21, 2026 and is not tax, legal or financial advice. Programs change. Confirm anything that affects a real decision with your CPA or tax counsel.
Sources and further reading
- Latham & Watkins — One Big Beautiful Bill: new law disrupts clean energy investment
- GreenLancer — what changed for the solar tax credit in 2026
- The Tax Adviser — navigating safe-harbor rules for §48E facilities
Questions we get asked
I signed a contract in 2025 but the system was finished in 2026. Do I get the residential credit?
Section 25D eligibility turned on when the system was placed in service, not when it was contracted or paid for. A residential system completed in 2026 does not qualify. Confirm your own situation with your tax preparer.
Can a homeowner get any federal benefit in 2026?
Only indirectly, through third-party ownership. In a lease or power purchase agreement the system is owned by a company that may claim the commercial Section 48E credit and reflect that value in the rate it charges you. You do not claim anything on your own return, and the trade-off is that you do not own the asset — which also complicates a future home sale.
What does 'begin construction' mean for 48E?
Federal guidance has historically recognised two paths — physical work of a significant nature, or incurring a qualifying percentage of project cost, both subject to continuity requirements. The details matter and are genuinely technical. If your project is relying on a begin-construction position, that determination belongs to your tax advisor, and we will supply the project documentation they need.
What are the foreign entity rules?
The 2025 law added restrictions concerning prohibited foreign entities and material assistance from them, with cost-ratio thresholds that tighten in later years. In practice this shapes equipment selection and requires supplier documentation. We track it at procurement.
Does the credit apply to batteries?
Standalone and paired energy storage has been creditable on the commercial side under the technology-neutral investment credit. Residential storage sat under Section 25D, which has ended for systems placed in service after 2025. Storage rebates through California’s SGIP are a separate matter — see SGIP.
Reviewed and updated August 21, 2026
If the 2027 in-service date matters to you, the useful month is this one.
Design, plan check, interconnection and construction all have queues. We will map your project against the deadline honestly, including telling you if it no longer fits.