Solar Tax Credit 2025–2026: How Much You Can Really Save
The federal solar tax credit continues to be one of the most powerful incentives for homeowners considering switching to solar power. In 2025 and 2026, the credit remains at 30%, making solar installations significantly more affordable across the United States. However, understanding exactly how the credit works — and how much you can personally save — can be confusing. This guide breaks down everything U.S. homeowners need to know, from eligibility and real-world savings to state bonuses and how to estimate your own benefit.
What Is the Federal Solar Tax Credit (ITC)?
The Solar Investment Tax Credit (ITC) is a federal incentive that allows homeowners to deduct 30% of the total cost of a solar energy system from their federal income taxes. This includes more than just panels — it also covers inverters, wiring, installation labor, permitting fees, and even home batteries when paired with solar.
Because the credit is not capped, homeowners installing both large and small systems can benefit equally. Whether your system costs $8,000 or $40,000, you receive the same 30% deduction percentage.
How the Tax Credit Works in Practice
The math itself is simple:
• If your solar system costs $15,000
• Your 30% tax credit = $4,500
• Your effective cost after incentives = $10,500
However, there are important conditions:
- You must owe enough federal taxes to claim the credit.
- If your tax liability is lower than the credit amount, you can roll the rest into future years.
- You must own the system — leased solar systems or power purchase agreements (PPAs) do not qualify.
Many homeowners mistakenly believe they will receive the credit as a refund check. In reality, it reduces the amount of tax you owe. If your tax bill is lower than the credit, the remainder carries over up to five years.
What Qualifies for the Solar Tax Credit?
The ITC covers a wide range of solar-related costs, including:
• Solar panels (PV modules)
• Inverters
• Electrical wiring
• Mounting hardware and racking
• Installation labor
• Backup batteries (up to 100% of cost when installed with solar)
• Roof work directly related to installing solar
• Energy storage systems added later (starting 2023 onwards)
• Permitting and inspection fees
Because the credit is applied to all associated costs, the real value is often much higher than homeowners expect.
Can Renters Claim the Solar Tax Credit?
The credit applies only to homeowners who install solar on property they own. Renters cannot claim the ITC, even if their landlord installs solar, because the credit is tied to the property owner.
Solar Tax Credit Rules for 2025–2026
The current 30% rate is guaranteed through 2032. There are no announced changes for 2025 or 2026, which makes the next two years one of the best windows for going solar in recent history.
After 2032, unless new legislation is passed, the credit will begin decreasing, eventually phasing out.
How Much Can U.S. Homeowners Save?
Average savings vary depending on system size, sunlight, and electricity rates. Here’s a quick breakdown:
• Average system cost (U.S.): $18,000–$25,000
• 30% federal tax credit: $5,400–$7,500
• Additional state incentives: $500–$4,000+
• Net savings in first year: $6,000–$11,000
Most homeowners recover their investment in 6–10 years, depending on the state.
State-Level Incentives: Where You Save the Most
Some states offer additional incentives on top of the federal credit. This can significantly speed up payback periods and reduce system cost.
States With the Highest Solar Incentives in 2025
• California – net metering benefits, local rebates
• New York – up to 25% state tax credit
• Massachusetts – SMART program payments
• New Jersey – Successor Solar Incentive Program (SuSI)
• Illinois – strong state-level rebate programs
• Maryland – grants and property tax exemptions
Even states with fewer incentives — like Texas or Florida — still offer excellent solar potential because of high sunlight and rising electricity rates.
Example Savings Scenarios
Below are simplified examples of how the 30% tax credit works in real-world cases.
Scenario 1: Small Home (4 kW system)
• System cost: $10,000
• Federal tax credit: $3,000
• Final cost after ITC: $7,000
• Annual electricity bill reduction: $900–$1,200
Scenario 2: Average Home (6 kW system)
• System cost: $15,500
• Federal tax credit: $4,650
• Final cost after ITC: $10,850
• Annual electricity savings: $1,300–$1,800
Scenario 3: Large Home (10 kW system)
• System cost: $26,000
• Federal tax credit: $7,800
• Final cost after ITC: $18,200
• Annual electricity savings: $2,200–$3,000
These numbers vary depending on region and utility rates, but they give a realistic idea of potential savings.
Want to Calculate Your Personalized Savings?
Estimating the exact amount of your 30% tax credit depends on multiple factors:
• System size
• Energy consumption
• Local electricity rates
• Solar hours in your region
• Optional battery storage
• Roof structure and installation complexity
To see your personalized savings, use our free interactive tool:
👉 Try the Solar Savings Calculator — it takes under 20 seconds.
The calculator automatically applies the federal 30% rebate and helps you estimate total costs and lifetime savings.
What Happens If You Install a Battery?
As of 2023, homeowners can claim the 30% tax credit on home batteries — even if the battery is added later, as long as it meets energy efficiency guidelines.
This can significantly reduce the cost of modern lithium-ion storage systems. For example:
• Battery cost: $9,000
• Federal credit: $2,700
• Final cost: $6,300
When combined with solar, batteries improve energy independence and protect against power outages.
Will the Solar Tax Credit Run Out?
Not soon. The Inflation Reduction Act extended the 30% credit through 2032. After that, unless Congress renews it, the credit will begin decreasing:
• 26% in 2033
• 22% in 2034
• 0% for residential solar in 2035
Homeowners planning to install solar should consider making the switch before the rate begins dropping.
Final Thoughts: Is Now the Right Time to Go Solar?
For most Americans, the answer is yes. With the 30% federal solar tax credit locked in for 2025 and 2026, rising electricity prices, and growing solar efficiency, the next few years offer one of the strongest financial opportunities to invest in solar energy.
Solar power is now more accessible than ever:
• Upfront costs continue to fall
• Incentives remain high
• Long-term savings are increasing
• Modern panels last 25–30 years
• Home value typically increases after installation
If you want to understand exactly how much you can save and how the solar tax credit applies to your home, start with a personalized estimate:
👉 Use our Solar Cost Calculator to estimate your personalized savings and total system cost.