Quotes That Subtract the 30% Federal Tax Credit in 2026
You'll get 30% back from the federal government, so your real cost is only $16,800 instead of $24,000.
What's actually true
The Section 25D homeowner credit does not apply to systems whose installation was completed after December 31, 2025. If you buy with cash or a loan in 2026, your federal credit is $0.
If you are buying solar with cash or a loan and your installation finishes in 2026, you get no federal tax credit. The 30% residential clean energy credit (Section 25D) ended for any system whose installation was completed after December 31, 2025. A quote that still subtracts 30% is either out of date or misleading, and it makes solar look about 30% cheaper than it is.
What the law actually says
Congress ended Section 25D in the July 2025 budget law (P.L. 119-21). The statute says the credit does not apply to expenditures made after December 31, 2025. An expenditure counts as “made” when installation is completed, not when you sign or pay. The IRS confirmed this in its August 2025 FAQ: paying in 2025 is not enough if installation finished in 2026.
There was no phase-down. It went from 30% straight to 0%. A Senate bill (S. 3722) would extend it, but as of October 2026 it had no committee or floor action. Don’t buy based on a bill that hasn’t passed.
The one exception that confuses people
Leases and PPAs are different. The company that owns a leased system can still claim a separate business credit (Section 48E) if deadlines and sourcing rules are met. That credit goes to the company, not to you. You benefit only if the company passes it through as a lower price. A rep who says “you still get the 30%” on a lease is wrong about who gets it. See lease vs. buy vs. PPA.
A worked example
An 8 kW system priced at $3.00 per watt costs $24,000.
| Line on the quote | Misleading version | Correct for 2026 |
|---|---|---|
| Gross price | $24,000 | $24,000 |
| Federal tax credit | -$7,200 | $0 |
| Net cost | $16,800 | $24,000 |
| Payback at $1,800/yr savings | about 9.3 years | about 13.3 years |
That four-year gap can turn a good deal into a marginal one. It also matters for loans: many solar loans were built to expect a lump-sum paydown equal to the credit. If you never get the credit, your payment can jump. See reamortization balloons.
How it shows up in a quote or contract
- “Net investment,” “cost after incentives” or “effective cost” lines
- A savings chart with a big bump in year one or two
- Loan terms with a “voluntary prepayment” or “ITC paydown” in month 12 to 18
- Fine print saying “consult your tax advisor” next to a credit the rep just promised you
Questions to ask
- “Does any number in this proposal include a federal tax credit? Which line?”
- “Please send a version with the federal credit set to zero.”
- “Is this loan’s payment based on me paying down part of the balance early? What happens if I don’t?”
- “If this is a lease, does my price depend on the company getting the 48E credit?”
What to do next
Run your quote through the sales claim checker and redo the payback in the payback calculator with no federal credit. Our guide to whether solar is worth it in 2026 shows when it still pays without the credit. Some state and utility incentives do remain; check incentives.
Bottom line: For an owned system installed in 2026, the federal credit line should read $0. If it doesn’t, ask why in writing.
Where to report it
- Your state attorney general’s consumer protection office
- FTC: reportfraud.ftc.gov
- CFPB: consumerfinance.gov/complaint if the loan was sized around a credit you can’t get
Related red flags
Overstated Tax Credits: "You'll Get a Check From the IRS"
The Section 25D credit only reduced federal income tax you actually owed. It was never a check. Households with little tax liability got little or nothing in year one, and some never used all of it.
The Month-18 Payment Jump (Reamortization)
The low payment is often calculated as if you will pay down about 30% of the loan early. If you don't, the loan re-amortizes and the payment can jump by 40% or more. Homeowners who buy in 2026 get no federal credit to make that paydown.
Inflated 25-Year "Lifetime Savings" Numbers
Lifetime savings headlines usually add up 25 years of future dollars as if they were worth the same as today's, assume you stay the whole time, and sometimes count tax credits or inflated rate increases as savings. The real value is usually much smaller and depends on what else you could do with the money.
A Lease or PPA Sold as a "Purchase" or "Program"
In a lease or power purchase agreement (PPA), the company owns the panels. You rent the equipment or buy its power for 20 to 25 years. That affects who gets tax credits, what happens when you sell your house, and who fixes the system.
Fake Urgency Around Tax Credit, Tariff and Net Metering Deadlines
Some solar deadlines are real, but many benefit the company more than you. The homeowner tax credit already ended for systems installed after 2025. The deadlines still in play mostly affect lease and PPA providers' own tax credits, and none of them justify signing a contract you haven't checked.