Did the solar tax credit get extended into 2026?

No. The Section 25D residential solar tax credit ended on December 31, 2025 under the budget law signed in July 2025. There is no federal tax credit for homeowners who purchase a solar system in 2026, and no phase-down or partial credit.

I installed solar in 2025 — can I still claim the credit?

Yes. Systems placed in service by December 31, 2025 qualify for the 30% credit, claimed on your 2025 federal tax return. The law that ended the credit did not claw it back from systems installed on time.

Do leased solar panels qualify for a tax credit in 2026?

Not for you directly — the company that owns the leased or PPA system can claim the Section 48E commercial credit, generally 30% for systems under 1 megawatt. Competitive providers price that credit into lower monthly payments, which is how lease and PPA customers still benefit from a federal incentive.

Will the residential solar tax credit come back?

No current law restores it, and we don't recommend planning around a future Congress. Base your decision on 2026 rules: no purchase credit, an active commercial credit behind leases and PPAs, LADWP or SCE export rules, and California's property tax exclusion through the end of 2026.

The Solar Tax Credit in 2026: What Ended and What Still Works

Published August 15, 2026 · Collective Solar, Northridge, CA

The federal residential solar tax credit (Section 25D) ended on December 31, 2025 — if you buy a solar system in 2026, there is no 30% federal credit to claim. But the commercial credit (Section 48E) is still in effect, which is why leased and PPA systems can still capture a federal incentive, and why how you finance solar now matters more than the panels you pick. Here is what the solar tax credit change in 2026 actually means, with no spin.

What happened to the federal solar tax credit?

The budget law signed on July 4, 2025 (the One Big Beautiful Bill Act) ended the Section 25D residential credit for any system placed in service after December 31, 2025. That credit was worth 30% of a purchased system's cost and had been scheduled to run through 2032 — the law cut it short by about seven years.

Three things worth knowing about how it ended:

It was a hard stop, not a phase-down. There is no reduced credit in 2026. The rate went from 30% to zero overnight.
2025 installs keep their credit. If your system was placed in service by December 31, 2025, you claim the credit on your 2025 tax return as usual. Nothing was clawed back.
The commercial credit survived. Section 48E — the credit claimed by businesses that own solar equipment — is still active in 2026. That distinction drives everything below.

Can I still get a tax credit if I buy solar in 2026?

No. If you searched "solar tax credit expired" — it did, for purchases. A homeowner who pays cash or takes a loan for a system installed in 2026 gets no federal tax credit. If a salesperson tells you otherwise, ask them to put the IRS code section in writing; they won't be able to.

That does not automatically mean buying is a bad idea — equipment costs are far lower than they were a decade ago, and LA electric rates keep climbing. It means the math changed, and you should see it before you sign. We walk through both sides in solar lease vs buy: how the math changed in 2026.

How do leases and PPAs still capture federal incentives?

With a lease or a power purchase agreement (PPA), you don't own the system — a solar company does. Because the owner is a business, the system can qualify for the Section 48E commercial credit, generally worth 30% of the project cost for systems under 1 megawatt. The homeowner never files anything; the incentive is claimed by the system's owner.

Here is the honest version of how that benefits you: the credit is not a check to you, and no provider is required to share it. But third-party owners compete on the monthly payment or the per-kilowatt-hour rate they offer, and the credit is part of what lets them price those payments below your current utility bill. When you compare offers, ignore the incentive talk and compare the only numbers that matter — the payment, the annual escalator, and the term.

One timing note, stated plainly: under current IRS rules, solar projects that began construction after July 4, 2026 generally must be placed in service by December 31, 2027 to qualify for 48E. The lease/PPA structure works today, but current law doesn't guarantee it indefinitely. That's a fact about the rules, not a countdown clock we're waving at you.

Curious how the per-kWh version works? Read how a solar PPA works.

What California and Los Angeles incentives still exist in 2026?

The federal purchase credit is gone, but a few state and local pieces still matter:

LADWP net metering. LADWP is a municipal utility, so the CPUC's Net Billing Tariff ("NEM 3.0") doesn't apply to it. LADWP still credits the solar power you export at close to the retail rate — one of the friendliest export deals left in California, and a big reason solar pencils well in much of the Valley.
SCE's Net Billing Tariff. If you're on Southern California Edison, systems interconnected since April 2023 earn much lower credits for exported power. That's not an incentive — it's a constraint. It usually means pairing solar with a battery, or sizing the system to what you use, changes the outcome more than any rebate.
Property tax exclusion (through the end of 2026). California currently excludes active solar energy systems from property tax reassessment — your home isn't reassessed for the value the system adds. That exclusion is scheduled to sunset on January 1, 2027 for new construction unless the legislature extends it. Systems completed before then keep the exclusion.
SGIP battery rebates — mostly closed. The Self-Generation Incentive Program still exists on paper, but as of spring 2026 the general-market budgets are closed to new applications; what remains is an income-qualified budget that is fully reserved with a waitlist. If anyone promises you an SGIP rebate, ask to see the approved reservation before you count that money. SGIP also requires the reservation before installation — applying afterward gets rejected.

Is solar still worth it in 2026?

For many LA homeowners, yes — but the honest answer depends on three things: your utility, your roof, and your financing.

Los Angeles electricity is among the most expensive in the country, and rates have kept rising regardless of what happens in Washington. Households paying $300–500 a month are the ones the math works hardest for — our clients save up to 60% on their electric bills. On LADWP, retail-rate net metering makes both purchased and leased systems strong. On SCE, the Net Billing Tariff means design matters: the right answer might include a battery, or a smaller system than a 2022-era quote would have shown.

And sometimes the answer is no. A heavily shaded roof, or a roof near the end of its life, should be fixed before anyone puts panels on it. We'll tell you that to your face — it's cheaper for everyone than a system that underperforms for 25 years.

What we recommend homeowners actually do

Check which utility you're on. LADWP vs SCE changes the export math more than any incentive in 2026.
Run your own numbers first. Our solar savings calculator gives you a baseline in about two minutes, before any salesperson does.
Compare lease/PPA and purchase side by side. Not on incentives — on monthly payment, escalator, term, and what happens when you sell the house.
If you're buying, mind the property-tax exclusion timeline. Systems completed before January 1, 2027 keep the reassessment exclusion under current law.
Get every claim in writing. Any quote that leans on a "federal credit" for a 2026 purchase, or an unreserved SGIP rebate, is a quote to walk away from.

If you want those numbers for your own roof, request a free estimate or start with our solar installation service in Los Angeles to see how the process works end to end.