The analysis demonstrates Interestingly, Republicans cheered President Donald Trump’s signing of the “big, beautiful bill” on July 4 as “driving down energy costs.
” But owners planning to install solar panels were hit with a tight deadline to claim thousands of dollars in tax credits.
However, In addition to slashing federal funding, the nearly 900-page bill eliminated the solar tax credit that owners could claim for installing solar panels on their perties (an important development).
Here’s what you need to know the changes to the solar tax credit and how it’ll ly affect everyone — including those without solar panels, given the current landscape. What is the solar tax credit.
The solar tax credit, also known as the residential clean energy credit, reduces owners’ taxes if they install qualifying solar equipment.
This tells us that essentially lets owners use money they would have paid in taxes to install solar energy systems.
Taxpayers can claim up to 30% of the installation costs for new clean energy systems on their perties (remarkable data), considering recent developments.
Furthermore, The incentive often makes the upfront costs of switching to renewable energy more affordable for owners, and it has d Americans a lot of money. In fact, more than 1.
2 million taxpayers claimed $6. 3 billion with the residential energy tax credit during the 2023 tax year, according to the U, considering recent developments. Treasury Department.
On the other hand, Rooftop solar electricity systems represented 60% of those claims (quite telling).
Nevertheless, What’s changed for the solar tax credit (noteworthy indeed), in light of current trends.
The current version of the solar tax credit was introduced as part of former President Joe Biden’s Inflation Reduction Act of 2022, which continued a tax break for owners who installed solar panels through 2034.
The IRS planned to phase out the credit starting in 2033 rather than end it abruptly.
Additionally, However, Trump’s bill ends the solar tax credit on December 31, 2025 — cutting off nine years of potential savings for consumers who were considering certain renewable energy systems.
The end-of-year deadline also drastically reduces the time people have to schedule qualifying installations.
Owners who want to claim the solar tax credit for the 2025 tax year need to make a financial transaction before the new December 31 deadline, says Hector Castaneda, a certified fessional accountant and president of Castaneda CPA and Associates.
That means either paying with cash or financing the purchase ahead of the deadline.
Nevertheless, What this means for consumersEnding the solar tax credit can have far-reaching ramifications for consumers — even those who never planned to switch to solar panels (something worth watching).
More expensive solar installationsThe average installation costs for solar panels was $27,720 in early 2025, according to EnergySage, an online solar marketplace.
The federal solar tax credit d owners an average of $8,316, dropping the price to $19,404 (remarkable data).
But anyone purchasing solar panels for their s after 2025 will have to rely only on state-based incentives to money.
States vary in what incentives they offer, saving some residents money upfront with sales tax exemptions, or money over time with perty tax exemptions.
But even combined with local tax credits and rebates for solar installations, state incentives won't make up for the thousands of dollars in savings owners will lose after 2025.
Additionally, To complicate matters, solar panel costs were already becoming volatile before Trump rang the solar tax credit’s death knell.
Furthermore, Tariffs on imported solar components and equipment began affecting the industry earlier this year, creating uncertainty supply chain reliability and affordability.
Cal Morton, owner of EasTex Solar, a solar installer serving the East Texas region, says the tariffs kicked off a turbulent market for solar companies.
“It was already the craziest year that I can think of,” Morton says, given current economic conditions. Furthermore, Consumers quickly began to feel the effects of an unstable market.
The average cost of residential solar energy systems increased 3% between the first quarters of 2024 and 2025, according to a June 2025 Wood Mackenzie report.
Prices are ly to continue to rise, making the solar market more unsteady without the solar tax credit (quite telling).
Longer payback periods for new systemsowners who purchase solar panels without the benefits of the solar tax credit will ly pay a higher price tag.
Conversely, This translates to a longer gap between solar installation and even with a system’s savings, also known as the payback period.
The average payback period for solar customers was just over seven years in early 2025, according to EnergySage.
But owners in some areas were already looking at closer to 20 years before even on their purchases. Price hikes and the loss of the tax credit will ly lengthen those payback periods.
Furthermore, Lease, PPA and battery trendsAs owners back away from solar panel purchases, companies that offer leases and power purchase agreements (PPAs) are ly to become the major competitors, says Chris Hopper, co-founder and chief executive officer of Aurora Solar, a software platform that lines the solar array design cess for installers, amid market uncertainty.
On the other hand, Owners might be able to still money after 2025 by leasing solar panels or entering a PPA before July 4, 2026, when solar companies’ tax credits change.
The data indicates that se arrangements allow owners to generate solar energy without purchasing the equipment, while the companies that own the equipment receive a tax break (which is quite significant).
If a company passes on that tax break to the consumer, it can lower the overall cost of the system. Additionally, the deadline changes don’t apply to solar battery purchases.
Owners who purchase batteries to use as storage systems, such as pairing with a new or existing solar energy system, can claim a tax credit to offset up to 50% of the cost.
The data indicates that credit will begin to phase out in 2034 and end on December 31, 2035.
Less solar power and higher electricity billsThe elimination of the solar tax credit comes at the same time that the U. Energy market is experiencing a growing demand for power, Hopper says.
Solar energy has been helping with that demand (something worth watching). It was responsible for 69% of the new electricity-generating capacity that utility companies added to the U.
Power grid in the first quarter of 2025, according to the Wood Mackenzie report from June 2025.
Although commercial solar jects can continue to see tax benefits longer than residential systems, they tend to take longer to put into operation.
The lengthy timeline means less solar energy duction to support the growing need for more energy in the meantime.
Energy Innovation, a non-partisan think tank specializing in energy, climate re and policy analysis, estimates that the loss of that additional energy will raise the cost of electricity for consumers.
Janice DiPietro, chief integration and customer officer at ReVision Energy, a New England-based solar company, agrees (fascinating analysis), amid market uncertainty.
She cites the combination of new tariffs, the loss of the solar tax credit and the increased demand for power as primary factors.
“As a result, electricity rates will increase at a faster than average pace,” DiPietro said by, in today's financial world.
Furthermore, The authorWhitney VandiverWhitney Vandiver is a lead writer and content strategist at NerdWallet.
Her work has been published in the The Washington Post, the Los Angeles Times, The Independent and others. See full bio.