Urgent Update: The Federal Solar Tax Credit for Homeowners is Set to Expire at the End of 2025

At Sun Supply PV, we offer solar products and solutions to help homeowners transition to renewable energy. With recent developments in federal policy, it’s important to understand the status of the solar Investment Tax Credit (ITC) and its implications for your potential solar installation.

Background on the Solar Tax Credit

The federal solar ITC, formally known as the Residential Clean Energy Credit under Section 25D of the tax code, was first introduced in 2005 as part of the Energy Policy Act to encourage the adoption of renewable energy technologies. It initially provided a 30% tax credit on the cost of solar photovoltaic systems for homeowners. Over the years, the credit has been extended and modified multiple times to support the growth of the solar industry.

In 2022, the Inflation Reduction Act (IRA) extended the ITC at a 30% rate through 2032, with planned step-downs to 26% in 2033 and 22% in 2034 before expiring in 2035. This extension helped make solar more affordable, covering a significant portion of installation costs with no income limits or caps on system size for most residential setups.

However, recent policy shifts, including proposals tied to tax cut extensions and changes in energy incentives, have accelerated the timeline. As of 2025, the 30% credit for homeowners is now set to terminate on December 31, 2025, without a phase-down period. This change stems from broader fiscal adjustments aimed at reducing certain clean energy subsidies, impacting residential solar incentives specifically.

Why There’s Urgency to Act Before the End of the Year

To qualify for the 30% tax credit, your solar system must be installed and placed in service by December 31, 2025. After this date, the credit will no longer be available for new residential installations, potentially increasing the upfront cost of going solar by thousands of dollars depending on system size. For example, on a $20,000 system, the credit currently reduces your federal tax liability by $6,000, but this benefit will disappear starting in 2026.

Supply chain demands, permitting processes, and installation timelines can take several months, so planning now is essential to ensure completion by year’s end. Delaying could mean missing out on these savings amid rising energy costs and potential grid instability.

How to Proceed

If you’re considering solar for your home, contact Sun Supply PV for details on panels, inverters, batteries, and installation options. We can help you navigate the process to maximize available incentives. Send an email to sales@sunsuppv.com, call us at 805-818-8899, or use the contact form on our website.

The Sun Supply PV Team