H.R.1, signed July 4, 2025, ended the 30% residential solar credit and reshaped the commercial credit timeline. Here is a plain-language breakdown of every solar provision in the One Big Beautiful Bill Act and what each one means for a homeowner or business owner deciding in 2026.
By Solar Installers Near Me Research Team • Published
Direct answer
The One Big Beautiful Bill Act (H.R.1, Public Law 119-21), signed July 4, 2025, terminated the Section 25D Residential Clean Energy Credit for solar systems placed in service on or after January 1, 2026. It also ended the Section 25C efficiency credit for residential heat pumps, insulation, and windows. The Section 48E commercial solar credit survived with a construction-start deadline of July 4, 2026. All state solar incentive programs are unaffected. Source: enrolled H.R.1 text; IRS.gov FAQs for Public Law 119-21.
If you have read that solar comes with a 30 percent federal tax credit through 2032, that information is out of date for homeowners. The One Big Beautiful Bill Act, signed July 4, 2025, terminated the residential credit (Section 25D) for systems placed in service after December 31, 2025. The commercial credit (Section 48E) is a different program and still active on its own timeline. For your own home in 2026, plan on no federal residential credit, and let us show you what your state still offers.
Solar provisions at a glance
Section 25D (residential solar): ENDED January 1, 2026. No residential credit for 2026 systems.
Section 25C (heat pumps, insulation, windows): ENDED January 1, 2026.
Section 48E (commercial solar): ACTIVE. Construction must begin by July 4, 2026 for full credit window.
Section 30C (EV charger, qualifying census tracts): Expires June 30, 2026.
All state solar incentive programs: UNAFFECTED by H.R.1.
The full picture
| Tax Code Section | Program | Status | Who It Affects |
|---|---|---|---|
| Section 25D | Residential solar credit | ENDED | Homeowners purchasing or financing solar |
| Section 25C | Efficiency credit (heat pumps, insulation) | ENDED | Homeowners upgrading HVAC, insulation, windows |
| Section 48E | Commercial solar credit | ACTIVE (deadline applies) | Commercial property owners, third-party solar ownership (leases/PPAs) |
| Section 30C | EV charger credit | EXPIRES JUNE 30, 2026 | Qualifying addresses only. Not universal. |
| State programs | All state solar incentive programs | UNAFFECTED | Homeowners and businesses in participating states |
Source: enrolled H.R.1 text (Congress.gov, Public Law 119-21). IRS.gov FAQs for Public Law 119-21. Accuracy verified .
Commercial property owners
The Section 48E Clean Electricity Investment Credit is still active for commercial solar projects. H.R.1 did not eliminate it. What it established is a construction-start deadline: for the full placed-in-service window through December 31, 2030, construction must physically begin by July 4, 2026.
The base 48E credit is 30 percent of system cost. Adders are available for qualifying projects: domestic content, energy community location, and low-income community designations can increase the effective rate above 30 percent for eligible projects. Verify your project's eligibility with a tax advisor. The math involves prevailing wage requirements, apprenticeship compliance, and domestic content thresholds that change over time.
For third-party-owned residential systems (leases and PPAs), the same Section 48E credit applies because the solar company owns the equipment. The company claims the credit; the homeowner benefits indirectly through potentially lower rates.
Commercial solar projects must begin construction by July 4, 2026 to qualify for the 30 percent Section 48E federal tax credit. After that date, the system must be placed in service by December 31, 2027.
Talk to an Advisor About Commercial SolarAfter July 4, 2026
Projects where construction begins after July 4, 2026 still qualify for Section 48E but with a placed-in-service deadline of December 31, 2027. The credit rate may also adjust. Verify current terms with a tax advisor after this date.
Your situation
Homeowners buying or financing solar
The federal math is gone.
No Section 25D credit for 2026 purchases. Payback periods are 2 to 4 years longer than 2024 quotes suggested. State incentives, electricity rates, and your utility's net-metering rules now determine whether solar makes sense. High-rate states with strong state programs (Massachusetts, New Jersey, Illinois, New York) remain compelling. Low-rate states without state programs are genuinely harder.
Is solar still worth it in 2026?Homeowners considering lease or PPA
One indirect path to federal value survives.
When a solar company owns the system, it claims Section 48E (not you). The company may pass a portion of that credit's value through lower monthly rates. This mechanism requires construction to begin by July 4, 2026. After that date, the window narrows. Verify the specific construction timeline for your installation with the company.
How the lease and PPA pass-through worksCommercial property owners
Section 48E is active. The deadline is July 4, 2026.
Commercial solar projects that begin construction by July 4, 2026 qualify for the 30 percent base Section 48E credit with a placed-in-service window through December 31, 2030. Additional adders are available for qualifying projects. This is a real and approaching deadline. Talk to a tax advisor, not just a solar installer.
Commercial solar and Section 48EWant to know exactly what H.R.1 means for your specific home, utility, and state?
A free in-home assessment models your real numbers: zero federal residential credit, your utility's net-metering rules, and every state incentive that applies to your address. No commission. No shared lead.
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A free in-home assessment works through your real numbers: zero federal residential credit, your utility's net-metering structure, and the state programs that apply to your address. Independent analysis. No commission. No door-knockers.
