What Is Section 48E / ITC?
Section 48E is the federal investment tax credit (ITC) claimed by whoever legally owns a solar system, and since the residential Section 25D credit expired for any system installed on or after January 1, 2026, it is the only remaining path to a 30%-equivalent credit, available only through third-party-ownership (TPO) structures like a lease or PPA where the installer or financier, not the homeowner, owns the system.
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Section 48E is the federal investment tax credit (ITC) claimed by whoever legally owns a solar system, and since the residential Section 25D credit expired for any system installed on or after January 1, 2026, it is the only remaining path to a 30%-equivalent credit, available only through third-party-ownership (TPO) structures like a lease or PPA where the installer or financier, not the homeowner, owns the system.
Section 48E / ITC explained
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, ended the 30% Section 25D residential credit as a cliff expiration, no phase-down, effective for any system installed on or after January 1, 2026. A cash buyer or a loan buyer who owns their own system now gets zero federal credit. Section 48E is the only remaining route to comparable tax benefit, and it is claimed by the system's legal owner, which under a lease or PPA structure is the installer or financier, not the homeowner.
That single mechanical fact is driving the biggest financing shift in the market. 44% of solar salespeople reported that more than half of their 2025 projects used TPO structures; that share is projected to hit 65% in 2026, with the share of reps selling zero TPO dropping from 9% to just 1%. Customer-owned market share fell from 54% to 43% during 2024 alone while TPO grew from 40% to 52% over the same period. Regional swings have been extreme: Michigan went from 1.16% TPO to 38.96% TPO in a single year; Connecticut moved from 9.23% to 50.00%.
A sales pitch still built around a homeowner-owned-system tax credit is selling a benefit that no longer exists for cash or loan deals.
Why it matters when you're buying
Lead with TPO or lease structure and Section 48E ownership economics, or lead with no-credit-needed cash-flow value, not a 25D-style homeowner credit that expired. A pitch that hasn't updated for this is losing every cash and loan conversation on a benefit that stopped being true January 1, 2026.
Frequently Asked Questions
Can a homeowner still get a 30% solar tax credit in 2026?
How fast is TPO growing because of the Section 48E shift?
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