What Is Section 25D?
Section 25D was the federal residential clean-energy tax credit that let homeowners who bought and owned their solar system directly claim 30% of the cost back, and it expired on a hard cliff, no phase-down, for any system installed on or after January 1, 2026.
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Section 25D was the federal residential clean-energy tax credit that let homeowners who bought and owned their solar system directly claim 30% of the cost back, and it expired on a hard cliff, no phase-down, for any system installed on or after January 1, 2026.
Section 25D explained
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, ended Section 25D for systems installed January 1, 2026 or later, with no gradual phase-down the way some prior credit changes have worked. That means cash and loan buyers, the homeowners who own their system outright, get zero federal tax credit in 2026, a hard change from the 30% credit that was available through the end of 2025.
This single policy change is the primary driver behind the entire 2026 residential solar contraction: installs forecast down 18% to 21%, CAC spiking 40% to $0.84 per watt, and the wave of solar-company bankruptcies that accelerated through 2025 and into 2026. Section 25D's expiration removed the single biggest financial incentive that had been pulling cash and loan buyers into the market.
The remaining path to a 30%-equivalent credit is Section 48E, but it is claimed by the system's owner, and under a lease or PPA structure that owner is the third-party financier, not the homeowner. That is the direct mechanical reason TPO structures surged after 25D's expiration: it is now the only realistic route for most residential buyers to capture tax-credit-equivalent savings at all.
Why it matters when you're buying
Any 2026 solar sales conversation with a homeowner still assuming a 30% tax credit on a cash or loan purchase is starting from a wrong premise. The pitch has to lead with TPO's Section 48E-driven savings or with cash and loan economics that no longer include a federal credit, not with pre-2026 assumptions.
Frequently Asked Questions
When did the Section 25D solar tax credit expire?
Can a homeowner still get a 30% credit on a cash-purchased solar system in 2026?
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