Proposal-assumption check · §25D status
Solar tax credit checker: is your quote still assuming a credit you can use in 2026?
If a 2026 residential solar proposal still subtracts a 30% federal credit from the bottom-line price, the audit question isn't when you signed — it's when the system is placed in service. Per current IRS guidance, the federal credit is not available for property placed in service after Dec 31, 20251. This checker resolves your specific install year + ownership model, flags the dollar gap when a quote is assuming a credit you can't claim, and surfaces the third-party (lease / PPA) path that may still capture credit value through 2027.
Updated May 16, 2026. Re-verified against the IRS Residential Clean Energy Credit page and the IRS Form 5695 (2025) instructions the same day.
Fast answer
Owned, 2022–2025
Possibly claimable.
If placed in service in the window and you have federal tax liability.
Owned, 2026+
Remove the 30% line.
The homeowner §25D credit ended Dec. 31, 2025.
Lease / PPA
Verify pass-through, not your return.
A business credit may flow through your payment; it doesn't show up on Form 1040.
Your install — type in the details
Quote assumption verdict
Per the IRS Residential Clean Energy Credit page and the Form 5695 (2025) instructions, the federal credit is not available for property placed in service after Dec 31, 2025. A 2026 install on an owned residential system cannot claim §25D directly. If a proposal still subtracts a 30% credit on this install year, the after-credit price is overstated.
This is what the quote may be subtracting that the homeowner cannot actually claim on a federal return. Ask the installer to re-run the bottom-line price without the assumed credit and compare the two numbers side by side before signing.
- What is the contractual placed-in-service date, and what happens to the math if installation slips past it?
- Under which section of the Internal Revenue Code is the credit being claimed for my install year — and on whose return?
- Please re-issue the bottom-line price without the federal credit subtracted, so I can compare both versions.
- IRS — Residential Clean Energy Credit (federal credit status + eligibility)
- IRS — Form 5695 (2025) instructions (placed-in-service language + carryforward)
- DSIRE — state, local, and utility incentives (look these up separately; the federal check above doesn't cover them)
What this check can't see
Federal §25D / §48E timing is the entire scope of this checker. State and utility incentives, AMT interactions, other credits, and the rest of your tax picture all sit outside it — look up state and local incentives separately. This is not tax advice; treat the output as input to a conversation with a CPA or enrolled agent, not a final answer.
How this check thinks.
The Residential Clean Energy Credit (§25D) applies to qualified residential clean energy property — solar electric, solar water heating, small wind, geothermal heat pumps, battery storage ≥3 kWh, fuel cells — installed at the homeowner's residence (main home or second home for most categories). The IRS-controlling date is the year the system is placed in service, which the Form 5695 (2025) instructions define as the year installation is complete — not contract date, deposit date, or permit-pull date.
Window: 2022 through Dec 31, 2025. The credit is 30%of qualified costs. It's nonrefundable (you need federal tax liability to claim it) but carries forward indefinitely.
What ended the window: a 2025 federal law change set a hard placed-in-service deadline of Dec 31, 2025 for the residential credit. The IRS Form 5695 (2025) instructions1 state this verbatim: "You can't claim residential clean energy credits for expenditures made after December 31, 2025." The IRS Residential Clean Energy Credit page mirrors that timeline: the credit is “not available for any property placed in service after December 31, 2025”2. If you see an older IRS FAQ page still referencing a 2032–2034 phase-down, that page reflects the pre-change timeline and has not been updated to current law.
Lease / PPA carve-out: Leased, PPA, and prepaid solar arrangements may still capture credit value through the business-side §48E credit, currently scheduled through 2027 — but the credit goes to the system's third-party owner, not the homeowner's tax return. Whether the third party passes that value through reduced lease / PPA payments is a contract question — ask in writing.
Homeowner §25D credit. Owned residential systems placed in service in this window claim the 30% credit on the homeowner's federal return.
Owned: expired. Owned residential systems placed in service after Dec 31, 2025 cannot claim §25D — the homeowner credit is gone.
Lease / PPA: maybe. Third-party owners may still capture value via business-side §48E. Whether it's passed through to the homeowner is a contract question.
State and local incentives sit entirely outside this federal check. They change by jurisdiction and by utility, and they change often. The N.C. Clean Energy Technology Center maintains DSIRE — a ZIP-searchable database of federal, state, local, and utility incentive programs. Use it to verify any state-level credit, rebate, performance payment, or net-metering treatment your quote assumes; we don't maintain state-by-state copy here.
Calculator FAQ
- What does "placed in service" mean exactly?
- Per IRS Form 5695 (2025) instructions1: "costs are treated as being paid when the original installation of the item is completed." Not the contract date. Not the deposit. Not the permit. Installation must be fully complete during the eligibility window. A 2025 contract with the install slipping into January 2026 doesn't qualify.
- Is the credit refundable?
- No — it's nonrefundable. You can only use it to offset federal income tax you actually owe. If your eligible credit exceeds your tax liability in the install year, the excess carries forward to future years indefinitely until used. Retirees with low tax liability often need 2–3 years of carryforward to fully realize the credit; the checker approximates the years needed if you fill in your tax liability.
- What if my installer is still quoting 30% on a 2026 install?
- Ask which section of the Internal Revenue Code authorizes the credit for your install year, and on whose tax return it shows up. For an owned residential system placed in service in 2026 or later, §25D is no longer available per the IRS Form 5695 (2025) instructions1. If the salesperson insists, request the installer's tax counsel to put the position in writing. A reputable installer won't — because the placed-in-service deadline is explicit.
- Are batteries eligible?
- Yes — battery storage with capacity ≥3 kWh installed in conjunction with a residential solar system qualifies for §25D under the same eligibility window and percentage (30%, through Dec 31, 2025).
- 1. IRS Form 5695 (2025) instructions, verbatim: "You can't claim residential clean energy credits for expenditures made after December 31, 2025." The One Big Beautiful Bill Act, signed July 4, 2025, terminated §25D for systems placed in service after that date. Verified 2026-05-16. irs.gov/instructions/i5695 ↩
- 2. IRS, Residential Clean Energy Credit page (confirmatory). Summarizes a 30% nonrefundable credit for qualified residential clean energy property, with any unused credit carrying forward indefinitely until used. The placed-in- service cutoff itself is quoted verbatim from the Form 5695 (2025) instructions footnote — the RCEC page here is the homeowner-facing overview, not the authority for the cutoff date. Verified 2026-05-16. irs.gov · Residential Clean Energy Credit ↩
Audit the rest of the quote
The credit is one line in a six-page proposal. The solar quote calculator benchmarks $/W, production, and dealer-fee gap alongside it. The how to read a solar quote guide walks through the five numbers that decide whether the math holds up.
See how losing the credit moves the math
Re-run payback without the credit on the solar payback calculator, or check whether a 30% credit assumption is being folded into financing on the solar loan calculator. State and utility incentives are at DSIRE.