When do solar tax credits expire? Discover when solar tax credit expiration dates went into effect and how you can figure out what it will cost to install solar.
Welcome to our series answering reader questions and concerns about how to cut the utility-company cord.
The U.S. federal government has eliminated rebates and tax credits for home solar and closed programs, such as Solar for All. I was hoping to rely on these incentives to go solar on my suburban home, but I wasn’t going to be financially ready for another six months or longer. Do any incentives remain – and how does the “new math” change my return on investment?
If you’ve ever visited a national or state park, you’ve likely seen signs warning against feeding wild animals. The park administrators know that feeding wildlife is not only dangerous, but can also make the animals dependent on humans for food. The same dynamic happens in economics when people, or entire industries, become overly reliant on incentives.
ITC Tax Credit Expiration
In the 1980s, I was a licensed broker-dealer heavily involved in real estate limited partnerships (RELP). The RELP industry thrived on lucrative federal subsidies that resulted in artificially favorable returns on investment (ROI) for commercial real estate, and those ROIs, in turn, flooded the market with new offices, warehouses, and retail spaces. When President Ronald Reagan ended the incentives, the commercial real estate market collapsed. Because of this experience, I was cautious when the modern solar investment tax credit (ITC) was created in 2005 and expanded in 2022, offering a 30 percent credit for systems installed through 2032. (Other credits incentivized wind and batteries.) Although the incentives were valuable to kick-start the renewable energy industry, I warned they’d be dangerous to rely on indefinitely. If the industry could reach an established state, then prices of labor and materials would gradually decrease – as would the incentives. This is exactly what happened, albeit not so gradually, on Dec. 31, 2025, when the One Big Beautiful Bill ended the ITC.
To be sure, losing ITC is a major blow to the solar industry. Many solar companies based their business models on those incentives. The credit allowed a home or commercial property owner to reduce their bottom-line income taxes by 30 percent of their system’s cost. Let’s say you were a small-business owner installing a commercial solar system that cost $100,000. Assuming your business was profitable, you would’ve received a tax reduction – not a deduction – of $30,000 for the year of installation. I told investors that buying into solar was one of the best tax-advantaged opportunities we’ve ever seen. I’ll spare you the complicated purchasing scheme I advised my clients to take advantage of, but business owners and homeowners alike could’ve achieved an ROI of under five years for most solar installs. But that was then.
Let’s talk about today and solar’s “new math” without the ITC. People often assume that when they buy a solar system, they’ll never see that money again (like buying a bull for your cow-calf operation). But solar doesn’t work that way; it’s an investment that pays for itself, only now over a longer period of time. Emily Walker, who’s director of insights for the online home energy marketplace EnergySage, explains it like this: The average price of a residential solar system in 2026 is about $30,000. “When you compare what you’re missing out on this year to last year, it’s about $9,000 [in credits] on the average system. Your payback jumped from about seven years to 10 years,” Walker says. “But when you’re looking at 25 or 30 years of electricity cost savings, it’s still very worthwhile.”
Energy prices aren’t going down for anyone. The explosion of data centers is pushing rates up all over the country. Financing a home solar system is a good option, especially if you can get a low-interest home-improvement loan with little or nothing down and with payments that are offset by your electricity savings. Your electricity savings pay off your loan, and you’ll still have many years of ongoing energy savings. Plus, the ITC wasn’t the only solar incentive; many states and local governments offered their own credits. In some cases, those still exist. You can see what’s available for your area at the Database of State Incentives for Renewables & Efficiency.
In the case of off-grid rural or remote properties, solar-plus-batteries may be the only option that makes sense. Another situation where solar makes complete sense is for a home backup system. I always opt for a backup system that includes solar, batteries, and a generator. The package costs more upfront, but you’re covered during a blackout.
Finally, if you’re thinking you may just wait for a new president in three years who might revive the ITC, Walker warns against it. “I’d be surprised if the tax credit comes back. At the same time, we’re seeing state incentives phase out,” she says. “The reason is [that] solar has become relatively affordable. For those who have it, they know exactly what their payment is over time. You’re not susceptible to the same volatility we see in the electricity market.”
Send Us Your Power-Full Questions
We’ll do our best to answer your questions on energy in upcoming issues. Email them to Letters@MotherEarthNews.com with “Energy Q&A” in the subject line. May all your days be filled with sunshine – even when it rains!
Hoss Boyd is founder, president, and CEO of TeraVolt Energy and a recognized solar and energy-storage expert. Learn more about TeraVolt Energy at http://TVNRG.com.
Originally published in the June/July 2026 issue of MOTHER EARTH NEWS and regularly vetted for accuracy.
