Solar tax credit 2026: the federal credit has ended, and this is who claimed it by state and income

The solar tax credit 2026 status: Section 25D ended for expenditures made after December 31, 2025

The homeowner credit for solar, batteries and other residential clean energy property stopped at the end of 2025. The statute sets the date; IRS guidance says the date that counts is when installation is completed.

Section 70506 of Public Law 119-21, enacted July 4, 2025, rewrote 25D(h) so the Residential Clean Energy Credit "shall not apply with respect to any expenditures made after December 31, 2025". Before the change, the credit was scheduled to run at 30% through 2032, then 26% in 2033 and 22% in 2034; section 70506 struck those later steps (26 U.S.C. 25D amendment notes).

The IRS FAQ in Fact Sheet FS-2025-05 (August 21, 2025) applies the existing rule in 25D(e)(8)(A): an expenditure is made when the original installation is completed. A system paid for in 2025 but completed after December 31, 2025 does not qualify. For new construction, the expenditure is made when the taxpayer's original use of the home begins.

Residential Clean Energy Credit (Section 25D): A nonrefundable federal income tax credit equal to 30% of the cost of new qualified solar electric, solar water heating, small wind, geothermal heat pump, fuel cell and (from 2023) battery storage property of at least 3 kilowatt hours installed at a US home the taxpayer lives in, including labor (IRS).

The IRS credit page, last reviewed July 4, 2026, says the credit is not available for property placed in service after December 31, 2025, while one sentence lower on the same page still refers to a phase-out beginning in 2033, a remnant of prior law. The statute controls; the FAQ notes that where an FAQ is inaccurate, the law determines tax liability.

What still applies in 2026: carryforwards, third-party ownership under 48E, and state credits

Three things survive the 25D cutoff: unused 25D credit carried forward, business credits for systems a third party owns, and state incentives.

Carryforward. The 25D credit is nonrefundable, but unused amounts carry forward. The Instructions for Form 5695 (2025) tell filers to use the form to carry the unused portion of the credit to 2026. CRS Insight IN12611 notes that Public Law 119-21 did not change the carryforward rules. On preliminary 2023 data, 601,300 returns carried $4.49 billion of 25D credit forward, and CRS calculated that 43.3% of 2023 recipients carried part of their credit forward and 10.2% carried all of it.

Third-party ownership. Section 48E, the clean electricity investment credit, is a business credit. Section 70513 of Public Law 119-21 ends it for wind and solar property placed in service after December 31, 2027 when construction begins more than 12 months after enactment, that is, after July 4, 2026. IRS Notice 2025-42 makes the Physical Work Test the method for showing construction began before July 5, 2026, and keeps the Five Percent Safe Harbor for solar facilities of 1.5 MW (AC) or less. Section 70513(c) also bars 48E for leased property described in 25D(d)(1) and (d)(4), which are solar water heating and small wind property; the text does not name solar electric property. How these rules apply to a given lease or power purchase agreement is a question for the system owner's tax adviser.

Other federal home credits ended on the same date. Section 70505 ended the 25C energy efficient home improvement credit for property placed in service after December 31, 2025; heat pump incentives are covered in heat pump rebates by state, and the 30C charger credit change is in EV charger installation cost.

Nevada, Hawaii and Florida had the most 25D claims per 1,000 returns in 2023

Claims cluster in the Sun Belt and Hawaii by rate, and in California, Texas and Florida by dollars. The national rate was 9.5 claims per 1,000 returns.

IRS Statistics of Income state data for tax year 2023 (returns filed in calendar 2024, released August 21, 2026) show 1,518,210 returns with a residential clean energy credit, out of 159,949,000 returns filed. Nevada led at 20.8 claims per 1,000 returns, followed by Hawaii (17.8), Florida (17.7), Arizona (17.3) and California (17.1). North Dakota was lowest at 1.7, a gap of 12.2 times. 12 of 51 jurisdictions were above the US rate.

By dollars, California returns claimed $1.93 billion, or 24.8% of the US total of $7.79 billion. Texas ($1.05 billion) and Florida ($866.0 million) followed, and the three states together claimed 49.4%. The 10 largest states by dollars claimed 69.1%.

Average credit per claiming return ranged from $2,268 in Mississippi to $7,442 in New Hampshire, against a US average of $5,132. The amount is the credit used against tax that year. Because the credit is nonrefundable, a filer with a small tax bill uses less of it in the first year and carries the rest forward, which lowers the average in lower-income states.

Residential energy credit dollars rose 233.1% from 2018 to 2022

IRS state files show the combined residential energy credit growing every year from 2018 to 2023. Only from 2023 can 25D be separated from 25C.

The combined residential energy credit field (25C and 25D) totaled $2.40 billion on 726,440 returns in tax year 2018 and $7.98 billion on 3,220,260 returns in 2022. Claims rose 343.3% over those four years. In 2023 the two credits together reached $10.12 billion, 26.7% above 2022: $7.79 billion of 25D on 1,518,210 returns and $2.32 billion of 25C on 2,612,610 returns.

The series has breaks. Before 2023 IRS published one combined field, and the eligibility rules of both credits changed during the period, so the 2018 to 2022 growth cannot be assigned to solar alone. The three IRS products for 2023 also differ: the state file counts 1,518,210 returns and $7.79 billion; the sample-based Table 3.3 estimates 1,481,945 returns and $8.23 billion, 5.6% more dollars; the preliminary Form 5695 table, cut off at May 23, 2024, shows 1,246,440 returns and $6.34 billion.

Returns with AGI of $100,000 or more received 71.5% of 2023 credit dollars

The credit went mostly to middle and upper-middle income filers: claim rates rise with income and so does the average credit.

IRS Table 3.3 for tax year 2023 shows returns with AGI of $100,000 under $200,000 were 17.2% of all returns, 31.5% of 25D claims and 42.2% of 25D dollars. Returns with AGI of $200,000 or more received 29.3% of the dollars on 15.7% of claims. Returns under $25,000 were 26.9% of all returns and received 0.2% of the dollars.

Claim rates rose from 0.6 per 1,000 returns under $25,000 to 17.3 per 1,000 at $200,000 under $500,000. The average credit rose from $516 to $13,011 for returns of $500,000 or more. Nontaxable returns, where credits reduced tax to zero, accounted for 39.0% of 2023 25D dollars: on those returns, credits reduced income tax to zero.

Solar electric property was 86.0% of qualified 25D costs; batteries were 2.3%

The Form 5695 detail confirms that 25D was mainly a rooftop solar credit, with batteries a small but new line.

Preliminary IRS Form 5695 data for tax year 2023 show 752,300 returns reporting $20.58 billion of qualified solar electric costs, an average of $27,355 per return. At the 30% rate that average implies a credit of about $8,206 before tax-liability limits. Battery storage, eligible on its own from 2023, appeared on 48,840 returns with $541.2 million of costs.

The same table shows 93,330 returns reporting panelboard, subpanel, branch circuit or feeder work under 25C. Panel costs and rebates are covered in electrical panel upgrade cost; installation trades are covered in EV, solar and low voltage.

Six of 11 states checked still offer a state income tax credit for residential solar in 2026

State incentives did not end with 25D. In an 11-state sample checked against statutes and tax agency pages, six income tax credits remain, two have ended, and several states exempt solar equipment from sales or property tax.

Arizona (25%, up to $1,000), Massachusetts (15%, up to $1,000), New Mexico (10%, up to $6,000), New York (25%, up to $5,000) and South Carolina (25%, up to $3,500 a year) set rates and caps in statute or program rules; Hawaii's Renewable Energy Technologies Income Tax Credit has no repeal date under current law. Montana repealed its alternative energy system credit in 2021, and Utah's photovoltaic credit fell to $0 for systems installed on or after January 1, 2024.

Four of the 11 states exempt solar equipment from sales tax (Arizona, Florida, Massachusetts, New York) and five shield it from property tax (Arizona, California, Florida, New York, Texas). The sample is not a 50-state count. DSIRE, which tracks incentives nationally, shows solar PV incentives of some kind in 45 states plus DC as of April 2026, including utility programs. Net metering rules are in net metering by state.

How we ranked the states

Get the calculations (CSV)

State by state

1. Public Law 119-21 (enacted July 4, 2025), section 70506, amended 25D(h) so the credit does not apply to any expenditures made after December 31, 2025, and struck the 26% and 22% rates scheduled for 2033 and 2034.^[7][8]
2. IRS FS-2025-05 (August 21, 2025) states that a 25D expenditure is made when original installation is completed; installation completed after December 31, 2025 means no credit even if paid for in 2025.^[10]
3. In tax year 2023, 1,518,210 US returns claimed 7,791,024 thousand dollars of 25D credit, an average of $5,132 per claiming return.^[1]
4. Nevada had the highest 25D claim rate in tax year 2023 at 20.8 per 1,000 returns; North Dakota had the lowest at 1.7.^[1]
5. 12 of 51 jurisdictions (50 states and DC) had a 2023 claim rate above the US rate of 9.5 per 1,000 returns, all of them in the South, West or New England.^[1]
6. California returns claimed $1.93 billion in tax year 2023, 24.8% of the US total; California, Texas and Florida together claimed 49.4%.^[1]
7. The average 2023 credit per claiming return ranged from $2,268 in Mississippi to $7,442 in New Hampshire.^[1]
8. Returns with AGI of $100,000 or more filed 47.2% of 2023 25D claims and received 71.5% of the dollars (IRS Table 3.3, US).^[4]
9. Returns with AGI under $25,000 were 26.9% of all 2023 returns but received 0.2% of 25D dollars, an average of $516 per claim.^[4]
10. On preliminary 2023 Form 5695 data, 752,300 returns reported $20.58 billion of solar electric costs, 86.0% of qualified 25D costs, averaging $27,355 per return.^[5]
11. 48,840 returns reported $541.2 million of battery storage costs for tax year 2023, the first year batteries qualified on their own.^[5][9]
12. 601,300 returns carried $4.49 billion of unused 25D credit from 2023 into later years (preliminary data).^[5]
13. US combined residential energy credits (25C and 25D) grew from $2.40 billion in tax year 2018 to $7.98 billion in 2022, a 233.1% increase in nominal dollars.^[3]
14. Section 70513 of Public Law 119-21 ends the Section 48E business credit for wind and solar property placed in service after December 31, 2027 when construction begins after July 4, 2026; its new lease rule names only solar water heating and small wind property, not solar electric property.^[7][8][13]

In short

• Section 70506 of Public Law 119-21, enacted July 4, 2025, ended the Residential Clean Energy Credit for expenditures made after December 31, 2025 (the law).
• IRS Fact Sheet FS-2025-05 says an expenditure counts as made when installation is completed, so a 2025 payment for a system finished in 2026 does not qualify.
• In tax year 2023, 1,518,210 returns claimed $7.79 billion of 25D credit, or 9.5 claims per 1,000 returns (IRS SOI state data released 2026-08-21).
• Nevada (20.8), Hawaii (17.8) and Florida (17.7) had the highest claim rates per 1,000 returns; California claimed the most dollars, $1.93 billion or 24.8% of the US total.
• Returns with AGI of $100,000 or more received 71.5% of 2023 credit dollars and returns of $200,000 or more received 29.3% (IRS Table 3.3).
• Solar electric property was 86.0% of qualified 25D costs on 2023 Form 5695 filings; batteries were 2.3%.
• Combined residential energy credit dollars (25C and 25D) rose 233.1% from 2018 to 2022 and reached $10.12 billion in 2023.
• Of 11 states checked against statutes and agency pages, 6 still offer a state income tax credit for residential solar in 2026, and 2 have ended theirs.

Common questions

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How we built this report

Question and scope: the status of the federal Residential Clean Energy Credit (26 U.S.C. 25D) in 2026, and who claimed it by state and income. Law and guidance were read in the enacted text of Public Law 119-21 on govinfo, the current 25D text and amendment notes, IRS FS-2025-05, the IRS credit page, the 2025 Form 5695 instructions and IRS Notice 2025-42, all checked on 2026-10-27.

State data: IRS Statistics of Income Historic Table 2, tax year 2023, the most recent release (August 21, 2026). Tax year 2023 is the first year the state file reports 25D (N07262) separately from 25C (N07265). Claims per 1,000 returns divide N07262 by all returns (N1); average credit divides A07262 (thousands of dollars) by N07262. Rankings cover 50 states and DC; the US total also includes Puerto Rico and other areas. Calculations are in derived_metrics.csv and scripts/.

Trend: tax years 2018 to 2022 use the single combined residential energy credit field (N07260). For comparability, 2023 is shown as 25D plus 25C dollars. Returns cannot be de-duplicated across the two 2023 fields, so no combined 2023 return count is shown. Dollars are nominal.

Income: IRS Publication 1304 Table 3.3 for tax year 2023, weighted sample estimates by AGI, grouped into six bands. Table 3.3 and the state file differ in population (all tax year 2023 returns vs returns filed in calendar 2024), so national totals differ; each is reported with its source. Property-type detail comes from the preliminary Form 5695 Table 1 (returns processed through May 23, 2024).

State incentives: a sample of 11 states chosen for high 25D use or a known state solar credit, checked against the statute or the tax or energy agency page. Where an official legislature site blocked automated access, an Internet Archive copy was used and labelled with its capture date. Cells marked 'Not checked' were not verified. No state incentive totals were estimated.

Excluded: a DSIRE program-database query (API returned HTTP 403), the congress.gov CRS page (bot challenge; an Internet Archive copy was used instead), CRS Insight IN12423 (no archive copy; its figures were replaced with the underlying IRS tables) and the Hawaii statute page (HTTP 403 and archive 403). See excluded.md. Limitations: amounts are credits used, not earned; returns are not households. Last updated 2026-10-27.

This report presents published data with its limitations. It is not legal, financial or investment advice.

Sources by tier

Tier 1: primary and official sources (29)

• [1] Internal Revenue Service, Statistics of Income. SOI Tax Stats, Historic Table 2: individual income and tax data by state and size of AGI, tax year 2023 (CSV, released 2026-08-21). Tax year 2023 (returns filed in calendar 2024). Accessed 2026-10-27.
• [2] Internal Revenue Service, Statistics of Income. State Data Tax Year 2023 Documentation Guide (Historic Table 2). Tax year 2023. Accessed 2026-10-27.
• [3] Internal Revenue Service, Statistics of Income. SOI Tax Stats, Historic Table 2 state data files, tax years 2018 to 2022. Tax years 2018 to 2022. Accessed 2026-10-27.
• [4] Internal Revenue Service, Statistics of Income. Individual Complete Report (Publication 1304), Table 3.3: All returns, tax liability, tax credits and tax payments, by size of AGI, tax year 2023. Tax year 2023 (sample estimates). Accessed 2026-10-27.
• [5] Internal Revenue Service, Research, Applied Analytics and Statistics. Table 1. Form 5695 Residential Energy Credits, tax year 2023 (through Filing Season 2024 Cycle 21, May 23, 2024). Tax year 2023 (preliminary, returns processed through 2024-05-23). Accessed 2026-10-27.
• [6] Internal Revenue Service, Statistics of Income. SOI Tax Stats, Upcoming data releases (July 1 to Sept. 30, 2026 schedule). 2026 release schedule. Accessed 2026-10-27.
• [7] U.S. Government Publishing Office (govinfo). Public Law 119-21 (H.R. 1), 139 Stat. 72, enacted July 4, 2025, sections 70505, 70506 and 70513. Enacted 2025-07-04. Accessed 2026-10-27.
• [9] Internal Revenue Service. Residential Clean Energy Credit. Page last reviewed 2026-07-04. Accessed 2026-10-27.
• [10] Internal Revenue Service. Fact Sheet FS-2025-05: FAQs for modification of sections 25C, 25D, 25E, 30C, 30D, 45L, 45W and 179D under Public Law 119-21. Issued 2025-08-21. Accessed 2026-10-27.
• [11] Internal Revenue Service. IR-2025-86: Treasury, IRS issue FAQs to address the accelerated termination of several energy provisions under OBBB. Issued 2025-08-21. Accessed 2026-10-27.
• [12] Internal Revenue Service. Instructions for Form 5695 (2025). Tax year 2025; page last reviewed 2026-04-30. Accessed 2026-10-27.
• [13] Internal Revenue Service. Notice 2025-42: Beginning of construction requirements for the termination of clean electricity credits for applicable wind and solar facilities. Issued August 2025. Accessed 2026-10-27.
• [15] Arizona State Legislature. Arizona Revised Statutes 43-1083, Credit for solar energy devices. Current statute, checked 2026-10-27. Accessed 2026-10-27.
• [16] Arizona State Legislature. Arizona Revised Statutes 42-5061, Retail classification (subsection M, solar energy devices). Current statute, checked 2026-10-27. Accessed 2026-10-27.
• [17] Arizona State Legislature. Arizona Revised Statutes 42-11054, Valuation of property (subsection C, solar energy devices). Current statute, checked 2026-10-27. Accessed 2026-10-27.
• [18] Hawaii Department of Taxation. Renewable Energy Technologies Income Tax Credit (RETITC), HRS section 235-12.5. Checked 2026-10-27. Accessed 2026-10-27.
• [19] Massachusetts Legislature. Massachusetts General Laws chapter 62, section 6(d) (Internet Archive copy of 2026-03-31). Statute as captured 2026-03-31. Accessed 2026-10-27.
• [20] Massachusetts Legislature. Massachusetts General Laws chapter 64H, section 6(dd) (Internet Archive copy of 2026-05-08). Statute as captured 2026-05-08. Accessed 2026-10-27.
• [21] Montana Legislature. Montana Code Annotated 2025, 15-32-201 (Repealed). MCA 2025. Accessed 2026-10-27.
• [22] New Mexico Energy, Minerals and Natural Resources Department. New Solar Market Development Tax Credit (NSMDTC). Checked 2026-10-27. Accessed 2026-10-27.
• [23] New York State Senate. New York Tax Law section 606(g-1), Solar energy system equipment credit (Internet Archive copy of 2026-03-21). Statute as captured 2026-03-21. Accessed 2026-10-27.
• [24] New York State Senate. New York Real Property Tax Law section 487 (Internet Archive copy of 2025-11-08). Statute as captured 2025-11-08. Accessed 2026-10-27.
• [25] New York State Senate. New York Tax Law section 1115(ee) (Internet Archive copy of 2026-10-12). Statute as captured 2026-10-12. Accessed 2026-10-27.
• [26] South Carolina Legislature. South Carolina Code of Laws section 12-6-3587. Current code, checked 2026-10-27. Accessed 2026-10-27.
• [27] Texas Comptroller of Public Accounts. Property Tax Exemptions (Solar and Wind-Powered Energy Device, Tax Code section 11.27). Checked 2026-10-27. Accessed 2026-10-27.
• [28] Florida Legislature. Florida Statutes 193.624, Assessment of renewable energy source devices (2026 Florida Statutes). 2026 Florida Statutes. Accessed 2026-10-27.
• [29] Florida Legislature. Florida Statutes 212.08(7)(hh), Solar energy systems (2026 Florida Statutes). 2026 Florida Statutes. Accessed 2026-10-27.
• [30] Utah State Legislature. Utah Code 59-10-1014, Nonrefundable renewable residential energy systems tax credit (current version). Version effective 2025, amended by Chapter 233, 2025 General Session. Accessed 2026-10-27.
• [31] California State Board of Equalization. Active Solar Energy System New Construction Exclusion (Revenue and Taxation Code section 73). Checked 2026-10-27. Accessed 2026-10-27.

Tier 2: trade bodies, market research, company data (3)

• [8] Legal Information Institute, Cornell Law School. 26 U.S. Code section 25D, Residential clean energy credit (text and amendment notes). Current text as amended by Pub. L. 119-21. Accessed 2026-10-27.
• [14] Congressional Research Service. CRS Insight IN12611: Expiration and Carryforward Rules for the Residential Clean Energy Credit (Internet Archive copy of 2026-04-02). Published 2025-09-25. Accessed 2026-10-27.
• [32] DSIRE, NC Clean Energy Technology Center. Solar Photovoltaic Incentives summary map, April 2026. April 2026. Accessed 2026-10-27.