Is The Federal Solar Tax Credit Ending in 2025? What Homeowners Need To Know
If you’ve been thinking about installing a solar array on your home, you may have seen headlines about potential changes to the federal solar tax credit. With recent developments in Congress, there’s been some concern — and understandably so. But before you worry, let’s take a closer look at what’s actually happening, what is being proposed, and what it means for you as a homeowner.
What Is the Federal Solar Tax Credit?
Under current law (the Inflation Reduction Act of 2022), homeowners can claim 30% of the cost of new, qualified clean energy systems like rooftop solar as a credit on their federal taxes. This benefit, known as the Residential Clean Energy Credit (25D), has made solar more affordable and more accessible for homeowners across the country and right here in Maine. This tax credit is scheduled to run through 2032.
What might be changing?
The new federal budget bill recently passed by the U.S. House of Representatives includes a provision that would eliminate this tax credit at the end of 2025. Under this provision, solar or battery installations completed by December 31st, 2025, will qualify for the 30% tax credit. Systems installed after December 31st, 2025 will not qualify for a federal tax credit.
If this provision becomes law:
- Homeowners installing systems in 2026 and beyond would no longer be eligible for the 30% federal tax credit.
- Our solar prices aren’t increasing, but if the federal tax credit goes away, the total cost of going solar could rise sharply for those who can no longer access the 30% credit.
Where does the bill stand now?
Here’s what’s important to understand: This change is not final.
The bill has only passed the House. It must still be debated, modified, and passed in the Senate. It would then need to be reviewed and approved again by the House before being signed by the President into law.
There’s still a real possibility that the Senate could amend or remove this provision entirely. Legislative proposals often change — sometimes substantially — before becoming law.
What should you do as a homeowner?
While we wait for more clarity from Congress, here is what we can depend on:
- The 30% solar tax credit is still available through at least the end of 2025.
- If you’ve been considering solar, now is the time to move forward and lock in the full federal incentive.
- If the bill passes with the tax credit cancellation in place, homeowners will have until the end of the year to have a system installed. Maine Solar Solutions currently has space in our installation calendar for 2025 installations, and we will keep prospective customers informed about our installation timelines.
Even without the Tax Credit, solar still makes financial sense
While the potential elimination of the 30% federal solar tax credit after 2025 may feel like a setback, it’s important to remember this: solar energy remains a smart, long-term investment — with or without the tax credit.
Yes, the tax credit helps accelerate your return on investment (ROI), but it’s not the only factor that makes solar a cost-effective choice. Even without federal incentives, generating your own electricity can lead to substantial savings over time, especially as utility rates continue to rise year after year.
Here’s why solar still adds up:
- Reduce or eliminate your electric bill: Once your system is installed, you start saving immediately by reducing or eliminating your monthly utility costs.
- Financing fixes your monthly electric bill: Financing the purchase fixes your annual electricity cost in the face of ever-increasing electrical rates.
- Energy independence: Reduce your vulnerability rising rates and increase your independence by adding a battery to your solar electric system.
- Benefit from a timely ROI: Even without a tax credit, most systems will pay for themselves within 10-15 years. With 25 year manufacturer warranties on most components and Maine Solar Solutions’ 30 year warranty, you can save money right away and look forward to free power after the system pays for itself.
- Added home value: Studies continue to show that homes with solar arrays that eliminate or greatly reduce their electric bills sell faster and at a premium compared to those without a solar electric system.
- Environmental benefits: Switching to clean energy helps reduce your carbon footprint and contributes to a more sustainable future — something that many homeowners value just as much as financial savings.
In short, while losing the tax credit would be unfortunate, it doesn’t erase the value of solar. It simply means the financial return takes a bit more time — but the long-term benefits remain strong and compelling.
Stay informed — not alarmed
The legislative process is still underway, and nothing is final yet. While it’s wise to be aware of proposed changes, there is no need to panic. Solar remains one of the smartest and most sustainable home improvements you can make — and for now, the incentives are still strong.
Our team is keeping a close eye on the situation in Washington and will provide updates as new information becomes available. In the meantime, if you’re ready to take the next step, our team is here to help you navigate your options and make the most of available incentives.
Have questions or want to get started? Contact us today for a free site assessment to get the ball rolling before the end of the year.
