Home solar after the 30% federal tax credit

Here's what changed, what it does to the payback math, and which state rules still help.

The IRS says the 30% Residential Clean Energy Credit is not available for property placed in service after December 31, 2025. A home system installed in 2026 is paid for without it, so a quote or cost page that still subtracts 30% overstates your savings.

What ended

The credit covered 30% of the cost of qualified clean energy property for a home, including solar panels, installed from 2022 through December 31, 2025 (IRS: Residential Clean Energy Credit). State credits, property and sales tax rules, and utility export credits are separate and did not end with it.

How much it moves payback: Phoenix example

A 7 kW system at Phoenix's average quote of $2.28/W (EnergySage, updated 2026-09-04), with the same rates and the state credit in both columns:

Assumptions on the methodology page. Full numbers for 5, 7 and 10 kW on Solar companies in Phoenix.

Questions people ask about the credit

My system was installed in 2025. Can I still claim it?

Yes, if it was placed in service by December 31, 2025. File Form 5695 with your return for the tax year the property was installed, not merely purchased (IRS).

I signed the contract in 2025, but installation is in 2026.

The IRS test is when the property is placed in service, not when you signed or paid, so a system placed in service in 2026 does not qualify.

My credit was bigger than my tax bill.

The credit is nonrefundable, but the IRS says you can carry the unused part forward to reduce tax in future years.

I lease my panels or have a PPA.

You don't own the system, so tax credits and incentives go to the owner, not you (FTC). Ask the company how its price reflects them.

Does the loss of the credit change what solar pays back?

At today's prices it adds several years in every city I cover: solar payback by city after the credit.

What still applies in Arizona

• Credit for Solar Energy Devices (A.R.S. 43-1083): 25% of device cost, max $1,000 per residence, unused credit carried forward up to 5 years, no sunset in statute
• Property tax: A.R.S. 42-11054(C)(2): solar energy devices designed to produce solar energy primarily for on-site consumption are considered to add no value to the property.
• Sales tax: A.R.S. 42-5061(M): amounts received from sales of solar energy devices are deducted from the transaction privilege tax base; the retailer must be registered as a solar energy retailer.
• Exported power: Net billing. Utilities regulated by the Arizona Corporation Commission (APS, TEP) credit exports at the Resource Comparison Proxy (RCP) rate, locked for 10 years from interconnection; the rate for new customers can drop by no more than 10% per year. SRP is not ACC-regulated and sets its own export credit.

Checked 2026-09-13. Sources: 1, 2, 3. Cities: Phoenix, Tucson, Chandler, Scottsdale, Gilbert, Glendale, Tempe, Peoria, Surprise.

What still applies in California

• Property tax: Revenue and Taxation Code section 73 (BOE Letter to Assessors 2024/031): an active solar energy system is excluded from new-construction assessment if completed before 2027-01-01; the exclusion lasts until a change in ownership. Construction added in 2026 qualifies only if completed before 2027-01-01.
• Exported power: Net Billing Tariff for customers applying for interconnection since 2023-04-15: exports are credited at CPUC Avoided Cost Calculator values (usually lower than import rates), with the tariff locked for nine years. SDG&E customers are excluded from the export compensation adder.

Checked 2026-09-13. Sources: 1, 2. Cities: San Diego, Fresno, San Jose, Bakersfield, Clovis, Chula Vista, Oceanside, Carlsbad.

What still applies in New Jersey

• SuSI / ADI performance incentive: $77 per MWh produced for 15 years for residential registrations received on or after July 27, 2026 (was $85; NJBPU order of May 21, 2026, Docket QO20020184/QO26030096); paid as SREC-II certificates
• Property tax: N.J.S.A. 54:4-3.113a–b: property certified by the local construction official as a renewable energy system is exempt; the owner may exempt each year the assessed value with the system minus the assessed value without it (Form CRES).
• Sales tax: N.J.S.A. 54:32B-8.33 (Division of Taxation bulletin S&U-6): solar energy devices or systems that provide heating, cooling, or electrical or mechanical power by collecting solar energy, including devices for storing it, are exempt from sales tax; the buyer gives the seller Form ST-4.
• Exported power: Net metering under N.J.A.C. 14:8-4.3: when a home sends more electricity to the grid than it takes in a billing period, the utility and supplier credit the excess against the next month's bill, credits carry over month to month through the customer's 12-month annualized period, and any kilowatt-hours still in excess at the end of the year are paid at the supplier's avoided cost of wholesale power (average locational marginal price), which is far below the retail rate.

Checked 2026-09-21. Sources: 1, 2, 3, 4. Cities: Toms River, Elizabeth.

What still applies in New York

• Solar Energy System Equipment Credit (Form IT-255): 25% of qualified solar equipment expenditures, up to $5,000, against New York State income tax; unused credit carries forward up to five years; purchased, leased and 10-year-plus PPA systems at a principal residence qualify
• NY-Sun incentive (NYSERDA): paid to the installer per watt; the standard residential rate depends on the region's open block and can be exhausted, while income-qualified homes get $0.80/W under the Affordable Solar Residential Incentive — check the NYSERDA dashboard for the current block
• Property tax: RPTL §487: the increase in assessed value from a solar energy system is exempt for 15 years, but each town, city, village and school district may opt out; the Department of Taxation and Finance keeps the opt-out list (records as of 2026-03-31).
• Sales tax: Tax Law §1115(ee): the sale and installation of residential solar energy systems equipment is exempt from the 4% state sales tax and the 3/8% MCTD tax; local sales tax may still apply (Publication 718-S); the buyer gives Form ST-121.
• Exported power: Phase One net metering remains in place for homes: exports are netted against use and credits carry over, for a 20-year term from interconnection. Systems that received permission to operate on or after January 1, 2022 pay a monthly Customer Benefit Contribution set by the utility per kW of DC system size (NYSERDA, PSC VDER orders).

Checked 2026-09-21. Sources: 1, 2, 3, 4, 5. Cities: New York, Yonkers.

What still applies in Texas

• Property tax: Tax Code Section 11.27: exemption of the appraised value added by a solar energy device primarily for production and distribution of energy for on-site use; apply to the county appraisal district with Form 50-123 between January 1 and April 30.
• Exported power: No statewide net metering rule; export compensation is set by each utility. CPS Energy is a municipal utility outside the competitive market.

Checked 2026-09-14. Sources: 1, 2, 3 (CPS Energy Rider E5 (effective 2008-09-01), received from CPS DG team 2026-09-14). Cities: San Antonio, Austin.

Red flags in a 2026 quote

• A "net price" that subtracts a 30% federal tax credit.
• Savings that value every exported kWh at the full retail rate. Arizona utilities credit exports at 3.45–5.55¢ against roughly 14–15¢ for power you buy.
• Offers that claim to be run or funded by the government, or that call the system no-cost.

Next steps

• Check your quote with your utility's current rates.
• How to check a solar quote — six numbers to verify.

Updated 2026-10-08.