Solar Tax Credit 2026: What's Left Now the 30% Has Ended

If you're searching for the solar tax credit in 2026, you're going to find a lot of pages that still describe a 30% credit as though you can claim it. You can't, and this is the single most common piece of misinformation in solar right now. The federal residential credit ended at the close of 2025, which changes the arithmetic of going solar but not the conclusion for most San Diego homes — because San Diego's case was always driven by SDG&E's rates more than by a tax credit. This guide covers exactly what ended, what survived, what to do if you installed in 2025, and how the numbers work now.

What this guide covers

• What exactly ended, and when
• Whether anything replaced it
• What to do if your system went in during 2025
• Which California incentives still apply
• Whether solar still pays for itself without the credit
• The questions worth asking a 2026 installer

*This article explains a tax change in general terms. It isn't tax advice — confirm your own situation with a qualified tax professional before filing.*

Is there still a federal solar tax credit in 2026?

No. Section 25D — the 30% Residential Clean Energy Credit that homeowners claimed on their own tax return for solar panels and battery storage — terminated on 31 December 2025.

Two details matter more than the headline:

It did not step down. Previous expirations of this credit tapered: 30% to 26% to 22% over several years, giving buyers a reduced rate during the transition. This one did not. It ran at 30% until the last day of 2025 and then stopped at zero.

It ended early. Under the Inflation Reduction Act, 25D was scheduled to run to 2032. The One Big Beautiful Bill Act, signed on 4 July 2025, terminated it nearly a decade ahead of that schedule. That's why so much published advice is out of date: it was accurate when written and the timetable changed underneath it.

The practical test is the placed-in-service date — when your system was complete, inspected and operational — not when you signed, paid a deposit, or took delivery of equipment.

Did anything replace the 30% credit?

Nothing that a homeowner buying a system can claim on their own return. For a 2026 cash or financed purchase of solar for your own home, the federal credit line is zero.

Tax treatment does differ between ownership structures — a system you own outright, a lease, and a power purchase agreement are handled differently under federal law, and commercial and third-party-owned projects sit under separate provisions with their own timelines and conditions. If someone is presenting a 2026 arrangement to you as delivering a federal tax benefit, treat that as a question for your own tax professional rather than something to take from a sales conversation or from us.

What we can tell you plainly is what we offer and what it does: a prepaid lease that reduces the upfront cost of a system by 30–40% compared with buying outright. That's a price reduction on our side of the transaction, not a tax position you have to claim or defend.

What if you installed solar in 2025?

Then you're in the last cohort that can claim it, and the mechanics are worth getting right.

• The credit belongs on your 2025 return — the tax year the system was placed in service.
• It was nonrefundable. It could reduce your federal tax liability to zero but not pay you beyond what you owed.
• Unused credit carries forward. If your 2025 liability was smaller than the credit, the remainder can carry into later tax years.
• A 2025 contract with 2026 completion generally doesn't qualify, because placed-in-service date governs. This is the hard case, and it's the one to take to a tax professional rather than to a forum.
• Keep your documentation — final invoice, system specification, permit sign-off and the date of Permission to Operate. That paperwork establishes when the system was placed in service.

If you are in that position, get advice on your specific facts. The difference between qualifying and not qualifying is a date on a document, and that's a matter for someone reviewing your actual records.

What solar incentives does California still have in 2026?

Four things still reduce what a San Diego homeowner pays, and one of them is bigger than the credit ever was.

San Diego Community Power's Solar Battery Savings programme

If your address is served by SDCP, this is the closest thing to a local replacement for the federal credit — and unlike SGIP it carries no income test. The programme pays an upfront rebate per kilowatt-hour of installed storage, with a higher rate for a new solar-and-battery system than for a battery retrofitted onto existing solar, plus a $0.10/kWh performance payment for energy your battery discharges during weekday dispatch windows in the 4 p.m.–9 p.m. block.

The conditions are specific and worth reading before you commit: it applies to a single-family home at your own service address, the battery must be charged from your solar rather than from the grid, you can't be enrolled in ELRP or DSGS at the same time, and you must stay enrolled for five years — leaving early means repaying a prorated share of the upfront rebate.

California's SGIP battery rebate

The Self-Generation Incentive Program is a state storage rebate administered under the CPUC's SGIP programme. It pays toward battery storage rather than panels, and it is targeted rather than open to everyone: the administrator in SDG&E territory describes current funding as going primarily to storage in fire-prone, low-income and disadvantaged communities.

SGIP funding moves in steps and eligibility rules are specific, so the amount available depends on when you apply and which category you fall into. Check current status through the programme administrator rather than relying on a figure quoted in an article — including any figure quoted to you by an installer.

A prepaid lease

Ours takes 30–40% off the upfront cost relative to an outright purchase. For most households this is now the largest single reduction available, and it's the practical answer to "what replaced the credit."

The rate structure

This is the real one, and it was doing most of the work even when the credit existed. Under California's net billing tariff — in effect for new interconnections since 15 April 2023 under the CPUC's net-metering rules — solar you export earns roughly $0.05/kWh, while power you buy during SDG&E's 4 p.m.–9 p.m. peak costs around $0.40/kWh. Producing and using your own power avoids the expensive side of that gap every single day, for 25 years, with no form to file.

The CPUC also notes that more than 90% of customer-sited solar capacity in the three large investor-owned utility territories remains on legacy net energy metering. That's a useful reality check on advice you read online: a lot of it describes an export arrangement that new systems no longer get, in the same way a lot of it describes a credit that no longer exists.

You can also check what California and utility programmes are currently active through the DSIRE incentive database, which tracks them as they change.

One more thing that isn't an incentive but saves real money

San Diego is unusually cheap and fast to permit. The City of San Diego self-issues residential rooftop solar permits with no plan review through its solar permit programme — up to 38.4 kW AC, panel upgrades to 320 amps, and storage to 38.4 kWh — provided no fire or structural review is triggered. In much of the country that step alone costs weeks and adds fees. Independent cities in the county run their own processes, and unincorporated areas route through County Planning & Development Services.

Is solar still worth it in San Diego without the tax credit?

For most homes here, yes — and the reason is that San Diego's case never depended primarily on the credit.

The variable that drives payback is the price of the electricity you stop buying. SDG&E's residential rates are among the highest in the country, the peak window is expensive, and the sun is reliable — most parts of the county see well over 250 sunny days a year. A system that offsets expensive kilowatt-hours in a sunny place pays back on rates alone. The credit shortened that timeline; removing it lengthens it without reversing it.

What genuinely changes is how a system should be designed:

• Honest sizing matters more. With the credit gone, every unnecessary kilowatt is your money rather than 70% your money. Sizing to actual consumption beats sizing to roof area.
• Self-consumption beats export. At roughly 8:1 between peak retail and export credit, a kilowatt-hour used at home is worth far more than one sold.
• Storage moved from optional to central for evening-heavy households, because that's what captures the peak window.
• The upfront number matters more than it did, which is what makes the prepaid lease structure relevant.
• Cheap quotes get more dangerous. With less subsidy cushioning the purchase, a system that underperforms or a crew that leaves a leaking penetration costs you more in relative terms.

We'd rather tell someone their evening load doesn't justify storage than sell them two batteries. Our residential solar page explains how we size to actual usage, and the system cost breakdown shows the tiers by home size so you can see the real numbers before talking to anyone.

Does the credit's expiry change anything if you already have solar?

Not for your existing system, and possibly for its value.

Nothing about your current setup changes. A credit already claimed is settled. Your production guarantee, equipment warranties and net metering arrangement are governed by their own terms and by the tariff you interconnected under — none of which the tax change touches. If you're on legacy net energy metering with full retail export credit, you keep it under its own rules, which is worth protecting when you make changes.

Two situations do deserve attention:

• Expanding an existing array. Adding panels can trigger a review of your interconnection agreement, and depending on how much capacity you add, it can put you onto the current net billing tariff instead of the legacy arrangement you have. That is a much bigger financial question than the tax credit ever was. Ask before you add.
• Adding storage to an older system. Generally this can be done without disturbing a legacy net metering arrangement, but it depends on the configuration, so confirm it in writing rather than assuming.

On resale value: solar has generally been treated as a value-add by buyers, and the removal of the credit makes an already-installed system marginally more attractive rather than less — a buyer purchasing your home gets a working array without the option of a credit they could have claimed by installing their own. What matters far more to a buyer than the tax history is whether the system is owned outright or carries a lease or loan that has to be assumed, whether the production guarantee transfers, and how much roof life is left underneath the panels. Keep your documentation together for that reason: system specification, warranty paperwork, permit sign-off, and the roof's age and condition.

If your array is more than a decade old, the useful thing to check now is the inverter rather than the tax position — string inverters typically need replacing at 10 to 15 years, and that is the real cost most owners hit next.

What should you ask a solar company in 2026?

The end of the credit changed the sales landscape, and not for the better. A few questions filter quickly.

1. "Does your proposal show a federal tax credit?" If it does, for a 2026 install, either the paperwork is out of date or the pitch is. Both are reasons to slow down. 2. "What's the price before and after any lease or financing structure?" You want the cash price visible, so you can see what the structure actually costs you. 3. "How did you size this system?" The right answer references your usage data. The wrong answer references your roof's available space. 4. "Which SGIP category do you think I fall into, and why?" A real answer is specific about eligibility. A vague answer quoting a dollar amount is a flag. 5. "Who does the electrical and roofing work?" Subcontracted crews are where warranty disputes start. Ours are in-house, on one licence — CSLB #970079, covering solar, electrical and roofing, which you can verify yourself in about a minute. 6. "What happens if my roof needs replacing in five years?" If nobody raises this, they aren't thinking past the sale. Removing and resetting an array later runs about $2,800–$4,800. 7. "What's guaranteed, in writing, and for how long?" We back production for 25 years; ask any company to put its equivalent in the contract.

A note on urgency: with the credit gone, some of the industry has switched to manufactured deadlines to replace the real one that expired. There is no longer a federal cliff to beat. Take the time to compare properly — our why choose us page sets out what we think the comparison should be based on.

We'll build that comparison from your usage data and tell you straight if the answer doesn't justify the spend. San Diego Solar has run its own in-house crews across San Diego County since 1996, licensed under CSLB #970079 for solar, electrical and roofing. Request a free solar quote or call (619) 514-0095.