Who Actually Gets the Solar Tax Credit in 2026?

No, the federal solar tax credit is no longer available to homeowners who buy or finance their own system. The 30 percent Residential Clean Energy Credit covered solar installed through December 31, 2025, and it does not apply to any system placed in service after that date. That single fact changes how homeowners across Rhode Island, Massachusetts and Connecticut should think about paying for solar in 2026, because a credit tied to third party ownership is still on the books even though the one tied to homeowner purchase is not.

What Actually Changed in 2026

For systems installed from 2022 through the end of 2025, the Residential Clean Energy Credit, known to the IRS as Section 25D, equaled 30 percent of qualified costs for a homeowner who purchased or financed their own solar system. It was one of the most commonly cited reasons homeowners moved forward with solar during those years.

That credit was repealed by the One Big Beautiful Bill Act, signed into law on July 4, 2025, roughly seven years ahead of the phase out schedule the credit had originally been on. The result is straightforward. The IRS is explicit that the credit is not available for any property placed in service after December 31, 2025. If your system was not up and running by that date, Section 25D does not apply to it.

It helps to understand what Section 25D actually was in plain terms. It was a nonrefundable federal income tax credit, meaning it reduced what a homeowner owed the IRS by a percentage of what they spent on their own solar system. It was never a rebate, a check, or money that arrived at closing. A homeowner claimed it themselves on their own return, using Form 5695, in the same year the system was placed in service. That mechanic matters, because it explains why ownership was always the key word. The credit followed whoever owned the equipment and whoever filed the claim, not whoever lived in the house.

If You Signed a Contract in 2025 but the Install Finished in 2026

This is the situation catching the most homeowners off guard right now. It is natural to assume that signing a contract before the end of 2025 locked in the credit. It did not. The IRS treats an expenditure as made when the original installation of the item is completed, not when the contract was signed. The completion date controls eligibility, and if that date fell in 2026, Section 25D does not apply, regardless of when you signed.

This is a real tax question with real consequences, and it depends on the specific facts of your project. If you are unsure where your install lands, that is a conversation for your tax professional, not something to guess at from a blog post.

What Homeowners With an Existing Credit Can Still Do

If you already installed solar in a prior year, 2022 through 2025, and did not use the full value of your Section 25D credit on that year’s return, the unused amount does not disappear. A homeowner may still apply an unused carryforward to a later tax return using Form 5695. What you cannot do is originate a brand new 25D claim for a system placed in service in 2026. The carryforward rule only rescues credit you already earned, it does not extend the credit to new installs.

The Credit That Did Not Go Away: Third Party Ownership

Here is the part of the story most homeowners have not heard. When a solar system is owned by a third party, meaning a lease or power purchase agreement provider rather than the homeowner, the equipment owner may qualify for the Section 48E Clean Electricity Investment Credit. That credit remains available. It is worth being precise about what that means: the credit can go up to 30 percent, but it is subject to start of construction and placed in service deadlines, it is not an automatic or guaranteed number, and it belongs to the entity that owns the equipment, not the homeowner.

How a specific lease or PPA provider structures that credit into its own pricing and paperwork is not something a general article can tell you, because every provider’s contract terms are its own. If you want to know exactly how credit attribution works for a specific offer on your roof, that is a question for a consultation, not something we can answer in general terms here.

Why This Matters for How You Pay for Solar in RI, MA and CT

Homeowners in Rhode Island, Massachusetts and Connecticut generally choose between a few ways to pay for solar, covered in full on our financing page. The short version for this discussion is that paying cash or financing with a loan means you own the system outright, so the credit rules that changed in 2025 are the ones that apply to you. Choosing a lease or PPA means a third party owns the equipment, so Section 48E, not Section 25D, is the credit that is relevant, and it belongs to the owner rather than to you directly.

Neither path is inherently better. What matters is understanding which set of tax rules actually applies to the way you are paying, because owned systems and third party owned systems are no longer playing by the same rulebook they were in 2025.

This is also why side by side comparisons of solar offers can get confusing right now. Two proposals for the same roof, one structured as a purchase and one structured as a lease or PPA, are no longer subject to the same federal credit picture they would have been a year ago. A homeowner comparing them needs to know which credit, if any, is even in play for each option before comparing price, term length, or projected production. That is exactly the kind of comparison our team walks through in a consultation, roof by roof.

Rhode Island: REG and Net Metering

Rhode Island’s Renewable Energy Growth program, known as REG, is open to homeowners with systems of 25kW and under. It runs first come, first served until each year’s allocation is fully subscribed, and ceiling prices are revised annually. Full detail is on our Rhode Island solar incentives page.

Rhode Island homeowners choose either REG or net metering, not both, so it is worth understanding each before you decide. Under Rhode Island net metering, generation is credited up to 125 percent of on site consumption in a billing period. Our net metering guide walks through how that credit works in practice.

Because REG is first come, first served with ceiling prices that are revised every year, the value of enrolling can shift depending on when in the year a system is placed in service. That is a separate question from the federal credit changes discussed above, and it is worth evaluating on its own terms with someone who can check current program status against your specific project timeline.

Massachusetts: Where SMART Stands Right Now

Massachusetts runs its main solar incentive through SMART, a declining block program administered by the Department of Energy Resources. As of this writing, SMART 3.0’s tariff structure is still pending approval from the Massachusetts Department of Public Utilities under docket D.P.U. 25-175. In the meantime, DOER continues to accept applications and issue Preliminary Statements of Qualification, so the program has not paused, it is in the process of being updated. Homeowners evaluating a Massachusetts project should confirm current program status directly, and our Massachusetts solar incentives page is kept current as the docket moves forward.

A declining block structure means the terms available to a new applicant are not fixed forever, they step down as each block fills. Combined with the pending DPU docket, the practical takeaway for a Massachusetts homeowner is to confirm where the program actually stands at the moment you are ready to apply, rather than relying on what a neighbor’s system qualified for a year or two ago.

Connecticut: The RRES Tariff Choice

Connecticut’s current program is the Residential Renewable Energy Solutions tariff, RRES, jointly administered by Eversource and United Illuminating under Public Act 19-35. Homeowners choose between two tariff structures, Buy All and Netting, and the right choice depends on your household’s usage pattern and goals.

One detail worth knowing before you apply: a project already approved under CT Green Bank’s Residential Solar Incentive Program cannot also enroll in RRES for the same system. More detail is on our Connecticut solar incentives page.

Because Connecticut homeowners choose one tariff structure at the point of enrollment, and because that choice interacts with the federal credit questions covered earlier in this article, Connecticut is a market where the ownership question and the state program question genuinely need to be worked out together, not treated as two separate decisions.

Frequently Asked Questions About the Solar Tax Credit

Is the federal solar tax credit gone for good? It is gone for homeowner owned systems placed in service after December 31, 2025. It was repealed by the One Big Beautiful Bill Act roughly seven years ahead of its original phase out schedule.

I signed my contract in 2025, does that lock in the credit? No. The IRS treats the expenditure as made when the original installation is completed, not when the contract was signed. If your system was not placed in service by December 31, 2025, the completion date is what controls, not the signing date.

Can I still use a credit from a system I installed a few years ago? Yes. If you have an unused Section 25D carryforward from a prior year’s install, you can still apply it to a later return using Form 5695. You cannot use that same rule to originate a new claim for a 2026 installation.

Does a lease or PPA still come with a tax credit? The equipment owner, meaning the lease or PPA provider, may qualify for the Section 48E Clean Electricity Investment Credit, up to 30 percent, subject to start of construction and placed in service deadlines. That credit belongs to the owner of the equipment, not to the homeowner directly.

Which way of paying for solar is best now that the credit has changed? That depends on your finances, your roof and your goals, and it is genuinely different for every household. Our financing page lays out how cash, loans, leases and PPAs differ, and a consultation can walk through what applies to your specific situation.

Do state incentives still apply in 2026? Yes. Rhode Island’s REG program, Massachusetts’s SMART program and Connecticut’s RRES tariff are all still active, though program details continue to evolve, so it is worth checking the current status for your state before you sign anything.

How do I find out what actually applies to my roof? The honest answer is that a general article can only get you so far. Our homeowner’s guide to solar and savings overview are good starting points, and a consultation is the fastest way to get answers specific to your address, your utility and your situation.

About the Author

Hyrum Bond leads Rooftop Power, a New England solar company based in Warwick, Rhode Island. Rooftop Power installs residential solar across Rhode Island, Massachusetts, and Connecticut with its own in-house crews, holding a 4.8-star rating on Google. To ask questions or schedule a free consultation, call (401) 298-8040 or get a free quote.