Solar Tax Credit 2026: What Changed and How to Claim It

The federal solar tax credit is still alive in 2026. It is still 30%. And it is still the single biggest financial incentive for going solar.

But the rules have shifted. What qualified last year may not qualify this year. Here is what you need to know before you sign a contract.

The Credit Is Still 30%

The Investment Tax Credit (ITC) remains at 30% for residential solar installations completed in 2026. That means if your system costs $25,000, you get a $7,500 tax credit.

This is not a deduction. It is a dollar-for-dollar reduction in your federal tax bill. A $7,500 credit reduces your taxes by exactly $7,500.

What Qualifies

The credit covers:

• Solar panels
• Inverters
• Mounting hardware
• Labor and installation
• Permitting fees
• Battery storage (if installed with the solar system)

It does not cover:

• Roof repairs or replacement (unless required by the solar installation)
• Electrical panel upgrades (unless required by the solar installation)
• Landscaping or site preparation

The Carryforward Rule

If your tax liability is less than your credit amount, you can carry the remainder forward to the next year. If your system costs $30,000 (creating a $9,000 credit) but you only owe $5,000 in taxes this year, you claim $5,000 now and carry forward $4,000 to next year.

State Incentives Stack on Top

Many states offer additional incentives:

• California: Net metering through NEM 3.0 plus property tax exclusion
• Texas: Property tax exemption for solar systems
• New York: NY-Sun program with additional rebates
• Massachusetts: SASH program with extra incentives for low-to-moderate income households

Check your state energy office for local incentives. They stack on top of the federal credit.

You Need to Own the System

The tax credit only applies if you own the solar panels. If you lease them or sign a power purchase agreement (PPA), the installer or financing company claims the credit, not you.

This is why cash purchases and solar loans qualify. Leases and PPAs do not.

The Deadline Is Approaching

The federal solar tax credit begins phasing down after 2032. It drops to 26% in 2033, 22% in 2034, and expires for residential installations in 2035.

If you are considering solar, 2026 is one of the last years at the full 30% rate.

Check Your Roof First

Before you commit to a $25,000 investment, make sure your roof actually qualifies. A $19 satellite analysis at solrscan.com tells you orientation, shading, panel count, and estimated production in 60 seconds.

Do not skip this step. The tax credit makes solar affordable. A bad roof makes it a waste of money.