The Solar Tax Credit Ends Soon—Don’t Miss Your Last Chance to Save 30%
Thinking about installing solar panels or a battery backup system? You can save 30% with the federal solar tax credit, but not for much longer.
On July 4th, 2025, President Trump signed the “One Big Beautiful Bill Act” (OBBBA) into law, crushing a slew of clean energy incentives, including the federal tax credit for solar panels.
You still have time to install solar and claim your 30% credit, but it’s running out. Here’s what’s changing with the solar tax credit and what you need to do if you want to claim it in 2025.
What Is the Solar Tax Credit?
The solar tax credit is a federal incentive that reduces the cost of solar energy systems for American homeowners and businesses. It reduces your federal income tax bill by 30% of your solar installation costs for the year you install your system. It’s not a direct discount on solar, but it allows you to recover a big chunk of your installation costs very quickly, which:
- Makes solar panels a lot more affordable
- Speeds up your payback period
- Increases your long-term electric bill savings
How Is the Solar Tax Credit Changing?
The OBBBA cuts the solar tax credit short. The new timelines are slightly different for residential and commercial solar installations.
Residential Solar Tax Credit Ends December 31, 2025
Under the new law, homeowners only have until the end of the year to claim the solar tax credit—that’s a full decade ahead of schedule. There’s no phase-out, so you need to either go solar now or miss out entirely.
Commercial Solar Tax Credit Ends Soon After
The commercial tax credit will last slightly longer than the residential credit.
Under OBBBA, commercial projects can claim the 30% tax credit if they begin construction by July 4th, 2026 (one year after the law’s enactment) and finish within four years. If you miss the July 4th deadline, you can still claim the credit, but only if you place your system in service by December 31, 2027.
New Restrictions on Commercial Tax Credits
On top of the shortened timeline, there are also tighter restrictions on the commercial solar tax credit.
Projects that start after December 31, 2025, will have to abide by new “Foreign Entity of Concern” (FEOC) rules. These rules limit where projects can source materials from. If your project doesn’t comply, you will not be eligible for any tax credit. We’re still waiting on final guidance around these rules from the Treasury.
How to Claim the Solar Tax Credit in 2025
The silver lining in all of this is that there is still time to claim the solar tax credit. But that time is running out quickly.
If you want to save 30% on solar panels and/or battery storage, our advice is to start now. Solar installations don’t happen overnight. At SouthFace Solar & Electric, our process is efficient, but several requirements, including permitting and utility approvals, are out of our control. As the tax credit deadline comes closer, it’s possible that pipelines will get jammed up as projects rush to qualify.
To get ahead of the rush and make sure your installation is completed on time, we encourage you to get started now. There are only a few months left to claim the residential solar tax credit, and not much longer for the commercial credit. Reach out to us today to learn more about your options and get your solar installation started before it’s too late.
