The Federal Solar Tax Credit Is Ending Sooner Than Expected. Should You Wait or Act Now?

Solar BasicsHome ValueCentral CoastCentral ValleyFor HomeownersPolicy & Market UncertaintyFinancing & Incentives
Written By Katrina Kramer
A California home with rooftop solar panels and a large calendar marking December 2025, symbolizing the federal tax credit deadline.

The countdown is on. Homeowners have until December 31, 2025, to install solar and claim the 30% federal tax credit under the new law.

What Just Happened in Washington?

On July 4, 2025, President Trump signed the One Big Beautiful Bill into law. Tucked inside was a major change for homeowners: the early termination of the 30% federal solar tax credit (known as the Residential Clean Energy Credit or Section 25D). Originally set to last through 2032, the credit now ends on December 31, 2025. That’s seven years ahead of schedule — and it’s already sending ripples through solar markets in the Central Coast and Central Valley.

What This Means for Homeowners

  1. You must complete your solar installation by December 31, 2025 to claim the 30%.
    That means your system must be installed, inspected, and fully connected to the grid (with Permission to Operate) before the year ends. If it’s not “placed in service” by then, the credit is gone.

  2. Leases and PPAs are still eligible — for now.
    While homeowners lose direct access to the tax credit, solar companies offering leases or power purchase agreements (PPAs) can still claim a separate commercial credit through 2027. Many pass those savings along through lower monthly payments.

  3. Big energy developers face separate deadlines.
    The bill also affects large-scale energy projects — not residential systems — requiring them to start construction by July 4, 2026 and be completed by the end of 2027 to qualify for incentives.

Why People Are Concerned

  • Analysts predict a 59% drop in clean energy buildout by 2035

  • Electricity rates could rise up to 18% nationwide

  • California homeowners face uncertainty as state-level programs come under review

Even if you’re not glued to energy policy, the impact is real. Especially if you were planning to go solar “someday.”

What About Leases, PPAs, and Batteries?

The early end of the residential tax credit only applies to direct purchases. But two major options remain in play:

  1. Leases and PPAs Still Qualify Through 2027

If you’re not buying your system outright, a lease or PPA might still be a smart move.

  • These third-party-owned systems qualify for the commercial ITC (Section 48E)

  • The provider gets the tax credit, but usually passes on the benefit through reduced rates or payments

  • These options can offer $0 down and simple setup, especially for homeowners focused on cash flow over long-term ownership

If you want solar without a loan or big upfront cost, leases and PPAs are still in the game — for now.


2. Batteries Still Qualify Through 2032 — Even Without Solar

Good news for anyone thinking about backup power or time-of-use shifting:

  • Standalone batteries (10 kWh or more) still qualify for the 30% tax credit through 2032

  • You don’t need to install solar to qualify

  • Covered costs include the battery itself, labor, inverters, and monitoring systems

Who can benefit?

  • Homeowners who already have solar but want storage

  • Families who want blackout protection

  • Anyone trying to offset PG&E’s peak pricing

What Homeowners Can Do Now

What to Do Why It Matters
Move quickly You must complete the install by 12/31/25 to qualify for the full credit
Consider leases or PPAs These remain eligible through 2027, and may offer simpler path to solar
Weigh storage separately Batteries still qualify through 2032—can reduce dependency on utilities
Talk to a tax advisor Some may qualify for other deductions or timing strategies


Bottom Line

The solar landscape just changed — fast. And if you're planning to go solar, the clock is now ticking.

Here at Viva Energy, we’re already helping homeowners lock in the 30% credit before the window closes. If you’re not sure where you stand or whether your project qualifies, let’s talk.

Schedule a quick call or get a custom quote while there’s still time to act.

References

This article was drafted with the assistance of AI and reviewed by the Viva Energy team for accuracy and clarity. If you spot an error or have a suggestion, please let us know at vivainsider@gmail.com.
Katrina Kramer
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