Congress Proposes Elimination of Solar Tax Credit

Senate Proposal Drastically Reduces Solar Tax Credit Timeline

Update: 6/17/2025

A draft bill from the U.S. Senate is accelerating the end of the solar tax credit (Investment Tax Credit, or ITC). Released by the Senate Finance Committee on June 16, 2025, the proposal outlines a plan to significantly reduce and eventually eliminate the federal solar tax credit.

The Senate bill would eliminate the residential solar tax credit 180 days after the bill is passed. The commercial solar tax credit would remain 30% for solar installed in 2025, then be reduced to 60% of its value by the end of 2026, 20% of its value by the end of 2027, and all projects placed into service by 2028 are ineligible for the credit.

The Senate bill is not yet law. It will face a full Senate vote, likely before the July 4 recess. After that, it must be reconciled with the House’s version of the bill, which has different timelines and provisions.

Read full details.

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House Of Representatives Passes Termination of Solar Tax Credit

Update: 5/22/25 

Congress passed their version of the reconciliation package after an all-night session that saw several new changes. Unfortunately, Congressional plans for the solar tax credit and other environmental considerations did not improve. A 42-page amendment to the original text details the changes that were made. 

The bill heads to the Senate, where it faces increased scrutiny over deficit implications and Medicaid cuts. Republicans plan to pass the legislation before the 4th of July holiday, but have a lot of work to do before then to align their legislation.

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Published: 5/14/25

Congress has proposed an elimination of the solar tax credit, which could upend the path to energy independence for millions of Americans. A draft federal budget from the House of Representatives seeks to eliminate the 30% solar tax credit (Investment Tax Credit, or ITC) for residential solar installations after December 31, 2025—nearly a decade ahead of the current expiration timeline. This bill is being referred to as the “Big Beautiful Bill”, and is a budget reconciliation package that would only need a majority of votes in the senate to pass.

This policy reversal doesn’t just threaten clean energy progress. It puts at risk one of the most powerful tools homeowners and businesses have to lower their energy bills, secure long-term financial stability, and gain freedom from unpredictable utility companies. This article explores what’s in the legislation, how it affects those considering solar and battery backup, and what steps can be taken right now before the window of opportunity closes.

What the Legislation Proposes

The newly released 2025 House draft budget proposes eliminating the 30% federal solar tax credit for homeowners starting in 2026. Currently, under the Inflation Reduction Act (IRA), the tax credit is scheduled to remain at 30% until 2032, then drop to 26% in 2033, 22% in 2034, and expire in 2035.

This accelerated elimination would:

• • Remove the 30% tax credit for residential solar systems installed after December 31, 2025.

• • Undermine the long-term policy certainty that homeowners and solar companies have relied upon.

• • Gut additional incentives for energy storage systems and commercial solar installations.

These changes are part of a broader Republican-led effort to scale back many of the clean energy investments passed in the IRA, with the justification that the savings will help fund proposed tax cuts and reduce federal spending. However, the implications for consumers are immediate and severe.

Learn more about the solar tax credit in our Solar Tax Credit Guide.

Why This Matters to Homeowners & Businesses

The proposed repeal of the solar tax credit isn’t just about policy shifts. It will directly impact families, small businesses, and communities who are weighing the decision to go solar or invest in battery backup systems.

Financial Impact

The 30% ITC is a major cost reducer, often saving homeowners and businesses thousands of dollars on solar and battery installations. For example, on a $30,000 system, the ITC provides a $9,000 federal tax credit. Without it, that same system becomes significantly more expensive.

Removing the credit prematurely will:

• • Increase the payback period for solar investments.

• • Make solar less financially accessible to middle- and lower-income households.

• • Shrink the customer base for local solar installers, potentially driving up costs further.

Threat to Budget Stability

Solar panels and battery systems offer more than clean power—they provide predictable energy costs. Once installed, solar users are largely protected from fluctuating utility rates, seasonal bill spikes, and the growing costs of grid maintenance.

Without access to the solar tax credit, fewer households will be able to afford solar panel systems, leaving them exposed to:

• • Year-over-year increases in electricity rates.

• • Utility surcharges and infrastructure fees.

• • Budget uncertainty caused by volatile energy markets.

Loss of Energy Control

Installing solar and battery storage enables homeowners to produce their own electricity, store it for later use, and reduce their dependence on centralized utilities. It also means increased resilience during power outages, blackouts, and extreme weather events.

If the solar tax credit is repealed:

• • Many will miss their chance to generate and manage their own power.

• • Battery storage adoption will slow, reducing energy security for thousands of homes.

• • Consumers will have fewer options for maintaining comfort and safety during grid failures.

Big Picture — Why This Feels Like a Step Back

The solar tax credit has been one of the most effective and stable clean energy policies in U.S. history. It has driven millions of solar installations, stimulated billions in private investment, and created hundreds of thousands of jobs. The proposed rollback threatens to reverse these gains.

This change comes just as solar is gaining mainstream momentum. More homeowners than ever are considering battery backup, EV charging, and grid-tied solar systems as part of their energy strategy. Cutting the solar tax credit sends a confusing and discouraging signal, undermining public trust and long-term planning.

The solar industry has worked hard to bring down costs, expand access, and meet growing demand. This policy shift could:

• • Disrupt solar supply chains and project pipelines.

• • Reduce investor confidence in residential and commercial solar projects.

• • Hurt progress toward national climate goals and local energy independence.

What’s at Stake if You Wait

The proposed repeal of the solar tax credit would take effect on January 1, 2026, but projects must be installed and operational by December 31, 2025 to qualify. That gives homeowners and businesses a narrow window to act.

Delays Can Be Costly

Solar installations aren’t instantaneous. From the first consultation to final inspection, the process can take several months, especially in areas with heavy permitting backlogs or utility interconnection delays.

With a looming deadline:

• • Projects started too late in 2025 could miss the cutoff.

• • Last-minute demand may exceed installer capacity, leading to long wait times.

• • Delays could mean losing out on thousands in tax credit savings.

A Surge Followed by a Cliff

If the Congressional budget proposal becomes law, a rush of solar and battery installations in late 2025 is inevitable. This could strain the solar workforce, slow timelines, and create pressure on equipment availability. After the deadline, demand is expected to drop sharply, creating instability across the industry.

Homeowners who wait risk:

• • Being unable to secure their solar project in time.

• • Paying more due to equipment shortages or labor premiums.

• • Missing the financial benefits altogether.

Act Now to Protect Your Energy Future

The good news: the legislation is not yet law, and there is still time to act. But that window is closing quickly. Here’s how to get ahead:

Schedule Your Solar Consultation Early

Start the process now. By engaging a reputable installer like Green Ridge Solar, you can evaluate your roof, electricity usage, and battery needs to create a system that maximizes savings and resilience. Early planning ensures you won’t be stuck in the backlog when demand spikes.

Contact Green Ridge Solar now to get a free solar analysis and secure your solar incentives.

Consider Financing Options

Worried about upfront costs? Solar loans and payment plans are designed to work in conjunction with the tax credit. Many allow you to go solar for little or no money down, while still receiving the 30% tax benefit.

Locking in today’s financing terms also protects against interest rate increases and helps stabilize monthly expenses.

Chat with our solar experts about your solar financing options.

Get a Customized System Design

Every home is different. Whether you want backup for power outages, offset high energy usage, or prepare for an EV, a custom system design ensures your solar and battery setup meets your goals and budget.

Green Ridge Solar’s team will walk you through options, incentives, and return on investment scenarios so you can make an informed decision. Contact us today and get all your questions answered.

Reclaiming Your Power, Literally & Financially

This isn’t just about solar panels. It’s about taking control of your future. With utility rates climbing, grid outages becoming more frequent, and climate uncertainty on the rise, the ability to generate and manage your own power is more important than ever.

But that choice is under threat. If this legislation passes, millions could lose the opportunity to:

• • Cut energy bills by 50% or more.

• • Lock in long-term energy savings.

• • Avoid painful, constant utility rate hikes.

• • Protect their homes from grid instability.

• • Build a cleaner, more resilient energy future.

Act Now Before Solar Tax Credit Eliminated

The 30% solar tax credit has been a game-changer for homeowners and businesses alike. Its sudden elimination would be a blow to affordability, accessibility, and autonomy.

While the proposal has not yet passed, the writing is on the wall. Waiting until the end of 2025 is a risky move. The smartest action is to explore your options now, while incentives are still in place and installation capacity is available.

Contact Green Ridge Solar today for a free consultation. We’ll help you secure your energy future, lock in valuable tax savings, and avoid the chaos of last-minute demand. There’s never been a more urgent time to go solar—and never a better time to take back control of your power.