Senate Proposal Signals End of Solar Tax Credit

A new 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. This bill, still in its early stages, could have serious implications for both residential and commercial solar customers.

Here’s a quick breakdown of what the bill proposes, who it affects, and what to expect next.

What the Senate Bill Proposes

The solar tax credit currently allows homeowners and businesses to deduct 30% of the cost of installing a solar energy system or battery backup system from their federal taxes. This has been a major driver of solar adoption across the U.S.

Under the Senate’s new proposal:

• Residential solar tax credit (25D) would end 180 days after the bill becomes law.
  • this includes solar panels and/or battery backup projects
• Commercial and utility-scale solar projects (48E) would still qualify for:
  • full 30% tax credit if they begin construction in 2025
  • 60% value of tax credit in 2026
  • 20% value of tax credit in 2027
  • 0% from 2028 onward
• Third-party-owned systems (like leases or PPAs) would remain eligible for the solar tax credit in the Senate version, unlike the more restrictive House version. However, they would still be subject to the same 180-day deadline as residential solar (25D) solar projects.

Impacts for Homeowners

If you’re a homeowner considering solar, this bill significantly shortens the window to claim the full 30% tax credit. The 2022 Inflation Reduction Act (IRA) phased out the solar tax credit by 2033. However, depending on when the current congressional bill becomes law, the credit could disappear for homeowners as early as late 2025 or early 2026.

To qualify, your system must be installed and operational before the 180-day cutoff. With demand likely to surge as the deadline approaches, delays in permitting or installation could jeopardize your eligibility. That’s why it’s vital to start your solar or battery project now to get the process started and completed before the deadline.

Acting now gives you the best chance to secure the full credit and reduce your long-term energy costs. Contact Green Ridge Solar today to get your solar and/or battery backup analysis. Secure your installation date and lock in your solar tax credit while it’s available.

Impacts for Commercial Solar Customers

Commercial solar developers have a bit more flexibility, but the clock is still ticking. Projects must begin construction in 2025 to receive the full 30% credit. Delays into 2026 or later could result in reduced credits and thinner profit margins.

The credit is 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.

If your business is planning a solar project, accelerating your timeline could preserve thousands (or even millions) in potential tax incentives.

Contact Green Ridge Solar today to get your solar and/or battery analysis. Get your businesses on the install schedule before we’re booked solid.

What Happens Next?

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.

The final legislation will need to pass both chambers of Congress and be signed by the president. Once that happens, the 180-day countdown for residential solar will begin.

Industry groups, solar companies, and clean energy advocates are actively lobbying for changes. But if the bill passes as written, the solar tax credit as we know it could soon be a thing of the past.

Next Steps for You

If you’re thinking about going solar:

• Don’t wait to get started.
• Contact Green Ridge Solar.
• Schedule a consultation, get a system design, and begin permitting as soon as possible.
• Ensure your system can be installed and energized before the credit expires.

If you’re a business:

• Get the ball moving now.
• Contact Green Ridge Solar.
• Review your project pipeline and timelines.
• Prioritize breaking ground in 2025.
• Talk to your financing and development partners about securing ITC eligibility now.

Bottom Line

The clock is ticking. The Senate’s proposed bill would dramatically change the financial equation for going solar. Whether you’re a homeowner or a business, taking action now is the best way to lock in savings and secure your energy future before the opportunity slips away.

Don’t wait. Contact Green Ridge Solar today to get a free solar and battery backup analysis. Our team of experts are here for all your questions related to solar installation, solar services, battery backup, the solar tax credit, and more.

Use our Solar Calculator to estimate your solar savings and see a 3D rendering of solar panels on your roof.