What Happens If the Solar Tax Credit Ends? Answering the Important Questions

What happens if the solar tax credit ends?

The potential elimination of the solar tax credit (Investment Tax Credit, or ITC) could dramatically reshape the solar energy landscape. For years, this crucial incentive has helped make solar more affordable by allowing homeowners and businesses to deduct a portion of their installation costs from their federal taxes. But proposed legislation in Congress now threatens to pull the plug on the ITC far earlier than originally planned—possibly by the end of 2025.

This development has far-reaching implications. For those considering solar or battery backup, it could mean losing out on thousands of dollars in savings. For those who already have solar, it raises important questions about upgrades, add-ons, and claiming credits on past installations. And for the solar industry as a whole, it may lead to increased demand, supply chain pressure, and greater urgency to act.

In this article, we dive deep into what the proposed end of the solar tax credit could mean for you. From the practical to the unexpected, we’ll explore not just the most common questions, but also the ones you might not think to ask—but definitely should.

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The Basics: What Is the Solar Tax Credit and What’s Changing?

The federal solar tax credit, officially known as the Investment Tax Credit (ITC), allows residential and commercial solar system owners to deduct a percentage of the system cost from their federal income taxes. Originally introduced in 2006, the solar tax credit has been extended and adjusted over the years due to its success in spurring solar adoption.

As of now, the solar tax credit offers a 30% credit for residential and commercial solar systems installed through 2032, stepping down to 26% in 2033 and 22% in 2034 before expiring completely in 2035. However, new legislation (Big Beautiful Bill Act) could significantly shorten this timeline, potentially eliminating the credit as early as the end of 2025.

This change would impact both homeowners and businesses considering solar installations, and it could also affect certain solar-related upgrades, such as battery storage systems. The implications are broad, and the timeline may leave little room to wait.

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

If You Haven’t Gone Solar Yet: What You Need to Know

Can I Still Qualify for the ITC if I Sign a Contract Before the Law Changes?

Under the proposed legislation, to qualify for the solar tax credit, your solar installation must be fully installed and operational by December 31, 2025. Simply signing a contract or beginning the permitting process will not guarantee eligibility under the proposed changes. The solar panel system must be up and running before the deadline in order to claim the solar tax credit.

Because of this strict timeline, it’s essential to begin the solar installation process as soon as possible. It’s crucial to work with an experienced and efficient installer that can help ensure you meet all deadlines and preserve your eligibility for the solar tax credit. Delaying could mean missing out on thousands of dollars in savings and a significant reduction in your long-term return on investment.

Contact Green Ridge Solar today to get your solar analysis today and install solar and battery backup before other homeowners rush to install and the solar tax credit expires.

What if My System Is Installed After the Credit Is Eliminated?

If your solar panel system is installed or put into operation after the solar tax credit is eliminated or expires, you may not be eligible to claim the tax credit at all. The timing of your project—from permitting to utility approval—can affect your eligibility. That makes it important to start the process as soon as possible.

Remember, installing solar and battery backup takes time. From initial consultation and design to permitting, installation, and final inspection, the entire process can take several months. And with so many homes and businesses trying to install their solar and battery backup before the deadline, the timeline to install could be even longer. The safest course of action is to move forward quickly with your solar and battery backup projects as soon as possible.

Get your solar analysis today to get a headstart and start the process before it’s too late.

What if I Can’t Use Entire Tax Credit in One Year?

Currently, if you do not have enough tax liability to fully use the solar tax credit in the first year, it can be applied to subsequent tax years. However, the current legislation moving through Congress could change that. There is no indication at this time that the carryover tax credit would be eliminated, but there are no guarantees.

Should I Rush to Install Solar Now?

The possibility of losing out on the solar tax credit understandably creates urgency, but that doesn’t mean you should rush blindly into a solar contract. While time is of the essence, due diligence is still key. Make sure to vet installers, read contracts carefully, and understand your system design and warranty coverage.

Reputable solar companies can guide you through the process quickly without cutting corners and help ensure you beat the deadline to get the solar tax credit. Acting now can help you secure your tax credit while still receiving a high-quality, reliable system.

Get your solar analysis today to get a headstart on installing solar and battery backup, and start the process before it’s too late.

For Those Who Already Have Solar or Battery Backup: What This Means for You

Can I Still Claim the Tax Credit If My System Was Installed Last Year?

Yes. If you had your system installed in a previous tax year and haven’t yet claimed the credit, you can still do so when you file your taxes, provided you meet eligibility requirements. In many cases, homeowners who installed solar in the past two to three years can file an amended return to claim the solar tax credit retroactively.

Just make sure to consult with a tax advisor to ensure you’re following the proper procedures. You may need documentation such as your installation contract, final inspection approval, or proof of payment.

You can also refer to our guide How to File Solar Tax Credit: Form 5695. It’s a simplified guide to filing your taxes to take advantage of the solar tax credit.

What if I Still Have Carryover Solar Tax Credits?

Currently, if you do not have enough tax liability to fully use the solar tax credit in the first year, it can be applied to subsequent tax years. However, the current legislation moving through Congress could change that. There is no indication at this time that the carryover tax credit would be eliminated, but there are no guarantees.

This applies to those who are installing solar panels and those who have already installed solar panels. If you installed solar panels in 2024 or before and still have carryover solar tax credits, it might be prudent to use your carryover tax credits as soon as possible before current legislation becomes law. As always, consult your financial adviser or tax expert for guidance.

Contact your tax and financial advisor for guidance. You can also refer to our guide How to File Solar Tax Credit: Form 5695. It’s a simplified guide to filing your taxes to take advantage of the solar tax credit.

What If I Added Panels or Battery Backup This Year? Do I Still Qualify?

If you’ve added additional solar panels or installed a battery backup system this year, you may be eligible to claim the solar tax credit on the cost of those upgrades, assuming the system is installed and operational before the credit is eliminated. Battery systems can also qualify for the solar tax credit.

This is a good time to consider whether your current solar panel system needs enhancements, as doing so now may still allow you to take advantage of federal solar incentives. Contact Green Ridge Solar to learn more about adding additional solar panels or battery backup to your existing solar panel system and taking full advantage of the solar tax credit.

Will This Change Impact My Solar Investment or ROI?

For the most part, the potential end of the solar tax credit will not affect systems already installed and operating. Your return on investment (ROI) remains intact, and you will continue to benefit from reduced electric bills, energy independence, and potentially increased home value.

However, as mentioned before, if you still have carryover solar tax credits from prior tax years, 2025 might be the last tax year to use them. If current legislation is passed, any carryover solar tax credits could be affected.

While new incentives may phase out, the core benefits of solar—like protection against rising utility rates and long-term energy savings—remain strong. Your investment is still a wise one. But don’t wait to see if legislation is passed that could impact your access to these savings. Contact Green Ridge Solar today to get your solar analysis today and install solar and battery backup before the solar tax credit expires.

Could This Affect My Warranty or Incentives from the Installer?

No. The solar tax credit is a federal program and is entirely separate from your installation warranty or any state/local programs you may have used. Your warranty coverage remains valid regardless of changes to federal tax incentives. Installer-specific rebates or incentives may continue as planned.

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Common Misunderstandings and Lesser-Known Questions

If the Solar Tax Credit Ends, Will Solar Prices Drop?

Some people assume that if the solar tax credit goes away, solar manufacturers or installers will lower their prices to compensate. However, in reality, prices may actually rise in the short term due to increased demand ahead of the credit expiration. Supply chains may tighten, and installation calendars may fill quickly.

While solar panel costs have declined over the past decade, factors such as inflation, labor shortages, and global supply constraints may prevent significant price drops. Acting sooner rather than later may help you lock in both lower prices and incentives. Contact Green Ridge Solar today to get your solar analysis today and install solar and battery backup before the solar tax credit expires and prices potentially increase.

Could Congress Reverse This Decision in the Future?

It’s possible that Congress and the President could reinstate the solar tax credit, but relying on uncertain future legislation is a gamble. The solar industry has seen fluctuations in policy support over the years, with incentives expanding under some administrations and contracting under others.

If the solar tax credit is eliminated, it may take a change in political leadership to bring it back. But even then, it might not apply retroactively. It’s safer to act under current laws than to wait and hope.

Will Battery Backup Still Qualify for Any Credits?

Under current law, both battery backup systems that are paired with solar and battery backup systems not paired with solar qualify for the solar tax credit. Under the 2022 Inflation Reduction Act (IRA), standalone battery systems are also eligible for the tax credit.

If the solar tax credit is eliminated, both solar-tied and standalone battery backup systems could lose federal support. That means now is a critical window to install battery backup and receive up to 30% tax credit through the solar tax credit.

Contact Green Ridge Solar today to get your solar analysis today and install solar and battery backup before the solar tax credit expires. To learn more about the benefits of battery backup, check our out Complete Guide to Battery Backup.

How Might This Affect State/Local Solar Programs?

Many states and utilities offer their own solar incentives separate from the federal solar tax credit. While these programs may not be directly affected, some could reevaluate or adjust their offerings if federal support is withdrawn.

In some cases, states may step in to fill the gap left by the solar tax credit, while others may not have the resources or political will to do so. This makes the federal credit even more valuable while it lasts.

Could Ending the Solar Tax Credit Impact Financing Options?

Yes. Many solar loan providers consider the solar tax credit when structuring loan terms and repayment plans. If the solar tax credit goes away, lenders may tighten their underwriting guidelines or offer less favorable terms.

Locking in financing now while the solar tax credit is still in effect could help you secure better rates and more flexible repayment options. Contact Green Ridge Solar today to see your solar financing options and to get your solar and battery analysis before the solar tax credit expires

What You Can Do Right Now

For Those Interested in Solar & Battery Backup:

If you’re considering solar or battery backup, the best time to act is now. Start by scheduling a site evaluation, gathering multiple quotes, and asking detailed questions about timelines, eligibility, and system design. A knowledgeable installer can walk you through the process and help ensure you qualify for the solar tax credit before it’s gone.

Even if you’re early in your research, getting a solar analysis now and starting the process is a smart move. If you decide later solar isn’t right for you, no problem. And if you decide to install solar or battery backup, you’re ahead of the game. Start the process now to avoid crowded install schedules, permitting and inspection delays, and any other delays that could hold up your solar or battery project and prevent you from receiving the solar tax credit.

Contact Green Ridge Solar today to get your solar analysis today and install solar and battery backup before the solar tax credit expires.

For Those Who Already Have Solar or Battery Backup:

Already have solar? Now is the perfect time to consider add-ons like battery storage or additional solar panels. Doing so while the tax credit still applies means significant savings. If you’ve yet to claim your solar tax credit, speak with your tax preparer about filing this year or amending a previous return to take full advantage of carryover solar tax credits.

Contact our service team today to learn more about adding solar panels and battery backup to your existing system.

You can also help spread the word. Let friends and family know about the potential changes and encourage them to explore their options before it’s too late. Don’t forget: We offer referral bonuses for recommending friends, family, and others who install solar with Green Ridge Solar. Submit your referrals today!

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How Is Green Ridge Solar Responding

At Green Ridge Solar, we’re committed to helping customers navigate the changing solar landscape. We are proactively working with new clients to fast-track their installations so they can meet any pending deadlines and preserve their eligibility for the solar tax credit.

For existing customers, we’re offering consultations on battery backup and system expansions, ensuring you can make the most of remaining incentives. We’re also staying informed on legislative developments and advocating for policies that protect energy independence and consumer savings.

Our team is here to answer your questions, provide expert guidance, and help you make smart, timely decisions about your energy future. Contact Green Ridge Solar today for all your questions related to solar installation, solar services, battery backup, the solar tax credit, and more.

Install Solar & Battery before Tax Credit Ends

The proposed elimination of the solar tax credit represents a turning point for solar energy in the U.S. For homeowners and businesses alike, the window to take advantage of this powerful incentive may be closing faster than expected.

Whether you’re just starting to explore solar and battery backup or already enjoying the benefits, now is the time to act. Get the facts, ask the right questions, and partner with a trusted installer to ensure you don’t miss out.

The future of energy is still bright, but it pays to move quickly before the opportunity dims.

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.

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