Federal Solar Tax Credit Ending Soon: What Homeowners Need to Know
Introduction
The federal solar tax credit—a key driver of residential solar adoption in the U.S.—is at risk of ending sooner than expected. If you’re considering going solar in 2025, you need to act fast. Changes in legislation may end the 30% tax credit by December 31, 2025, significantly impacting your potential savings. Here’s what every homeowner should know and do now.
What Is the Federal Solar Tax Credit?
The solar Investment Tax Credit (ITC), commonly known as the federal solar tax credit, allows homeowners to deduct 30% of their total solar installation costs from federal taxes. This includes panels, inverters, batteries, labor, permitting, and more. The credit applies to both existing homes and new builds using qualified solar energy systems.
What’s Changing in 2025?
Under the new budget proposal, the U.S. House approved language that would end the 30% residential solar tax credit by the end of 2025. The Senate version may offer a 180-day grace period, but the message is clear: the window is closing. Previously, the credit was expected to gradually step down by 2035 under the Inflation Reduction Act.
Why Acting Now Matters
With solar panel prices dropping and utility rates rising, 2025 is a prime year to go solar—especially while the full 30% tax credit is still available. If you wait, you risk:
- Missing out on thousands in solar installation tax incentives
- Higher upfront costs without federal support
- Increased demand causing installation delays
See if your home qualifies now before the rush.
How Much Can You Save With the Solar Tax Credit?
For an average system costing $20,000, the 30% solar energy tax credit offers $6,000 in savings. This credit can dramatically shorten the payback period and boost your ROI. Even larger systems and solar battery storage setups qualify, making it one of the most generous clean energy incentives currently available.
Is Solar Still Worth It After the Tax Credit Ends?
Yes—but the numbers are tighter. Without the solar federal tax credit, you lose a huge upfront discount. However, rising energy bills and state incentives can still make solar worthwhile. That said, maximizing your financial benefits means installing before the end of 2025.
Other Incentives Still Available
- Net metering programs that pay you for excess solar energy
- State and local rebates that stack with federal credits
- SREC markets in some states for selling your solar output
Check with your installer to learn about incentives in New Mexico or your specific state.
Why Choose a Trusted Installer Before the Deadline?
To qualify for the 2025 solar tax credit, your system must be installed and operational by year-end. This means scheduling is crucial. Partnering with a trusted solar installer ensures your system is designed, permitted, and installed on time with no shortcuts.
See our installations and why homeowners trust Solar Works Energy.
Conclusion
The end of the federal solar tax credit is a game-changer. If you want to save big on your solar installation, the time to act is now. Don’t wait for the rush of late 2025—check your eligibility or contact our team to get started today.
