The 30% Federal Solar Tax Credit Is Ending at the End of 2025

Recently in this space, we discussed the likelihood of changes to government programs that would result in the end of the 30% federal solar tax credit at the end of 2025. Those changes appear to be confirmed; what is expected in terms of the general timeline here, and what should you be thinking about if you're looking to install solar panels on your home and take advantage of the credit while it still remains?

At Intermountain Wind & Solar, we're here to offer a wide variety of solar panel services for clients around Utah and Idaho, including important information on tax credits and other residential solar incentives - including the solar tax credit ending in 2025. Here are some basics on the 30% federal solar tax credit ending and the timelines involved, plus a few additional factors to consider.

Confirming Timeline

Sadly, it does not appear that any major changes have taken place in the months since it was first announced that President Trump's One Big Beautiful Bill would include a stipulation to end the 30% federal solar tax credit at the end of 2025. All signs point to this timeline being accurate and still in effect, meaning that homeowners have a limited amount of time to take advantage of the full tax credit.

What is the Solar Tax Credit?

The solar tax credit, also known as the Investment Tax Credit (ITC), is a federal incentive for residential and commercial solar energy systems. It allows individuals or businesses to deduct 30% of the cost of installing a solar system from their federal taxes. This has been a major benefit for homeowners looking to switch to renewable energy sources, as it significantly reduces the overall cost of installation.

However, residential clients will now only have a few months left to take advantage of this credit.

Grandfathering

One small positive here: A grandfathering effect is in place, meaning that if you install your solar panel system before the end of 2025, you will be able to take advantage of the full tax credit moving forward. This allows homeowners some leeway in terms of timing, but it is still important to act sooner rather than later.

System Operational Or Simply Ordered?

There is still some remaining confusion about whether a solar panel system must be fully installed and operational by December 31, 2025 for the owner to be eligible for the 30% federal solar tax credit - or whether the system simply must be purchased and agreed to by this date to qualify. Because of the uncertainty here, we are recommending that homeowners assume the former and plan to have their system up and running by this date.

While there may be some debate over the wording of the tax credit's requirements, it is always better to err on the side of caution when it comes to such a significant financial opportunity.

Ensuring Eligibility

If you're thinking about trying to beat this deadline and install a solar panel system before the solar tax credit ends at the completion of 2025, you'll need to do more than just scheduling your installation with a solar panel installer.

The IRS has set certain eligibility requirements that homeowners must meet in order to claim the tax credit. These include:

• The solar panel system must be installed on a home that is owned and used as a primary residence by the taxpayer claiming the credit.
• The system must be new and not previously used or installed.
• It must generate electricity for use in the home, meaning it cannot simply be used for heating water or other non-electric purposes.

Other Incentives Remain

It's important to realize that even as the federal tax credit winds down, there are still plenty of other incentives available for homeowners who invest in solar energy systems. Many states offer their own tax credits and rebates, as do local utility companies. These can often be combined with the federal tax credit to significantly reduce the overall cost of a solar system.

Additionally, some municipalities offer property tax exemptions for homes with solar installations, further lowering the long-term financial burden. And don't forget about the potential savings on electricity bills once your system is up and running - these can add up to thousands of dollars over the lifetime of your solar panels.

At Intermountain Wind & Solar, we're here to help clients understand the changing residential solar incentives within our industry. Contact us today for help with solar panel services, tax breaks or other incentives around Utah or Idaho!