Congress May End the 30% Solar Tax Credit Early – What It Means for Homeowners

Breaking News: A new proposal in Congress could eliminate the 30% federal solar tax credit for homeowners by the end of 2025, nearly a decade ahead of schedule. This unexpected move threatens to upend the economics of home solar. Below, we break down what’s happening, who’s behind it, and how it might affect your solar savings. Most importantly, we’ll explain why now may be a smart time to go solar before incentives potentially change.

A Threat to the Solar Tax Credit

In mid-2025, the House Ways and Means Committee, led by a Republican majority, introduced a massive budget bill nicknamed “The One, Big, Beautiful Bill.” Its goal is to extend expiring 2017 tax cuts, and to pay for roughly $4 trillion in lost revenue, it slashes clean energy incentives, including the homeowner solar credit. Specifically, Section 25D of the tax code (the residential solar Investment Tax Credit, or ITC) would be terminated on December 31, 2025 under the draft legislation. This is far earlier than the current law, which thanks to 2022’s Inflation Reduction Act had guaranteed a 30% solar credit through 2032, with a gradual step-down to 26% in 2033 and 22% in 2034. In other words, **Congress is considering ending the 30% solar credit seven years sooner than planned.

Congress is debating an early end to the 30% solar tax credit that helps homeowners afford rooftop systems. The proposed budget bill would cut short this popular incentive, potentially slowing installations. Home solar has boomed under the current tax credit, and an abrupt halt could disrupt the industry.

What exactly would change? If this House proposal becomes law, homeowners will no longer get a 30% federal credit on solar installations after 2025. Right now, if you install solar for, say, $29,500, you can claim 30% of that cost, about $8,850, as a credit on your taxes, effectively reducing the net cost to around $20,650. The new bill would eliminate that credit starting in 2026. For consumers, that means paying the full cost of a solar system with no federal help. According to EnergySage marketplace data, a typical home solar setup costing about $20,550 after the credit would jump by roughly $8,980 in out-of-pocket cost without the credit. That added expense would significantly lengthen the return on investment (ROI) and payback period for going solar.

It’s not just solar panels on the chopping block. The same draft legislation also targets other clean energy perks. Home energy efficiency upgrades (Section 25C, for improvements like insulation, efficient windows, HVAC, etc.) could lose their credits by the end of this year, and electric vehicle tax credits (up to $7,500 for new EVs) would be wound down faster as well. This is part of a broader effort to cut spending on climate initiatives in order to offset the cost of extending other tax cuts.

Who Is Behind the Proposal?

The push to end the solar credit early is coming from House Republican lawmakers, especially those on the tax-writing Ways and Means Committee. The committee’s chairman, Rep. Jason Smith (R-MO), is spearheading the budget bill that contains this provision. It’s largely supported by House GOP leadership as a way to fund extensions of the Trump-era Tax Cuts and Jobs Act provisions. In essence, the plan takes money that would have gone to clean energy incentives and reallocates it to pay for keeping other tax cuts in place.

However, it’s important to note this proposal has not become law. As of mid-May 2025, the House Ways and Means Committee was marking up the bill. It may advance through the House, but it would still have to pass the Senate and be signed by the President before any changes occur. Political support is divided: virtually all House Republicans are behind the tax package, but Democrats and many clean energy advocates oppose rolling back these credits. Even some Republican members have signaled unease about gutting popular incentives. Industry analysts point to a few key GOP representatives, for example, Nicole Malliotakis (NY), Blake Moore (UT), Brian Fitzpatrick (PA), and Vern Buchanan (FL), as potential swing votes who might break ranks due to the clean energy benefits in their districts. The ultimate outcome is uncertain. The Senate (with a slim Democratic majority) is expected to be a hurdle; there are indications that the Senate could amend or block the accelerated credit phase-out to preserve a more gradual timeline. In short, the battle isn’t over, but the threat is very real.

Implications for Solar Customers and the Industry

Solar experts warn that an abrupt end to the residential credit would have serious consequences. The 30% ITC has been a cornerstone policy fueling the growth of rooftop solar across America. Eliminating it overnight in 2025, rather than tapering it down, would likely cause major market disruption. Aaron Nichols of Exact Solar cautions that if Congress kills the credit without a reasonable phase-down, it will create “immediate disruption within the solar industry”. Here’s what could happen:

• Rush, Then Slowdown: Homeowners would likely rush to install solar before the December 2025 deadline, leading to a short-term spike in installations. Installers might become extremely busy as people hurry to sign contracts and finish projects while the 30% credit is still available. But after the credit expires, experts anticipate a sharp drop in demand – a potential bust following the boom. EnergySage analysts expect a “short-term surge and then a potential contraction after the deadline passes”. Simply put, many who miss the cutoff might put off going solar, since the financial payback will be weaker without the credit.
• Higher Costs for Homeowners: Without the federal credit, a solar system will cost you 30% more out-of-pocket. That ~$9,000 example above could be a deal-breaker for some families. Monthly financing payments would be higher, and the time to recoup your investment through energy bill savings would be longer. This might dissuade cost-conscious homeowners from adopting solar. Higher upfront prices could particularly impact middle-class households looking to save on bills with solar.
• Fewer Local Jobs and Slower Industry Growth: The residential solar sector today supports hundreds of thousands of American jobs – from panel manufacturers to installers and salespeople. If demand contracts in 2026 and beyond, job growth could stall or even reverse. One analysis warns that killing the 30% credit would “raise homeowners’ energy bills, kill jobs, kneecap the solar industry, and hurt small businesses,” especially in states where solar has been booming. Solar companies, especially smaller local installers, might struggle if sales dry up. This could mean less competition and innovation in the long run.
• Shift to Leases and Commercial Projects: Interestingly, business-owned solar installations would still get a tax credit for a few more years under this proposal. The commercial solar credit (Section 48) for third-party owned systems is set to phase down more gradually through 2028. This means companies that offer solar leases or power purchase agreements (PPAs) could continue claiming credits on systems installed on homes (since the company owns the system). If the homeowner credit disappears, solar leasing companies could gain a competitive edge. More consumers might opt for $0-down lease/PPA deals because they can no longer benefit from buying panels outright with a tax credit. While that keeps solar accessible, the savings to homeowners are usually smaller with leases than if you own your system and claim the credit. In short, the playing field would shift in favor of third-party ownership models.
• Lost Climate and Manufacturing Momentum: Beyond immediate dollars and cents, cutting the solar credit early could set back U.S. clean energy goals. The federal credit has helped drive down solar costs and encouraged domestic production of solar equipment. Pulling support now could cede the advantage to other countries (like China) that continue to invest in clean energy manufacturing. The Solar Energy Industries Association (SEIA) president, Abigail Ross Hopper, warned that this legislation would “effectively dismantle the most successful industrial onshoring effort in US history”– referring to the recent surge in American solar manufacturing and deployment spurred by stable incentives. In addition, without the credit, homeowners may be less able to contribute to emissions reductions and grid resiliency by going solar, just as climate concerns and energy demand are rising.

What’s Next for the Tax Credit?

As of now, no changes have taken effect yet. The House tax bill will need to pass a floor vote and then survive the Senate. The Senate has until around July 4, 2025 to consider, amend, or vote on this budget reconciliation package. Given the stakes, it’s possible the final legislation could look different – the solar credit cut could be softened or removed during negotiations. There is growing bipartisan support for clean energy incentives (several Republicans have noted the positive impact of solar jobs and investments in their districts). This support may help protect programs like the ITC in the final outcome. In fact, this entire proposal has sparked significant public pushback. Solar industry groups, many businesses, and pro-solar consumers are urging Congress not to pull the plug on these incentives prematurely.

However, uncertainty is high. The mere possibility of an early expiration is already causing some homeowners to reconsider or delay solar plans. Policy changes can move quickly, and there’s no guarantee that the credit will remain untouched. It’s a good idea to stay informed on the issue as the budget debates continue over the next few months. We will keep this page updated as new developments emerge.

How Homeowners Can Take Advantage (and Take Action)

For homeowners interested in solar, the looming threat to the tax credit is a call to pay attention and possibly act sooner rather than later. Here are some steps to consider:

• Plan Your Solar Project Before the Deadline: If you’ve been on the fence about installing solar panels, now is the time to explore your options while the 30% tax credit is still in place. Projects need to be fully installed and operating by the deadline to qualify, there’s no partial credit for merely signing a contract. Given the potential end-of-2025 cutoff, that effectively means you’d want your system up and running by next fall at the latest. The solar installation process (from signing up to getting permits and actually powering on) can take a few months. Starting sooner will help ensure you beat any new deadline. Many installers may get booked up if there’s a rush, so initiating your solar project now could secure your spot. Plus, you get to start saving on utility bills that much earlier.
• Secure Current Incentives: Besides the federal credit, don’t forget to take advantage of any state and local incentives or rebates that are available. These could also change in the future, but if you act now, you lock in all the credits and rebates currently on the table. The combined savings can substantially reduce your solar costs. For example, with the 30% federal credit still available today, you’re effectively getting a major discount on your system, an opportunity that may not exist after 2025 if the law changes.
• Make Your Voice Heard: If you feel strongly that these solar incentives should continue, consider reaching out to your representatives in Congress. Let them know that policies like the solar ITC are important to you as a constituent, for saving money on energy and for supporting local jobs and clean energy growth. Lawmakers often take local feedback seriously, especially from voters in their own district. Whether through a phone call, email, or attending a town hall, voicing your concerns can help influence the debate. At least four members of the House Ways and Means Committee could be key in this decision (Reps. Malliotakis, Moore, Fitzpatrick, and Buchanan), so citizen input in those districts may be particularly impactful. Even if you’re not in those districts, every Senator and Representative will eventually weigh in on the budget bill, so every call counts.

Don’t Wait to Save with Solar

Time will tell what Congress decides, but the possibility of losing the 30% federal solar tax credit in mere months has introduced a sense of urgency. Home solar remains one of the best investments for long-term energy savings, and today’s incentives make it as affordable as it’s ever been. An early end to the tax credit could mean higher costs and delayed payback for future solar adopters.

The good news is that the credit is still available right now, and if you move forward with a solar installation before any new law takes effect, you can lock in those savings. Many solar companies are already advising customers to accelerate their timelines. As EnergySage puts it, “the clock is now ticking” for anyone considering solar under the current incentive. By acting soon, you can secure the 30% credit and enjoy the full financial benefits that come with it, even if the policy changes later.

Bottom line: the landscape for solar incentives may be changing, but your opportunity to save is here today. Educate yourself, consider accelerating your solar plans, and make your voice heard. With smart action now, you can beat the proposed deadline and ensure you reap the rewards of going solar, brightening your home’s future no matter what Congress decides.