Solar Energy Tax Credits for Homeowners sunset December 31st 2025 – here’s what homeowners need to know.
As the December 31, 2025, deadline approaches for the 30% Residential Solar Tax Credit (Section 25D), many homeowners are rushing to secure their spot. Unfortunately, you may have heard a common misconception: simply signing a contract, or paying for your solar system, before the deadline is enough to qualify for the credit.
It’s not.
The IRS has answered this question directly—and their guidance couldn’t be clearer:
“An expenditure with respect to an item is treated as made when the original installation of the item is completed.”
In other words, your solar system must be installed and operational by December 31, 2025, to qualify for the 30% credit.
Here’s what that really means and how to make sure you don’t miss out.
Common Questions from Homeowners
What does “installed” mean for solar tax credit purposes (25D)?
In tax terms, “installed” means your solar system is substantially complete—fully built, wired, and capable of operating.
While “Permission to Operate” (PTO) from your utility may come a bit later, the installation itself must be finished and functional before the end of 2025.
Can I pay for the system in 2025 and install it in 2026 to receive the solar tax credit?
No. This is one of the most common misconceptions since the passing of the OBBB. The IRS explicitly states that installation must be completed by December 31, 2025.
A contract, deposit, or even full payment without a completed installation will not qualify you for the 30% tax credit.
Does it matter how I pay—cash or loan?
No. The tax credit applies whether you pay in cash or finance your system through a loan.
However, keep in mind that most solar loans assume the homeowner will use their tax credit to make an early principal payment. As the deadline approaches, some lenders are adjusting their products and timelines to reflect the possibility that homeowners might not receive the credit if installation slips into 2026.
What about batteries or storage systems?
The same rule applies. To qualify under Section 25D, a battery system—whether paired with solar or installed on its own—must be installed and operational by December 31, 2025. After that date, the 25D residential credit no longer applies.
What if part of my payment happens in 2026?
That’s fine—as long as your solar system is installed and operational in 2025.
The IRS considers your expenditure “made” when installation is completed, not when the final payment clears. So if your project is finished in December 2025, you can still claim the full 30% credit on your 2025 tax return, even if part of your invoice is settled later.
How to Protect Your Eligibility
Choose a trusted installer. Work with a company that’s transparent about project timelines and has the workforce capacity to meet deadlines.
Get realistic about scheduling. Be cautious of anyone guaranteeing “last-minute” 2025 installations—capacity will be tight and you want to trust the work of the installer you choose (AKA not rush the job).
Talk to your tax professional. Every homeowner’s tax situation is unique. Confirm how your installation date affects your eligibility.
Don’t Risk 30% Chasing a Misconception
The IRS has made it clear: You cannot claim the 30% Residential Solar Tax Credit (25D) unless your system is installed and operational by December 31, 2025.
Payment or contract date doesn’t qualify—installation completion does.
“An expenditure shall be treated as made when the original installation of the item is completed.” — IRS, Section 25D(e)(8)(A)
Thanks for reading!
Kokosing Solar has been helping Ohio homeowners and businesses go solar for over 25 years.
Our 2025 schedule is full and we’re actively helping homeowners lock in their rates and plan for a 2026 installation.
Schedule your free consultation today.
