The 30% Federal Solar Tax Credit: What Homeowners Should Know in 2025
- Rose Avakian
- May 19
- 2 min read
With recent proposals to change the federal solar tax credit, 2025 could be a critical year for homeowners considering solar. The 30% federal tax credit, which has helped millions of homeowners afford solar and battery systems, is currently available, but its future remains uncertain.
Here’s what you need to know in 2025, especially if you want to take advantage of the full credit before potential changes take effect.
How the Solar Tax Credit Works (Section 25D)
The federal Investment Tax Credit (ITC) — officially known as the Residential Clean Energy Credit under Section 25D of the Internal Revenue Code — allows homeowners to claim 30% of the total cost of their solar energy system as a credit on their federal taxes. This includes both solar panels and eligible battery storage systems.
For example, a $25,000 solar project could qualify for a $7,500 tax credit.
This is a dollar-for-dollar reduction in your tax liability (not just a deduction). But there’s one important detail: to claim the credit for the 2025 tax year, your system must be fully installed and operational by December 31, 2025.
Why There’s Uncertainty in 2025
The 30% tax credit was extended through 2032 by the Inflation Reduction Act. However, in 2025, lawmakers have proposed rolling back or eliminating parts of that legislation, including solar and clean energy incentives.
As of now, the tax credit is still active. But there’s no guarantee it will remain in place, and any future policy changes could be implemented quickly without retroactive protection for systems that haven’t been completed.
That’s why homeowners and contractors alike are watching the situation closely and moving forward with installations sooner rather than later.
Why Timing Matters
If you're planning to claim the 30% tax credit in 2025:
Your system must be installed and turned on by the end of the year.
Delays in permitting, utility approval, or contractor schedules could affect your eligibility.
A last-minute rush in Q4 (if policy changes are announced) could strain installer capacity and slow down timelines.
Even if your project is planned for later this year, starting the process early gives you more control over the outcome.
Key Takeaways
The 30% tax credit (Section 25D) is still available, but its future is uncertain.
You must complete your installation within the calendar year to qualify for that year’s credit.
Starting early reduces the risk of missing out due to unforeseen delays or policy changes.
Final Thought
The 30% federal solar tax credit remains one of the most valuable tools for homeowners going solar. But with proposals in motion that could reduce or eliminate it, there’s no guarantee it will stay the same much longer.
If you’ve been considering solar for your home, this may be the right time to move forward, while the full credit is still on the table and installation timelines are in your control.
Want to make sure your system qualifies?
Reach out for a free custom quote and timeline — we’ll help you navigate the process while the full credit is still in effect.
For more information on eligibility, refer to IRS Form 5695, or speak with a licensed tax professional about how Section 25D applies to your situation.