solartop Last updated: Mar 31, 2026 solartop
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solartop 7 min read 
Updated: March 31, 2026

The Federal Solar Tax Credit, also known as the Investment Tax Credit (ITC), was a pivotal program for homeowners who invested in solar energy. For years, it significantly reduced the upfront costs of installing solar photovoltaic (PV) systems, making clean energy more accessible. However, this tax credit officially expired for residential installations after December 31, 2025.

While the federal incentive has ended, switching to solar remains a valuable investment for reducing energy costs. To help homeowners continue to make the transition affordably, Solar Topps has introduced the new Easy Ownership Program. This leasing program is designed to help offset the absence of the 30% federal rebate, providing a new pathway to solar ownership.

This guide explains the former ITC and introduces our new program to help you navigate your solar investment. To learn more, please Contact Us.

You can also fill out a Commercial or Residential Quote.

What Was the Federal Solar Tax Credit?

The Federal Solar Tax Credit was a dollar-for-dollar reduction in federal income tax owed, based on a percentage of a solar system’s cost. For example, if an individual owed $5,000 in taxes and claimed a $1,500 tax credit, their tax liability would decrease to $3,500. Unlike tax deductions, which only lower taxable income, tax credits directly reduce the amount of tax owed.

The ITC applied specifically to residential solar installations, allowing Arizona homeowners to claim a percentage of their system’s cost on their federal tax returns. This program was instrumental in promoting solar adoption, but officially ended for residential systems on January 1, 2026.

Past Eligibility for the Solar Tax Credit

To have qualified for the Federal Solar Tax Credit, homeowners needed to meet the following requirements:

  1. Installation Deadline: The solar PV system had to be installed and operational by December 31, 2025.
  2. Ownership: The homeowner had to own the system outright, either through a cash purchase or financing.
  3. Primary or Secondary Residence: The system had to be installed at a U.S. residence owned by the taxpayer.
  4. Community Solar Projects: Shares in off-site community solar projects were eligible if the electricity generated offset the home’s energy consumption.

What Expenses Qualified for the Solar Tax Credit?

The ITC covered a wide range of costs associated with solar installations, including:

  • Solar Panels: Costs for PV cells and panels.
  • Labor Costs: Installation, permitting, and inspection fees.
  • Energy Storage: Battery systems with a capacity of at least 3 kWh (if installed after December 31, 2022).
  • Balance-of-System Equipment: Inverters, wiring, and mounting hardware.
  • Sales Tax: Any sales tax applied to eligible expenses.

What Didn’t Qualify?

Not all expenses were eligible for the credit. The following did not qualify under the ITC:

  • Leased solar systems
  • Electricity purchases from community solar projects
  • Pre-owned or previously installed equipment

How Incentives Affected the Tax Credit

The impact of additional incentives on the final tax credit calculation was a key detail.

Utility Rebates

Utility rebates typically reduced the system’s cost basis before the tax credit was calculated. For example:

  • Solar system cost: $20,000
  • Utility rebate: $1,000
  • Tax credit calculation: ($20,000 – $1,000) x 30% = $5,700

State of Arizona Rebates

State-level rebates generally did not reduce the federal tax credit amount. For example:

  • Solar system cost: $20,000
  • State rebate: $1,000
  • Tax credit calculation: $20,000 x 30% = $6,000

Frequently Asked Questions

Could you claim the credit for a vacation home?

Yes, secondary residences qualified as long as they were in the U.S.

Did off-grid systems qualify?

Yes, as long as they met the eligibility requirements and were used for a residence.

What if I financed my solar PV system?

Financed systems qualified as long as the homeowner owned the system outright.

Could I claim the tax credit for ground-mounted panels?

Yes, ground-mounted systems were eligible.

What happened if my tax liability was less than the credit?

The unused portion of the credit could be rolled over to the next tax year.

Did the roof replacement qualify?

Generally, roof replacements did not qualify unless the new roofing was an integral part of the solar system itself.

The Future of Solar: Act Now with Solar Topps!

While the Federal Solar Tax Credit has expired, the opportunity to secure a sustainable and cost-effective energy future has not. Solar technology continues to be a premier investment for homeowners looking to reduce energy costs and increase property value.

Solar Topps is committed to making this transition seamless and affordable. Our new Easy Ownership Program offers a powerful alternative, providing financial benefits to help you make the switch without the federal incentive.

Don’t wait to take control of your energy costs. Reach out to Solar Topps today to learn about our new program and get a personalized quote