Congress May End the Residential Solar Tax Credit Before 2034
Installing solar panels has never been more affordable for homeowners, largely thanks to the residential solar tax credit known as the Investment Tax Credit, or ITC. Unfortunately, though, changes may be coming to the ITC, phasing out residential solar rebates by the end of 2025. This would be a major blow to those looking to upgrade to solar in the next few years.
As Denver’s leading solar installers, our team at Elite Roofing & Solar has more information for homeowners.
Is the Residential Solar Tax Credit Going Away?
Yes, it’s very likely—according to EnergySage, Congress is considering eliminating the federal solar tax credit (ITC), which could impact affordability for homeowners planning solar installations in 2025 and especially beyond.
If you’ve been considering installing a solar array on your home, now is the time to act. While the ITC rebate was set to run through 2034, and its elimination is far from certain, this is a major incentive that homeowners should take advantage of if they can.
What Is the Residential Solar Tax Credit?
Officially called the Investment Tax Credit, or ITC, the residential solar tax credit is a tax rebate offered to incentivize homeowners to make energy-efficient upgrades to their homes. In particular, it provides significant benefits for solar panel installation, including:
- A 30% tax credit off the total cost of your solar installation
- Can be applied toward both solar panels and solar + battery systems
- Availability through 2034, but with reduced incentives beginning in 2033
This tax credit was originally put in place in 2005 (to a maximum of $2,000), then expanded in 2008 by removing the dollar maximum. The credits have been extended multiple times, with the most recent extension, ITC was extended through 2034 by the Inflation Reduction Act in 2022.
This rebate has been a game-changer in solar adoption within the United States, significantly reducing upfront costs and enabling homeowners to get a return on their investment much sooner.
Why Congress May Cut the Solar Tax Credit
The ITC is primarily being removed as part of broader budget discussions to fund other legislative initiatives. The current federal proposal seeks to cut clean energy programs, including the ITC.
If passed, this repeat could take effect as soon as 2025, potentially ending the tax credit by December 31.
What Does Ending the Solar Tax Credit Mean for Homeowners?
In short, removing the residential solar tax credit would mean significantly higher out-of-pocket costs for homeowners. Homeowners would experience:
- Higher overall installation costs
- Reduced long-term ROI as solar investments take longer to pay for themselves
- Reduced accessibility for those who may not be able to afford solar panels otherwise
Why 2025 May Be Your Last Chance to Save with Solar
With the proposed changes to the ITC solar rebates, there may never be a better time to go solar than right now. Homeowners who act quickly will still be able to take advantage of this massive incentive, which can total as much as $6,000 to $9,000 (for solar arrays costing between $20,000 and $30,000 to install).
Homeowners who delay, on the other hand, risk missing out on those thousands of dollars in savings entirely.
Steps to Lock In the Solar Tax Credit Before It Ends
Homeowners who want to take advantage of the residential solar tax credit in 2025 should do the following:
- Sign a contract with your installer before any repeal law passes
- Make sure your system is fully installed and operational (“placed in service”)
- Work with a solar provider that’s tracking federal legislation
If possible, homeowners should get written confirmation from their contractor that the system will qualify for the ITC.
How Homeowners Can Help Protect the Solar Tax Credit
While Congress has proposed to cut the ITC program, these changes to the solar tax credit are not set in stone. Homeowners can still be heard on the issue and may consider the following:
- Contact elected officials at both the state and federal levels
- Join solar advocacy groups and petitions
- Stay informed through trusted resources like SEIA.org and EnergySage
- Share this news with friends, neighbors, and community leaders
Call Elite Roofing & Solar to Lock in Your Solar Savings
If you’re considering installing solar panels on your home, there may never be a better time. The residential solar tax credit is an incredible incentive that has helped homeowners save thousands. Don’t miss your chance—plan your solar installation with Elite Roofing & Solar today.
Get started with a free consultation.
Solar Tax Credit Repeal FAQs
When could the tax credit be eliminated?
If Congress passes a repeal, it could take effect as early as mid-to-late 2025.
Will I still qualify if I sign a contract now but install next year?
Potentially, as long as your system is “placed in service” before the repeal takes effect. Check with your installer to be sure.
Does this affect battery storage incentives, too?
Yes—battery systems that are part of solar installations are also covered under the ITC, as well as residential wind turbines and other clean energy sources.
What if I only use local or state rebates?
Those can help, but they’re usually much smaller than the federal tax credit. Because they can typically be paired with the federal tax credit, they’re unlikely to offset the loss.
Can businesses still claim the tax credit?
This repeal effort focuses on residential solar, but commercial incentives could also face changes.
