Checked September 26, 2026
No, not for a home solar system completed in 2026.
Public Law 119-21, enacted July 4, 2025, ended the residential clean energy credit under section 25D for any expenditures made after December 31, 2025, and the IRS treats an expenditure as made when the original installation is completed, so a system installed in 2026 does not qualify even if it was paid for in 2025.
Public Law 119-21, enacted July 4, 2025 and commonly known as the One, Big, Beautiful Bill, amended section 25D(h) of the Internal Revenue Code so that the residential clean energy credit does not apply with respect to any expenditures made after December 31, 2025. Before that change, section 25D(h) ended the credit for property placed in service after December 31, 2034. The IRS describes the credit as equal to 30 percent of the costs of new, qualified clean energy property for a home installed from 2022 through December 31, 2025, and it lists solar electric panels among the qualified expenses. The IRS page summarizing the law's provisions, last reviewed or updated September 25, 2026, lists the Residential Clean Energy Credit (25D) as not allowed for any expenditures made after Dec. 31, 2025.
Section 25D(e)(8)(A) treats an expenditure as made when the original installation of the item is completed. In its frequently asked questions on the law, the IRS says a credit cannot be claimed for property installed after December 31, 2025, even if the taxpayer paid for it on or before that date, because the expenditure is treated as made after December 31, 2025. For solar that is part of building or rebuilding a home, the expenditure is treated as made when the taxpayer's original use of the home begins, and the IRS says original use beginning after December 31, 2025 prevents the credit. The IRS also says the credit is claimed for the tax year when the property is installed, not merely purchased.
The Instructions for Form 5695 (2025) cover improvements made in 2025 to a home in the United States, and the IRS says the credit is claimed by filing Form 5695, Residential Energy Credits, with the tax return for the tax year when the property is installed. Those instructions give the credit rate for property placed in service in 2022 through 2025 as 30 percent and state that residential clean energy credits cannot be claimed for expenditures made after December 31, 2025. The IRS says the credit is nonrefundable, so it cannot exceed the tax owed, but unused credit can be carried forward and applied to reduce tax in future years. The 2025 instructions say an unused portion can be carried to 2026, and the IRS early release draft of the 2026 instructions, dated August 27, 2026 and marked not for filing, titles the 2026 form Carryforward of Residential Energy Credit.
Section 25D applies to qualified expenditures made by an individual taxpayer, and Public Law 119-21 separately changed the clean electricity production credit in section 45Y and the clean electricity investment credit in section 48E, which are based on electricity a taxpayer produces at, or a taxpayer's investment in, a qualified facility. For a facility that uses solar energy to produce electricity and whose construction begins after July 4, 2026, the law ends both credits if the facility is placed in service after December 31, 2027, and IRS Notice 2025-42 sets out how to tell when construction began. The law also denies both credits, for taxable years beginning after July 4, 2025, for property described in section 25D(d)(1) or (4), which the Internal Revenue Code defines as solar water heating property and small wind energy property, when the owner rents or leases it to a third party for use at a home in the United States that the person leasing it uses as a residence. Solar electric property, the category that covers solar panels, is defined separately in section 25D(d)(2), a paragraph the leasing rule does not name. Homeowners should confirm how these rules apply to their own situation with a tax professional.
Questions
No, according to the IRS. Section 25D treats an expenditure as made when the original installation is completed, and the IRS says that if installation is completed after December 31, 2025, the expenditure is treated as made after that date, which prevents the credit even if the property was paid for on or before December 31, 2025.
For solar installed as part of building or rebuilding a home, section 25D treats the expenditure as made when the taxpayer's original use of the home begins. The IRS says that if the construction or reconstruction is completed and the taxpayer's original use begins after December 31, 2025, the expenditure is treated as made after that date, which prevents the section 25D credit.
The IRS says unused residential clean energy credit can be carried forward and applied to reduce tax owed in future years, and the 2025 Form 5695 instructions say an unused portion can be carried to 2026. The IRS early release draft of the 2026 Form 5695 instructions, marked not for filing, says the form is used to take a carryforward from 2025 or to carry an unused portion to 2027, and that only a carryforward of unused credit may be claimed.
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