Senate Finance Bill Puts 30% Solar Tax Credit for Homeowners to Expire in 2025

A new legislative proposal from the Senate Finance Committee threatens to drastically alter the landscape for homeowners looking to go solar. Dubbed the “One Big Beautiful Bill,” this draft legislation, part of a larger budget reconciliation package, aims to terminate the popular 30% Residential Clean Energy Credit (Section 25D) much earlier than expected.

A Major Reduction for Solar Incentives
The proposed bill outlines several significant changes to existing solar incentives:

• • Residential ITC (Section 25D) Elimination: For homeowners, the beloved 30% Residential ITC is slated to end just 180 days after the bill becomes law. This means a likely mid-2026 cutoff, a stark contrast to its current scheduled expiration in 2032 under the Inflation Reduction Act (IRA).
  • Commercial/Leased System ITC (Section 48E) Phase Out: The bill also proposes to aggressively phase out the ITC for commercial and leased solar systems within 180 days of enactment to 60% of current levels in 2026, 20% in 2027, and 0% in 2028 and beyond.

Why 2025 Is the Crucial Deadline

If this bill is enacted as drafted, homeowners will face an accelerated deadline to claim the 30% tax credit. While the official termination is 180 days post-enactment with a goal of July 4th enactment, homeowners must have their solar systems “placed in service” by December 31, 2025, to be eligible. This “placed in service” status means all major steps—design, permitting, and installation must be completed within this calendar year. This is a critical distinction from the current IRA law, which extends the 30% ITC through 2032.

What Homeowners Need to Understand

The Residential Clean Energy Credit is a significant incentive, covering 30% of your solar system’s costs, including panels, inverters, labor, and even battery storage when installed alongside solar.

If you were considering solar, now is the time to act. Many other homeowners will be in the same boat and will be rushing to contract their system for this year. Installers will quickly book out for the rest of the year.

Therefore, the message is clear: to secure the 30% credit, every step of your solar project— from initial design to installation —must be completed by December 31, 2025.

Projected Impacts on the Solar Market and Industry

Industry experts are sounding the alarm. They anticipate a frantic rush of installations in late 2025 as homeowners scramble to meet the deadline, followed by a sharp downturn in residential solar demand in 2026. This potential volatility is already impacting investor confidence, with solar stocks experiencing significant drops following the bill’s announcement.

What Homeowners Can Do NOW:

The proposed bill outlines several significant changes to existing solar incentives:

• Start Planning Immediately: Contact a local installer to start the process
• Obtain Quotes Without Delay: Installation timelines can be 2-4 months. Request multiple bids from reputable installers and confirm their capacity to complete your project before the year-end deadline.Commercial/Leased System ITC (Section 48E)
• Stay Informed: Keep a close eye on legislative developments. Senate markups, potential amendments, and the final passage could significantly alter deadlines or phase-out terms.
• Consider Battery Storage: Battery storage paired with solar currently qualifies for the Residential Clean Energy Credit. Since this credit is also under threat, now might be the time to incorporate storage into your system.

In Summary:

If the Senate Finance Bill passes as currently drafted, the invaluable 30% residential solar tax credit will effectively disappear for systems not “placed in service” by December 31, 2025. Homeowners hoping to realize 30% savings on their solar investment must act with unprecedented urgency. While commercial and utility-scale solar projects may retain their incentives longer, the future of rooftop solar in the U.S. hangs in the balance unless Congress revises this critical Senate draft.