The federal solar tax credit is gone. Here's what that does to the math

What changed

For years, a residential solar purchase came with a 30 percent federal tax credit. Buy a $20,000 system, reduce your tax bill by $6,000. It was the single largest subsidy in residential solar and most of the industry's payback arithmetic was built around it.

It ended for anything bought after 31 December 2025.

There's no state credit in California that replaces it for this. SGIP, the battery incentive, has been waitlisted. There is, at present, nothing.

Why it matters less here than you'd think

For rooftop solar this was a serious blow, on top of the net billing changes that had already cut export compensation. A $25,000 system that was effectively $17,500 is now $25,000.

For plug-in solar, the effect is real but proportionally smaller, for a slightly odd reason: the credit was worth 30 percent of a big number for rooftop buyers and 30 percent of a small number here. Losing $255 on an $850 kit stings less than losing $7,500 on a roof.

Estimated at SCE's 33.2-cent rate. Full working.

Payback goes from about two and a half years to a bit over three. That's worse, and it doesn't change anyone's decision.

Compare that to a $25,000 roof going from roughly nine years to roughly thirteen, which changes plenty of decisions.

The odd second-order effect

Removing the credit made rooftop solar meaningfully less attractive while barely touching plug-in solar. Combine that with net billing already having cut what exported rooftop power earns, and the relative case for a small self-consumption system is stronger now than it was two years ago.

That's not an argument for the policy. It's just where the arithmetic landed.

What to watch out for

Stale pricing content. A lot of 2026 solar writing was drafted earlier and quietly still assumes the credit. If a payback figure looks unusually good, check the date and check whether it's subtracting 30 percent.

Salespeople who haven't updated. If someone quotes you a net-of-credit price for a 2026 installation, that's either a mistake or worse. Ask them directly whether the figure assumes a federal credit.

"Incentives" that aren't. Manufacturer discounts are discounts. A rebate you have to apply for through a programme that's waitlisted is not money you can count on. Our rule is that we don't quote any incentive we haven't verified is currently active, and this is why.

Is anything coming back?

We don't know. Tax credits have been enacted, expired and revived repeatedly over twenty years, and predicting the next Congress isn't our job.

What we can tell you is what we'd do: don't wait for one. A three-year payback is a good purchase without a subsidy, and buying now with real numbers is better than buying later on a promise.