Federal Residential Solar Tax Credit Ending Soon — Why Now Is the Time to Go Solar

President Trump recently signed the “Big Beautiful Bill,” which accelerates the phase-out of the 30% federal tax credit for residential solar systems. This credit, originally extended through 2034 under the Inflation Reduction Act, will now expire December 31, 2025.

For homeowners considering solar, this marks a critical window of opportunity. Here’s what you need to know — and why waiting could cost you thousands.

Act Before December 31, 2025 to Claim 30% Back

Homeowners who install solar before the end of 2025 can still claim 30% of their system cost as a federal tax credit — an average savings of around $9,000 depending on system size and price.

The safest way to qualify is to have your system fully installed and operational before the deadline. Waiting could risk missing out entirely if installation schedules fill up late next year.

Rising Electricity Prices Make Solar a Smart Hedge

Electricity prices have been climbing faster than inflation since 2022, with U.S. households paying record-high rates in many regions. The U.S. Energy Information Administration (EIA) projects demand will hit record levels in 2025 and 2026 — fueled by population growth, electrification of homes, and energy-intensive data centers.

Higher demand means higher rates. Analysts forecast that average residential electricity prices could approach 18¢/kWh or more by 2026, and utilities will likely pass infrastructure upgrade costs on to customers.

Solar helps lock in your power costs now — providing predictable, near-zero energy bills for decades. Think of it as insurance against rate hikes.

Local Incentives Can Boost Your Savings

While the federal credit is disappearing, many state and local programs still offer cash rebates, property tax exemptions, or low-interest financing for solar.

For example:

• New York’s NY-Sun program continues to provide upfront incentives and financing to lower the cost of solar installations.

• GRID Alternatives’ Energy for All program helps low- and moderate-income families slash electricity bills by up to 90% through no-cost solar installations.

Combining these with the federal credit can significantly shorten payback periods.

Solar Adds Resilience as the Grid Faces Strain

With energy demand surging, blackouts and brownouts are becoming more common — especially during summer peaks. Pairing solar with battery storage can keep your lights on and appliances running even when the grid goes down.

This is becoming increasingly valuable as climate events, grid congestion, and extreme weather put pressure on utilities.

Why Waiting Could Cost More

Industry experts warn that installation backlogs will likely grow in late 2025 as homeowners rush to meet the deadline. This could lead to:

• Longer wait times for site surveys and installs

• Higher labor and equipment costs as demand spikes

• Missed eligibility if projects cannot be completed before year-end

Starting the process now helps lock in current prices, guarantees installation availability, and maximizes savings.

The Bottom Line

The federal residential solar tax credit is ending — and electricity rates are only headed higher. Acting now allows homeowners to:

• Claim 30% back on installation costs

• Hedge against future utility rate hikes

• Increase home value and energy independence

• Potentially eliminate most or all of their electricity bill

With just three months left before the credit expires, there’s never been a better time to explore solar for your home.