One Big Beautiful Bill Kills 30% Solar Tax Credit for Homeowners
The OBBB, signed into law July 4, 2025, ends the 30% residential solar tax credit for homeowner-owned systems after December 31, 2025 — nearly a decade earlier than expected.
Solar Maui Staff
News Team
The Inflation Reduction Act of 2022 originally guaranteed a 30% federal solar tax credit through 2032. That promise has been broken. The One Big Beautiful Bill (OBBB), signed into law on July 4, 2025, dramatically shortened the timeline, leaving homeowners with a narrow window to act.
What Changed
The OBBB accelerated the expiration of the Residential Clean Energy Credit (Section 25D) to help offset other tax policy changes in the bill, cutting the residential solar incentive nearly a decade early.
Homeowner-Owned Systems (Cash or Loan)
The 30% Residential Clean Energy Credit now ends on December 31, 2025. Any solar system not fully installed and "placed in service" by this date will not qualify for the federal credit. This applies to homeowners who purchase their system outright with cash or through a solar loan.
Leased and PPA Systems (Third-Party Ownership)
Third-party owned residential solar systems — including leases and Power Purchase Agreements (PPAs) — remain eligible for the 30% tax credit under Section 48E through December 31, 2027. For homeowners who cannot install before the 2025 deadline, a lease or PPA may be the only path to benefit from the federal incentive.
Battery Storage
Standalone battery systems under third-party ownership still qualify for the 30% credit through 2032. However, homeowner-owned batteries are affected by the same 2025 cutoff as solar panels.
What This Means for Maui Homeowners
**If you want to own your system:** You have until December 31, 2025, to have your system fully installed and operational. Given permitting timelines and installer availability, the window to start the process is extremely tight.
**If you're considering a lease or PPA:** Third-party ownership options still carry the 30% credit through 2027, which installers can pass along as lower monthly payments.
**The bottom line:** The 30% rate is no longer guaranteed through 2032 for direct ownership. Homeowners who have been waiting to go solar need to act now or explore alternative ownership structures.
Updated Federal Solar Tax Credit Timeline
Homeowner-Owned (Section 25D):
Third-Party Owned / Lease / PPA (Section 48E):
How to Claim Before the Deadline
The federal solar tax credit is still claimed using IRS Form 5695 when filing your annual tax return. To qualify, your system must be fully installed and placed in service by December 31, 2025. There is no cap on the credit amount, and unused credits can be carried forward to future tax years.
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