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The residential ITC is gone. Section 25D expired December 31, 2025. But Massachusetts is not like other states. Here is the honest math for 2026.
Federal Residential Solar Tax Credit (Section 25D): EXPIRED
The One Big Beautiful Bill Act (OBBBA) eliminated Section 25D effective December 31, 2025. Homeowners who buy solar with cash or a loan receive $0 in federal tax credits. Section 48/48E (commercial ITC for PPA/lease) remains active until July 4, 2026.
Solar is still worth it for most MA homeowners in 2026
Massachusetts is one of a handful of states where solar makes strong financial sense even with the federal residential tax credit at $0. The reason is simple: MA has the highest residential electric rates in the continental US, a state-funded production incentive (SMART 3.0) that no other state matches, full retail net metering, and generous tax exemptions. The payback period went from approximately 5 years to approximately 7.8 years. That is a real difference, but it is still well within the 25-year panel warranty period, leaving 17+ years of nearly free electricity.
In most other states, losing the 30% ITC pushed payback beyond 12-15 years. In Massachusetts, state-level programs absorb much of the blow. Here are the numbers.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. Among its provisions, OBBBA eliminated Section 25D (the residential clean energy tax credit) and Section 25C (the energy efficiency credit) effective December 31, 2025. This is not a phase-down. It is not a temporary pause. The residential solar ITC went from 30% to 0% overnight. For an 11 kW system in Massachusetts costing $34,760, that is $10,428 that homeowners can no longer claim.
OBBBA signed into law — eliminates Section 25D and 25C effective end of 2025
Section 25D expires — $0 residential ITC for cash/loan buyers
Section 48/48E deadline — third-party projects must begin construction before this date for 30% ITC
Most states relied heavily on the 30% federal ITC to make solar economics work. When it disappeared, many markets saw payback periods jump to 12-15 years or longer. Massachusetts is different because the state built its own incentive ecosystem that operates independently of federal policy. Here is what MA has that most states do not:
The SMART program alone is unique to Massachusetts. No other state offers a guaranteed per-kWh production incentive on top of net metering for residential solar. When you combine SMART 3.0 income with some of the highest electric rates in the nation and full retail net metering, MA homeowners generate more value per kWh of solar than homeowners in almost any other state. The lost $10,428 ITC hurts, but it does not change the fundamental math: solar panels in Massachusetts produce electricity that is worth $0.30-$0.33/kWh, plus another $0.03/kWh from SMART. That is $0.33-$0.36 of value per kWh produced. No federal credit needed to make that work.
Here is the side-by-side comparison for a typical 11 kW system in Massachusetts. The ITC expiration increased the net cost by approximately $10,400 and extended payback by approximately 2.8 years. But the 25-year savings only dropped by about $13,000 — from $160,000+ to $147,000+. That is because the ongoing value of solar (net metering, SMART, tax exemptions) remains identical.
| Item | 2024 (With 30% ITC) | 2026 (No ITC) |
|---|---|---|
| System Cost (11 kW) | $34,760 | $34,760 |
| Federal ITC (Section 25D) | -$10,428 (30%) | $0 (EXPIRED) |
| MA State Tax Credit | -$1,000 | -$1,000 |
| Sales Tax Saved (6.25%) | -$2,173 | -$2,173 |
| Net Cost After Incentives | $21,159 | $31,587 |
| SMART 3.0 Income (20 yr) | $7,920 | $7,920 |
| Net Metering Value (25 yr) | ~$87,500 | ~$87,500 |
| Property Tax Saved (20 yr) | ~$12,000 | ~$12,000 |
| ConnectedSolutions (if battery) | $225-$1,500/yr | $225-$1,500/yr |
| Payback Period | ~5 years | ~7.8 years |
| 25-Year Net Savings | ~$160,000+ | ~$147,000+ |
Key takeaway: The payback period increased from approximately 5 years to approximately 7.8 years. That is meaningful, but still excellent by national standards. After payback, you have 17+ years of nearly free electricity. The 25-year savings still exceed $147,000, making solar one of the best home investments available in Massachusetts even without any federal incentive. The numbers above assume Eversource territory with 5% annual rate escalation and a cash purchase of an 11 kW system at $3.16/W.
The federal ITC was never the only reason solar worked in Massachusetts. It was one piece of a much larger picture. Here are the five pillars that keep MA solar economics strong in 2026.
Massachusetts has the highest residential electricity rates in the continental US. Eversource customers pay approximately $0.2836/kWh, National Grid customers pay $0.32/kWh, and even Unitil customers pay $0.2833/kWh. Over the past decade, MA rates have increased an average of 4-6% annually. At 5% annual growth, today's $0.28/kWh becomes $0.46/kWh by 2036 and $0.74/kWh by 2046. Solar locks in your electricity cost at $0 for 25+ years. That hedge is worth more than the lost ITC.
The Solar Massachusetts Renewable Target program is unique to Massachusetts. Under SMART 3.0, residential systems (25 kW or less) receive a flat $0.03/kWh for every kilowatt-hour produced, guaranteed for 20 years. Low-income qualified households get $0.06/kWh. For an 11 kW system producing ~13,200 kWh/year, that is $396/year or $7,920 over the full term. Add a battery for the $0.04/kWh storage adder, bringing your total SMART rate to $0.07/kWh. This income is ON TOP of net metering credits.
Massachusetts requires all three investor-owned utilities to credit residential solar exports at the full retail rate (1:1 net metering) for systems up to 25 kW. When your panels produce more than you consume, every excess kWh is credited at $0.27-$0.28/kWh. Credits roll over monthly. For a properly sized 11 kW system, net metering offsets approximately $3,100-$3,700 per year in electricity costs. No other New England state offers this combination of rate + full retail credit.
Here is the most important thing most articles miss: Section 48/48E commercial ITC is still available for projects beginning construction before July 4, 2026. When you sign a solar PPA or lease, a third-party financing company owns the system. As a business entity, that company claims the 30% ITC under Section 48. The savings are passed through to you as a below-retail PPA rate. You get $0 down, immediate monthly savings, no maintenance, and the economic benefit of a credit that homeowners can no longer access directly.
Massachusetts exempts solar installations from both property tax assessment (20 years) and sales tax (6.25%). The property tax exemption means your home value increases by $20,000-$35,000 from the solar system, but your property taxes stay the same. At a typical 1.2% MA tax rate, that saves approximately $500-$800 per year. The sales tax exemption saves $2,000-$2,300 upfront on an 11 kW system. The $1,000 state income tax credit (15% of cost, capped) adds further savings. Combined, these state benefits are worth over $15,000 across the system lifetime.
We believe in honest advice. Solar is not right for every home. Without the federal ITC acting as a buffer, these situations become more important to evaluate carefully. If any of these apply to you, solar may not be your best investment right now.
Removing and reinstalling solar panels for a roof replacement costs $2,000-$5,000. If your roof is nearing end of life, replace it first or coordinate a roof+solar package. Most MA solar installers offer combined roof and solar projects.
MA is heavily wooded. If your roof gets less than 4-5 hours of direct sun between 9 AM and 3 PM, solar production drops significantly. Microinverters help with partial shade, but heavy shading cannot be overcome. Get a proper shade analysis before committing.
About 14% of MA households are served by one of 41 municipal light plants (MLPs). MLP customers do NOT qualify for SMART 3.0 and may have different (often lower) electric rates and less favorable net metering. If you are on Reading Municipal Light, Concord Municipal, or similar, solar economics are materially different. Contact your MLP directly.
With a 7.8-year payback, you will not fully recoup your investment if you sell within 3-4 years. Solar does increase home value, and MA buyers are solar-savvy, but you may not recover the full net cost. A PPA/lease transfers to the buyer, making it a better option for shorter ownership timelines.
Here is what most solar articles miss: while homeowners lost the 30% ITC, the commercial Investment Tax Credit (Section 48/48E) is still available for projects beginning construction before July 4, 2026. This creates a unique opportunity through solar PPAs and leases.
You sign a Power Purchase Agreement (PPA) or solar lease. The third-party financing company — not the installer — is the legal owner of the system.
As a business entity, the system owner qualifies for the commercial Investment Tax Credit. On a $34,760 system, that is $10,428 in federal tax savings for the financing company.
The financing company uses the ITC savings to offer you a below-retail PPA rate, typically 10-20% lower than your current utility rate. You pay $0 upfront, get immediate monthly savings, and the company handles all maintenance.
The net result: you get $0 down solar with immediate savings, and the economic benefit of a 30% tax credit that individual homeowners are no longer eligible for. This is the single biggest advantage of PPA/lease in 2026.
Section 48/48E requires projects to begin construction before July 4, 2026. After that date, the third-party ITC drops significantly or disappears entirely depending on the project. If you are considering a PPA or lease, starting the process now ensures your project qualifies for the full 30% credit. Projects that begin construction after the deadline will not have this advantage, which will likely increase PPA rates.
Use this calculator to see your personalized payback period and 25-year savings based on your utility, system size, financing type, and whether you add a battery. The calculator accounts for SMART 3.0, net metering, tax exemptions, and ConnectedSolutions revenue.
Estimate your solar return on investment with SMART income, net metering credits, ConnectedSolutions, and MA tax benefits.
Federal Residential Solar Tax Credit (Section 25D) Expired
Homeowners who purchase solar with cash or a loan receive $0 in federal tax credits. Section 25D expired December 31, 2025.
Eastern MA (Boston, South Shore, Cape Cod, MetroWest, Western MA)
Electric Rate
$0.28/kWh
Net Metering
1:1 retail credit (Class I ≤25 kW)
SMART 3.0 Rate
$0.03/kWh
Interconnection
2-4 weeks typical
20-year exemption — solar adds $0 to your property tax
Payback Period
7
years
25-Year Savings
$114,687
total
Monthly Benefit
$378
per month
Estimates based on average 2026 MA solar pricing, SMART 3.0 $0.03/kWh residential flat rate, 1:1 retail net metering, 6.25% sales tax exemption, 20-year property tax exemption, and 15% state tax credit (max $1,000). Section 25D residential ITC expired Dec 31, 2025 — $0 federal tax credit for cash/loan purchases.
Common questions about solar economics in Massachusetts after the federal ITC expired. Updated for March 2026.
Yes. Massachusetts has the strongest state-level solar incentive stack in the country. The combination of the highest residential electric rates in the continental US (~$0.30/kWh average), SMART 3.0 program payments ($0.03/kWh for 20 years), 1:1 net metering at full retail rate, a $1,000 state tax credit, 20-year property tax exemption, and 6.25% sales tax exemption creates a payback period of approximately 7.8 years for cash buyers. The 25-year savings exceed $147,000 even without any federal credit.
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, eliminated the Section 25D residential clean energy credit effective December 31, 2025. Homeowners who purchase solar with cash or a loan now receive $0 in federal tax credits. There is no scheduled return date and no pending legislation to restore it. Section 25C (energy efficiency credit for heat pumps, insulation) also expired on the same date.
Yes, indirectly. Section 48/48E, the commercial Investment Tax Credit, is still available for projects beginning construction before July 4, 2026. When you sign a solar PPA or lease, a third-party financing company owns the system on your roof. As a business entity, that company (the system owner, not the installer) claims the 30% ITC under Section 48. The savings are passed through to you as lower PPA rates or lease payments. This is the primary advantage of PPA/lease in 2026.
For a cash purchase of a typical 11 kW system ($34,760), the payback period is approximately 7.8 years without the federal ITC. This accounts for SMART 3.0 income (~$396/yr), net metering credits (~$3,100-$3,700/yr), the $1,000 state tax credit, $2,173 in sales tax savings, and ongoing property tax exemption savings. With the ITC, payback was approximately 5 years. The difference is meaningful but the investment still pays for itself well within the 25-year panel warranty.
No. There is no pending legislation to restore Section 25D. Waiting means paying $0.28-$0.34/kWh every month while MA electricity rates continue rising 4-6% annually. A system installed today saves over $147,000 across 25 years even without the ITC. Additionally, the Section 48 third-party ITC for lease/PPA expires July 4, 2026. After that date, even the PPA/lease cost advantage disappears. Every month you wait costs approximately $290-$350 in electricity bills that solar would have offset.
It depends on your financial situation. Cash purchase produces the highest 25-year savings (~$147,000+) because you keep 100% of SMART income and net metering credits. Solar loans (5.5-8% APR through local lenders) allow ownership with $0 down, though monthly loan payments offset some early savings. PPA/lease is compelling in 2026 because the third-party owner claims the 30% Section 48 ITC — $0 down, immediate savings (10-20% below retail), no maintenance. For homeowners who cannot spend $31,000-$35,000 upfront, PPA is a strong option while Section 48 lasts.
Yes, SMART 3.0 is fully active and unaffected by the federal ITC changes. The Solar Massachusetts Renewable Target program pays residential solar owners $0.03/kWh for every kWh produced, locked in for 20 years. Low-income households receive $0.06/kWh. Adding a battery qualifies for a $0.04/kWh storage adder. SMART payments stack on top of net metering credits — they are separate income streams. For a typical 11 kW system, SMART generates approximately $396/year or $7,920 over 20 years.
A typical 11 kW residential solar system costs $33,000-$37,400 in Massachusetts in 2026 ($3.00-$3.40/W). The average installed price is $3.16/W or about $34,760. After the $1,000 MA state tax credit and $2,173 in sales tax savings, the net cost is approximately $31,587. There is no federal Section 25D tax credit available for cash or loan purchases. Prices vary by city: Boston $3.10-$3.50/W, Worcester $2.90-$3.30/W, Springfield $2.85-$3.25/W, Cape Cod $3.10-$3.55/W.
These guides provide deeper analysis on specific aspects of Massachusetts solar in 2026 — from detailed cost breakdowns to program-specific guides.
Full overview of solar in Massachusetts — costs, incentives, utilities, and next steps.
Honest look at what solar really costs in MA after the ITC expired.
Detailed cost breakdown by system size, city, and equipment tier.
How SMART 3.0 works, current rates, adders, and enrollment process.
Compare financing options and see which makes sense without the ITC.
Earn $225-$1,500/yr with battery demand response from Eversource or National Grid.
Get a personalized solar proposal for your Massachusetts home. We will show you the exact costs, incentives, and payback for your specific address, roof, and utility. No pressure, no gimmicks, just honest numbers.
NABCEP-certified installers serving all of Massachusetts since 2008.