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The residential solar ITC (Section 25D) expired December 31, 2025. Massachusetts homeowners who buy solar with cash or a loan get $0 from the IRS. But there is a legal, congressionally-designed path to still access the 30% credit — through third-party ownership under Section 48/48E.
30%
ITC Rate (Section 48)
$10,230
Example ITC (11 kW)
Jul 4, 2026
Construction Deadline
A 64-year-old tax code provision — not a loophole
Section 48 of the Internal Revenue Code has existed since 1962. It provides an Investment Tax Credit (ITC) to the owner of qualifying energy property — solar panels, wind turbines, battery storage, and other energy systems. The critical word in the statute is “owner.”
For decades, two parallel pathways existed for solar tax credits. Section 25D let individual homeowners claim the ITC on their personal tax return when they purchased solar with cash or a loan. Section 48 let businesses and financing companies claim the ITC when they owned solar systems — including systems installed on residential rooftops through leases and PPAs.
On July 4, 2025, the OBBBA (One Big Beautiful Bill Act) eliminated Section 25D. The homeowner pathway is dead. But Section 48 — the business/TPO pathway — remains active for projects beginning construction before July 4, 2026.
For Massachusetts homeowners, this means the only path to federal solar tax benefits in 2026 is through third-party ownership — a solar lease, PPA, or a program like NuWatt Propel (coming soon to MA). Massachusetts is NuWatt's largest market, and TPO-financed solar pairs especially well with the state's SMART 3.0 program and high electric rates.
Expired Dec 31, 2025. Cash or loan buyers get $0 federal tax credit.
30% ITC for TPO-owned systems. Deadline: begin construction by July 4, 2026.
Construction must begin before July 4, 2026. Sign a TPO contract by spring 2026.
What changed and what still works for MA homeowners
| Feature | Section 25D | Section 48/48E |
|---|---|---|
| Tax code section | Section 25D | Section 48 / 48E |
| Who claims the credit | Homeowner (on personal return) | System owner / TPO (financing company) |
| IRS form used | Form 5695 | Form 3468 |
| Credit rate | 30% (was) | 30% (still active) |
| Current status | EXPIRED Dec 31, 2025 | ACTIVE through July 4, 2026 |
| Applies to | Cash or loan purchases | Lease, PPA, Propel (TPO models) |
| MACRS depreciation | Not available to homeowners | 5-year accelerated + 20% bonus (2026) |
| Domestic content bonus | N/A (credit is dead) | +10% with FEOC-compliant panels |
| Energy community bonus | N/A (credit is dead) | +10% if project in qualifying area |
| Net effect for homeowner | $0 federal benefit | Lower monthly payment via TPO savings |
Source: IRS Code Sections 25D, 48, and 48E. OBBBA signed July 4, 2025.
Follow the ITC from installation to your monthly bill
A third-party owner (financing company) purchases a solar system — for example, an 11 kW system at $3.10/W costs approximately $34,100. The TPO owns the panels, inverter, and racking. They contract with an installer (like NuWatt) to mount the system on your roof.
The TPO files IRS Form 3468 and claims the 30% Investment Tax Credit on the system cost. On a $34,100 system, that is $10,230 in federal tax credits. This goes directly to the financing company — not to you, and not to the installer. The critical word in the tax code is “owner.”
The TPO also claims Modified Accelerated Cost Recovery System (MACRS) depreciation on a 5-year schedule. In 2026, this includes a 20% first-year bonus. On our $34,100 example, MACRS provides roughly $5,400 in additional tax benefits over 5 years. This is a commercial tax benefit unavailable to individual homeowners.
The TPO receives approximately $15,630 in combined tax benefits ($10,230 ITC + ~$5,400 MACRS). These savings are baked into your lower monthly lease payment or per-kWh PPA rate. Without Section 48, the TPO would need to charge you significantly more. This is not a loophole — it is the intended mechanism Congress designed to encourage solar deployment at scale.
On an 11 kW system at $3.10/W ($34,100), the TPO captures approximately $15,630 in combined federal benefits ($10,230 ITC + ~$5,400 MACRS). These savings are passed to you as lower lease or PPA payments. Add SMART 3.0 revenue ($0.03/kWh for 20 years) and the TPO economics in Massachusetts are among the best in the country.
Three system sizes at $3.10/W — MA average installed cost
18 panels
8 kW System
$3.10/W
Best for: Smaller homes, condos, 600–800 sq ft roof
25 panels
11 kW System
$3.10/W
Best for: Average MA home, covers full usage
32 panels
14 kW System
$3.10/W
Best for: Large homes, EV charging, heat pump
Estimates based on MA average $3.10/W installed cost, 1,200 kWh/kWp annual production, and 30% ITC. PPA rates compared to Eversource $0.28/kWh and National Grid $0.32/kWh. MACRS assumes 20% first-year bonus depreciation (2026). Actual figures vary by installer, roof orientation, and contract terms.
Compare your options in the post-25D landscape
Fixed monthly payment for 20–25 years. The TPO owns the system and claims the 30% ITC + MACRS. You pay a predictable monthly amount that is lower than your current electric bill.
Advantages
Drawbacks
Massachusetts Note
TPO-owned systems can enroll in SMART 3.0 and receive $0.03/kWh for 20 years, helping keep lease rates low.
You pay per kilowatt-hour at a rate lower than your utility rate. The TPO owns the system, claims Section 48 ITC + MACRS, and sells you the power at a discounted rate.
Advantages
Drawbacks
Massachusetts Note
At $0.12–0.18/kWh vs Eversource $0.28/kWh or National Grid $0.32/kWh, you save 38–63% on solar electricity from day one.
NuWatt’s third-party ownership program is coming soon to Massachusetts. The financing company owns the system, claims Section 48 ITC + MACRS + domestic content bonus. Requires FEOC-compliant Silfab 440W panels.
Advantages
Drawbacks
Massachusetts Note
Propel is currently available in ME and TX. Massachusetts launch is planned — contact NuWatt for updates and to join the waitlist.
You own the system outright. Because you own it, there is NO Section 48 benefit — and Section 25D is dead. You get $0 in federal tax credits. Solar loans in MA are typically 6–8% APR.
Advantages
Drawbacks
Massachusetts Note
The Mass Solar Loan program ended in 2020. Current solar loans are market rate at 6–8% APR. You own it, but 25D is dead — $0 ITC.
The combination that makes MA one of the best TPO markets in the country
Massachusetts' SMART (Solar Massachusetts Renewable Target) program is a state production incentive that pays solar system owners per kilowatt-hour of electricity produced. In SMART 3.0, the residential rate is $0.03/kWh for systems up to 25 kW, paid for 20 years. TPO-owned systems are eligible to enroll.
When a TPO finances a system on your roof, they receive three revenue streams:
$10,230
Section 48 ITC
30% of $34,100 (11 kW)
~$5,400
MACRS Depreciation
5-year schedule + 20% bonus
~$7,920
SMART 3.0 Revenue
$0.03/kWh x 13,200 kWh x 20 yrs
Combined, the TPO receives approximately $23,550 in tax benefits and incentive revenue on an 11 kW system. This is why MA lease and PPA rates can be competitive even in the post-25D landscape. The TPO has strong economics; you get low monthly payments or per-kWh rates well below utility prices.
Misinformation costs Massachusetts homeowners thousands
“Section 48 is a loophole for solar companies.”
Section 48 has been part of the IRS tax code since 1962 — 64 years. It was specifically designed to encourage investment in energy property by providing an ITC to the entity that owns the qualifying system. Congress intentionally structured it so that financing companies could deploy capital into solar at scale. There is nothing hidden, creative, or exploitative about it.
“I get the 30% tax credit directly on my tax return.”
No. With a lease, PPA, or Propel arrangement, the third-party owner (TPO) claims the ITC on their corporate tax return using IRS Form 3468. You benefit indirectly through lower monthly payments or a reduced per-kWh rate. If you want to claim the credit directly, you would need to purchase the system outright — but Section 25D is dead, so you would receive $0.
“Solar leases are always a bad deal.”
This advice was accurate when Section 25D was alive. Homeowners could claim 30% themselves, making cash or loan purchases clearly superior. In 2026, the calculus has changed. With $0 in homeowner tax credits, leases and PPAs that leverage Section 48 can deliver better economics than a loan at 6–8% APR with no ITC. In Massachusetts, where electric rates are $0.28–0.32/kWh, a PPA at $0.12–0.18/kWh provides significant day-one savings.
“The installer claims the tax credit.”
The installer (contractor) does not claim the ITC. The credit goes to the entity that owns the qualifying energy property — the financing company or TPO. The installer is paid for labor and materials. This is a common misunderstanding that leads homeowners to ask the wrong questions during the sales process.
“I should wait for Congress to bring back Section 25D.”
The OBBBA (One Big Beautiful Bill Act), signed July 4, 2025, eliminated Section 25D with no sunset clause and no scheduled return. There is no pending legislation to restore it. Meanwhile, Section 48/48E itself has a construction deadline of July 4, 2026. Waiting risks losing access to both the homeowner credit (already gone) and the TPO credit (expiring soon).
“SMART payments replace the need for a tax credit.”
SMART 3.0 provides $0.03/kWh for residential systems (≤25 kW) over 20 years. On an 11 kW system producing 13,200 kWh/year, that is about $396/year or $7,920 over 20 years. Helpful, but it does not replace the $10,230 ITC + $5,400 MACRS that a TPO captures under Section 48. The two stack — TPO systems can enroll in SMART, keeping lease/PPA rates even lower.
The clock is ticking on Section 48/48E
July 4, 2025
OBBBA signed into law
Section 25D eliminated. Residential solar ITC drops to $0 for homeowners.
December 31, 2025
Section 25D officially expires
Cash and loan solar purchases receive $0 federal tax credit starting January 1, 2026.
Now — Spring 2026
Optimal signing window
Sign a TPO (lease/PPA) contract now. Equipment orders + permitting takes 8–12 weeks. Eversource/National Grid interconnection adds 4–8 weeks.
July 4, 2026
Section 48/48E construction deadline
Projects must begin construction (5% safe harbor or physical work test) before this date. After this, the 30% ITC may be reduced or eliminated.
July 4, 2026
FEOC compliance deadline
After this date, panels with Foreign Entity of Concern components lose domestic content bonus eligibility.
July 4, 2030
Placed-in-service deadline
Projects that began construction before July 4, 2026 must be completed and placed in service within 4 years.
In Massachusetts, permit-to-interconnection timelines average 12\u201316 weeks. Eversource interconnection reviews alone take 4\u20138 weeks. To safely begin construction before July 4, 2026, homeowners should sign a TPO contract by April 2026 at the latest. Equipment supply chains are tightening as installers rush to meet the deadline. Massachusetts is NuWatt's largest market — demand is already surging.
Section 48/48E for Massachusetts homeowners
Section 48 is the Investment Tax Credit (ITC) provision that has existed in the IRS tax code since 1962. It provides a tax credit to the owner of qualifying energy property — such as solar panels. Section 25D was the residential energy credit that allowed individual homeowners to claim the ITC on their personal tax return. Section 25D expired on December 31, 2025 (eliminated by the OBBBA). Section 48/48E remains active for projects beginning construction before July 4, 2026. The key difference: 48 goes to the system owner (the financing company in a lease/PPA), while 25D went to the homeowner.
Not directly. Section 25D is dead — if you buy solar with cash or a loan, you receive $0 in federal tax credits. However, if you finance through a solar lease, PPA, or a program like NuWatt Propel (coming soon to MA), the third-party financing company (TPO) claims the 30% ITC under Section 48/48E. The savings are passed to you through lower monthly payments or a discounted per-kWh electricity rate.
TPO-owned systems installed on residential rooftops can enroll in SMART 3.0 and receive the $0.03/kWh incentive for 20 years. The SMART payment typically goes to the system owner (the TPO), but the TPO factors this revenue into lower lease or PPA rates for the homeowner. This is one of the reasons MA is attractive for TPO financing — the combination of Section 48 ITC, MACRS, and SMART revenue allows competitive pricing.
Interconnection timelines in Massachusetts typically run 4–8 weeks after installation is complete. Eversource and National Grid review applications, inspect the system, and install a bi-directional meter. TPO systems go through the same interconnection process as homeowner-owned systems. The TPO or installer (NuWatt) handles the paperwork. To meet the July 4, 2026 construction deadline, you should sign a TPO contract by April–May 2026 at the latest.
The IRS defines “begin construction” through two safe harbors: (1) Physical Work Test — meaningful physical work begins at the site (foundation, mounting hardware installation), or (2) Five Percent Safe Harbor — at least 5% of the total project cost has been incurred. For residential TPO systems, this typically means signing a contract and having the TPO place equipment orders before July 4, 2026. Projects must be placed in service within 4 years of beginning construction.
FEOC stands for Foreign Entity of Concern. Under the IRA and subsequent guidance, solar panels manufactured by or containing components from a Foreign Entity of Concern (primarily Chinese-owned companies) may lose eligibility for certain ITC adders, particularly the 10% domestic content bonus. FEOC-compliant panels like the Silfab 440W are manufactured without FEOC components, ensuring eligibility for the full ITC stack. The FEOC compliance deadline is July 4, 2026.
Propel is currently available in Maine and Texas. A Massachusetts launch is planned. Propel uses the same TPO structure as a lease or PPA — the financing company owns the system and claims Section 48 ITC + MACRS + domestic content bonus — but specifically requires FEOC-compliant Silfab 440W panels. Contact NuWatt to join the MA waitlist and be notified when Propel launches in your area.
It depends on your financial situation. Cash purchase gives the highest 25-year savings (you own the system and keep all net metering credits and SMART payments) but requires $25,000–45,000 upfront with no federal tax credit. TPO (lease/PPA) provides $0 down with immediate savings — a PPA at $0.14/kWh vs National Grid $0.32/kWh saves you money from month one. If you have $35,000+ in liquid capital and plan to stay in your home 10+ years, cash may be better. Otherwise, TPO is the stronger choice in the post-25D landscape.
For projects that begin construction before July 4, 2026, the 30% ITC remains available as long as the project is placed in service within 4 years. After July 4, 2026, new projects may face reduced or eliminated ITC rates depending on future legislation. There is currently no indication that Section 48 will be extended beyond this deadline under the current administration.
Yes, but it depends on the TPO agreement. If the TPO installs a battery alongside the solar system, the system can enroll in ConnectedSolutions (Eversource $275/kW summer + $50 winter, National Grid $225/kW + $50). The ConnectedSolutions revenue may go to the TPO or be shared with the homeowner, depending on the contract. Unitil does not participate in ConnectedSolutions. Always review TPO contract terms regarding battery DR revenue.
Comprehensive guide to solar energy in Massachusetts — costs, incentives, SMART, and timeline.
Deep dive into lease vs PPA structures, rates, and contract terms for Massachusetts.
Side-by-side financing comparison with 25-year savings projections.
Honest analysis of whether solar still works in MA without Section 25D.
City-by-city pricing, system sizes, and cost breakdowns across Massachusetts.
SMART 3.0 rates, capacity blocks, and how to maximize incentive payments.
Track launch timing and join the Massachusetts waitlist for NuWatt's upcoming ownership-focused offer.
Massachusetts has the highest electric rates in the region. Section 48/48E lets you access the 30% federal solar tax credit through TPO financing — but only if you begin construction before the deadline. NuWatt is MA's largest market. Get a free solar assessment today.
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