TL;DR: What Changed and What Didn't
What You Lost
- -30% federal tax credit on residential solar (Section 25D) — worth ~$9,000 on a $30,000 system
- -30% credit on residential batteries, heat pumps, and EV chargers under 25D
What You Still Have
- SMART 3.0: $0.03/kWh for 10-20 years ($360/yr on 10 kW)
- Full retail net metering: ~$0.25-$0.32/kWh credit
- MA state tax credit: $1,000
- Sales tax exemption: $1,875 saved
- Property tax exemption: 20 years
- ConnectedSolutions battery revenue: $225-$325/yr
- Commercial ITC (Section 48): still 30%
What Happened: The OBBBA and Section 25D
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law. Among its sweeping tax and spending changes, the bill repealed the Section 25D Residential Clean Energy Credit — the 30% federal tax credit that had been the cornerstone of residential solar economics since 2006.
Unlike the previous Inflation Reduction Act (IRA) timeline, which had the credit phasing down from 30% to 26% in 2033 and 22% in 2034, OBBBA terminated the credit entirely with no phase-down period. The credit applies only to expenditures made on or before December 31, 2025. If your solar system was not installed and paid for by that date, you cannot claim the credit.
The repeal affects all residential clean energy technologies that were covered under 25D: solar photovoltaic systems, solar water heaters, small wind turbines, geothermal heat pumps, fuel cells, and battery storage systems. The residential EV charger credit (Section 30C) was not part of Section 25D but follows its own expiration schedule — it expires June 30, 2026.
The Dollar Impact on a Typical Massachusetts System
System Cost
$30,000
10 kW, installed
25D Credit (2024-2025)
$9,000
30% of system cost
25D Credit (2026+)
$0
Repealed by OBBBA
The loss of the 25D credit increases the effective upfront cost by $9,000. However, this does not change the ongoing value of electricity production, SMART payments, or net metering credits — which represent the majority of solar's lifetime financial return.
What Massachusetts Incentives REMAIN in 2026
Massachusetts has always had the strongest state-level solar incentive stack in the country — and none of it was affected by OBBBA. Every state-level incentive is still fully active. Here is exactly what you still receive when you install solar in 2026:
SMART 3.0 Performance Payments
ActiveAnnual value: $360/yr for 10-20 years
Estimated lifetime value: $5,400 (15-yr avg)
Net Metering (Full Retail)
ActiveAnnual value: $3,403-$3,840/yr
Estimated lifetime value: $85,075-$96,000 (25 yr)
MA State Tax Credit
ActiveAnnual value: $1,000 (one-time)
Estimated lifetime value: $1,000
Sales Tax Exemption
ActiveAnnual value: $1,875 saved at purchase
Estimated lifetime value: $1,875
Property Tax Exemption (20 yr)
ActiveAnnual value: No increase in property tax
Estimated lifetime value: $3,600 saved
ConnectedSolutions (Battery)
Active (requires battery)Annual value: $325/yr
Estimated lifetime value: $4,875 (15 yr)
Total Lifetime Value Without 25D (Eversource, 10 kW System)
- Net metering savings (25 yr)$85,075
- SMART 3.0 income (15 yr avg)$5,400
- MA state tax credit$1,000
- Sales tax exemption$1,875
- Property tax savings (20 yr)$3,600
- TOTAL LIFETIME VALUE$96,950
System Cost
$30,000
Net Return (25 yr)
+$66,950
Even without the federal tax credit
Before vs. After OBBBA: Incentive Comparison
The table below shows every major solar incentive available to Massachusetts homeowners, comparing what was available in 2024-2025 with the federal credit versus what is available in 2026 without it. The key takeaway: only one incentive changed. Everything else is identical.
| Incentive | 2024-2025 (with 25D) | 2026+ (without 25D) | Change |
|---|---|---|---|
| Federal Tax Credit (25D) | $9,000 | $0 | -$9,000 |
| MA State Tax Credit | $1,000 | $1,000 | No change |
| Sales Tax Exemption | $1,875 | $1,875 | No change |
| SMART 3.0 Income (annual) | $360/yr | $360/yr | No change |
| Net Metering Value (annual) | $3,403/yr | $3,403/yr | No change |
| ConnectedSolutions (annual) | $325/yr | $325/yr | No change |
| Property Tax Exemption | Exempt 20 yr | Exempt 20 yr | No change |
Commercial ITC (Section 48): Still 30% — Why It Matters
While the residential credit is gone, the Section 48 Investment Tax Credit for commercial solar was not repealed by OBBBA. This creates a significant divergence between residential and commercial solar economics in Massachusetts:
Residential (Section 25D)
- Federal tax credit: $0 (repealed)
- Depreciation: Not available for homeowners
- Effective federal incentive: None
Commercial (Section 48)
- Federal ITC: 30% base (up to 50% with bonuses)
- MACRS depreciation: 85% of cost over 5 years
- Bonus depreciation (2026): 80% first-year
- Effective federal benefit: Up to 55-60% of cost
If you own a business, commercial property, farm, or nonprofit in Massachusetts, solar is more financially compelling than ever. The combination of the 30% ITC, MACRS accelerated depreciation, SMART 3.0 commercial rates, and commercial net metering or AOBC credits makes commercial solar one of the best investments available.
For homeowners, there is a potential workaround: solar leases and PPAs. Under a third-party ownership model, the solar company claims the Section 48 commercial ITC and passes some of the savings to you through lower lease or PPA rates. This option has become more popular in 2026 as the residential credit disappeared.
Why Solar Is Still Worth It in Massachusetts
Losing $9,000 in federal incentives is significant. But the fundamental economics of solar in Massachusetts remain strong for three core reasons:
1. Massachusetts Electricity Rates Are the Highest in the Continental US — and Rising
Eversource residential rates have increased from $0.1821/kWh in 2020 to $0.2836/kWh in 2025 — a 56% increase in five years. National Grid is even higher at $0.32/kWh. These rates are 2-3x the national average and show no sign of decreasing. Every kilowatt-hour your solar system produces displaces electricity at these premium rates.
| Year | Eversource Rate |
|---|---|
| 2020 | $0.1821/kWh |
| 2021 | $0.1935/kWh |
| 2022 | $0.2529/kWh |
| 2023 | $0.2672/kWh |
| 2024 | $0.2690/kWh |
| 2025 | $0.2836/kWh |
| 2026 (proj.) | $0.30+/kWh |
At a conservative 3-5% annual increase, Eversource rates could exceed $0.40/kWh by 2030 — making solar savings even more valuable each year.
2. Massachusetts Has the Best State-Level Solar Incentives in the Nation
No other state matches Massachusetts' combination of incentives. SMART 3.0 is the only statewide performance-based incentive in the US that pays you for every kilowatt-hour produced — not just exported. Full retail net metering means your excess energy earns you ~$0.25-$0.32/kWh in bill credits. Add the $1,000 state tax credit, sales tax exemption, and property tax exemption, and Massachusetts homeowners receive more state-level support than any other state.
Compare this to California, which shifted to NEM 3.0 and reduced export credits to ~$0.04-$0.08/kWh. Or Texas, which has no state incentive program at all. Massachusetts solar owners earn 3-4x more per kWh than their California counterparts, even without the federal credit.
3. Payback Period: 9-10 Years (With Battery: 7-8 Years)
Without the federal credit, a 10 kW system costing $30,000 has a payback period of approximately 9-10 years for Eversource customers and 8-9 years for National Grid customers (due to their higher rates). With a battery and ConnectedSolutions enrollment, the payback drops to 7-8 years.
Compare this to your alternatives: a kitchen renovation has no payback period. A new car loses 20% of its value the moment you drive it off the lot. Solar is one of the few home improvements that actually pays you back — and then continues generating returns for another 15-17 years.
Payback (Solar Only)
~9.5 years
Eversource, 10 kW system
Payback (Solar + Battery)
~7.5 years
With ConnectedSolutions
4. Lock In Net Metering Before DPU 25-200 Changes the Rules
The Massachusetts DPU opened docket 25-200 in December 2025 to investigate potential reductions to net metering credit values. While no changes have been finalized, the investigation is active and a decision could come in late 2026 or 2027. Systems installed before any new rules take effect are grandfathered under current full-retail-rate net metering for 20+ years.
With the federal tax credit already gone, losing full-retail net metering would be a second blow to solar economics. Installing now locks in today's rates. Waiting risks losing both.
Frequently Asked Questions
Did the federal solar tax credit really expire?
Yes. The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, repealed the Section 25D Residential Clean Energy Credit effective for expenditures after December 31, 2025. Unlike previous phase-downs where the credit gradually decreased, OBBBA terminated the credit entirely with no transition period. Systems installed and paid for before January 1, 2026 still qualify for the 30% credit on their 2025 tax return.
How much did Massachusetts homeowners lose?
On a typical $30,000 solar installation, the 30% federal tax credit was worth $9,000. This was a dollar-for-dollar reduction on federal income taxes owed. Without it, your net cost at installation is the full system price minus the $1,000 MA state credit and $1,875 sales tax savings. However, ongoing incentives like SMART 3.0 and net metering are unchanged.
Is the commercial solar tax credit (Section 48) still available?
Yes. The Section 48 Investment Tax Credit (ITC) for commercial solar was not repealed by OBBBA. Businesses, nonprofits (via direct pay), farms, and commercial property owners can still claim 30% (or up to 50% with domestic content and energy community bonuses). This is one reason commercial solar demand in MA has surged in 2026.
Is solar still worth it in Massachusetts without the tax credit?
Yes, for most homeowners. Massachusetts has the highest electricity rates in the continental US ($0.28-$0.32/kWh), which means solar savings are substantial even without the 25D credit. A 10 kW system saves $3,400-$3,840 per year on electricity alone, plus $360/year from SMART 3.0. The payback period increased from approximately 6-7 years to 9-10 years, but the 25-year return on investment still exceeds $50,000.
What is SMART 3.0 and how much does it pay?
SMART (Solar Massachusetts Renewable Target) 3.0 is a state performance-based incentive administered by DOER. Residential systems receive approximately $0.03/kWh for every kilowatt-hour produced, paid for 10 to 20 years depending on your capacity block. For a 10 kW system producing 12,000 kWh/year, that is $360/year or $5,400-$7,200 over the contract term. SMART income is completely independent of the federal tax credit.
Will MA net metering rates change?
Possibly. The DPU opened docket 25-200 in December 2025 to investigate potential changes to net metering credit values. Currently, residential solar owners receive full retail rate credits (~$0.25-$0.32/kWh). Any changes would not affect systems already interconnected, which would be grandfathered. This adds urgency to installing solar sooner rather than later.
Should I add a battery if I go solar without the tax credit?
A battery is more valuable now than before the credit expired. Without the 25D credit to lower your system cost, maximizing the value of every kilowatt-hour matters more. A battery lets you enroll in ConnectedSolutions (earning $225-$325/year), provides backup power during outages, and allows you to self-consume more solar energy. If net metering credits are eventually reduced, a battery protects you by reducing how much energy you export.
Can I still get a solar loan in Massachusetts?
Yes. The Mass Solar Loan program and conventional solar financing options are still available. Interest rates for solar loans in MA typically range from 3.99% to 7.99% for 10-25 year terms. Without the federal tax credit, your monthly loan payment may be slightly higher than in 2024-2025, but many homeowners find that their loan payment is still lower than their previous electric bill. NuWatt also offers the Propel financing program with competitive rates.
The Tax Credit Is Gone — But the Savings Are Still There
Massachusetts electricity rates are climbing. SMART 3.0 capacity blocks are filling. Net metering could change. The best time to lock in your solar savings is now. Get a free quote and see your personalized 25-year savings projection.