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The federal solar tax credit is dead for homeowners. Cash buyers get $0. Loan buyers get $0. But lease and PPA providers still capture the 30% ITC through Section 48/48E — and pass those savings directly to you. The $8,400+ advantage that made buying superior? Gone. Here's why leasing is now the smartest play for most homeowners.
$0
Buyer ITC
25D expired
30%
Lease/PPA ITC
48/48E active
$100+
Day 1 Savings
per month
Jul 4
Deadline
2026
Section 25D — the residential solar tax credit — expired December 31, 2025. Cash and loan buyers now get $0 from the IRS. But third-party owners (lease/PPA companies) still claim the 30% ITC under Section 48/48E and pass those savings to you through lower monthly payments. The $8,400+ gap that used to make buying the clear winner has collapsed. For most homeowners, leasing now offers the best combination of savings, simplicity, and risk reduction.
Before 2026, the math clearly favored buying. Cash buyers received a 30% tax credit that slashed their net cost from $28,000 to $19,600. That $8,400 advantage made buying the smart financial choice for anyone who could afford it.
That advantage no longer exists. The OBBBA eliminated Section 25D, and cash buyers now pay the full $28,000 with zero federal offset. Meanwhile, lease and PPA providers still capture the 30% ITC through Section 48/48E. The competitive landscape has fundamentally shifted.
| Metric | Before 2026 (25D Active) | 2026 (25D Dead) | Winner |
|---|---|---|---|
| Federal tax credit (buyer) | 30% ($8,400 on $28K) | $0 — Section 25D expired | Lease |
| Federal tax credit (lease/PPA) | 30% (claimed by owner) | 30% (still claimed by owner) | Lease |
| Effective buyer payback | 7–9 years | 10–14 years (no ITC) | Lease |
| Day 1 out-of-pocket (buyer) | $19,600 net ($28K – $8,400) | $28,000 gross (no credit) | Lease |
| Day 1 out-of-pocket (lease) | $0 | $0 | Tie |
| Monthly savings vs. utility | Buyer wins (lower net cost) | Close — lease gap narrowed significantly | Lease |
| Maintenance responsibility | Buyer handles | Buyer handles (lease: included) | Lease |
| 25-year total savings | Buyer wins by $30K+ | Buyer still wins by $15–20K | Buy |
Scorecard: Leasing wins 6 of 8 metrics in 2026. Cash purchase still wins on 25-year total savings — but requires $28,000 upfront and 10+ years to break even. For homeowners who value immediate savings and zero risk, the lease/PPA path is now the stronger choice.
8 kW system | $0.33/kWh utility rate | 9,600 kWh annual production
System cost: $28,000. Federal ITC for buyers: $0 (Section 25D expired).
| Metric | Cash | Loan | Lease | PPA | Propel |
|---|---|---|---|---|---|
| Upfront Cost | $28,000 | $0 | $0 | $0 | $0 |
| Federal ITC | $0 | $0 | $8,400 (owner) | $8,400 (owner) | $8,400 (owner) |
| Monthly Payment | — | $195/mo | $120/mo | ~$130/mo | $155/mo |
| Year 1 Savings | $3,168 | $828 | $1,248 | $1,368 | $1,308 |
| Year 5 Ownership | Yes | Yes | No | No | Yes |
| Year 25 Total Savings | $79,200 | $52,200 | $31,200 | $34,200 | $48,900 |
| Maintenance | You | You | Included | Included | Included (yr 1–5) |
Here is what each financing path looks like for a typical 8 kW system in Massachusetts over 5 and 10 years. No sugarcoating — real numbers.
Own it outright, but $0 ITC in 2026
Homeowners with $28K+ available who want max long-term savings and can wait 10+ years for payback
Own it with payments, but $0 ITC
Homeowners who want ownership but payments may exceed savings initially
ITC captured by owner — savings start day 1
Homeowners who want immediate savings, zero risk, and zero maintenance hassle
Key takeaway: Cash purchase still delivers the highest 10-year savings — but requires $28,000 upfront and carries the highest risk. Solar loans produce the lowest net savings because 7% APR interest eats into your returns without any ITC to offset it. Leasing delivers guaranteed savings from day 1 with zero financial risk, making it the optimal choice for most homeowners in 2026.
You cannot claim the tax credit yourself. But you do not need to. Here is how third-party ownership turns the 30% ITC into real monthly savings in your pocket — without you filing a single IRS form.
A financing company (the "third-party owner") purchases and installs solar panels on your roof. You don't buy the system — you agree to either lease it (fixed monthly payment) or buy the power it produces (PPA, per-kWh rate).
Because the financing company legally owns the system, it files IRS Form 3468 and claims the 30% Investment Tax Credit under Section 48/48E. On a $30,000 system, that's $9,000 back from the IRS. The company also claims MACRS depreciation (5-year accelerated schedule + 20% bonus in 2026).
The financing company doesn't pocket the ITC — it uses the $9,000+ in tax benefits to reduce your monthly payment. This is why lease/PPA payments are typically 20–40% lower than what you'd pay on a standard solar loan without the ITC.
Your lease/PPA payment is locked in below your current electric bill rate. You save money starting month one. The system owner handles all maintenance, monitoring, and warranty claims.
With NuWatt's Propel program, the third-party owner transfers full ownership to you at year 5 — after the ITC recapture period expires. You get the best of both worlds: ITC savings upfront, full ownership long-term.
Sunrun is the largest residential solar company in the US. They do many things well. But there are things they do not disclose upfront that you should know before signing a 25-year agreement. This is not an attack — it is a fair, informed comparison.
Sunrun correctly explains that the 30% ITC is captured by the system owner and passed to customers through lower payments.
Sunrun rarely discloses how much of the ITC benefit actually reaches you vs. stays as margin. Independent PPAs and local providers often pass through more savings.
Sunrun offers legitimate 25-year solar leases with performance guarantees and included maintenance.
Many Sunrun contracts include a 2.9% annual escalator — meaning your payment in year 25 is 97% higher than year 1. Some competitors offer 0% escalator leases.
Sunrun operates in 22+ states with strong infrastructure and financing.
National providers typically use subcontracted installers. Local companies like NuWatt provide direct installation with the same financing structures — often with better post-install support.
Sunrun offers buyout options after year 5–7 at fair market value.
NuWatt's Propel program transfers ownership automatically at year 5 with no buyout fee — a hybrid model Sunrun doesn't offer.
Our position: Sunrun is a real company with legitimate products. But national providers use subcontractors and often include escalators that inflate your costs over 25 years. NuWatt installs directly, offers 0% escalator options, and has the Propel program that Sunrun does not. Compare total 25-year cost before you sign.
Most solar financing forces you to choose: own the system (but lose the ITC) or lease it (but never own it). Propel eliminates this tradeoff.
No upfront cost. Your 25-year loan with Concert Finance covers everything.
A third-party owner holds the system for years 1–5 and claims the 30% Section 48/48E credit. That savings is baked into your lower payment.
After the 5-year ITC recapture period, full ownership transfers to you — free of charge. No buyout required.
The third-party owner guarantees system performance and covers all maintenance for the first 5 years.
Because the ITC is factored in, your monthly payment is 15–25% lower than a standard solar loan.
Availability: Currently available in Maine and Texas. Expanding to additional states in 2026. Requires 660+ FICO score and a roof in good condition.
The 30% ITC is just the starting point. Each state has its own incentive stack that amplifies your lease/PPA savings. Here is what you gain beyond the federal credit.
These deadlines are real, immovable, and could cost you thousands if you miss them.
The One Big Beautiful Bill Act (OBBBA) requires projects to begin construction before July 4, 2026 to qualify for Section 48/48E. After this date, the 30% ITC for third-party solar owners may be eliminated or significantly reduced.
If bundling solar + EV charger, the $1,000 EV charger credit (Section 30C) expires June 30, 2026.
The 20% bonus depreciation available in 2026 drops to 0% in 2027, reducing the TPO company's tax benefit and potentially increasing your lease/PPA payments.
What “begin construction” means: The IRS requires either (1) physical work of a significant nature to start, or (2) at least 5% of total project costs to be incurred. Your TPO partner handles this documentation. But permitting takes 4–8 weeks, so starting the process by April 2026 is critical to ensure your project qualifies.
Decision-focused answers for homeowners comparing lease, PPA, and cash purchase in 2026.
In 2024, cash buyers got a 30% federal tax credit ($8,400 on a $28K system), making buying clearly cheaper long-term. In 2026, buyers get $0 credit — but lease/PPA providers still capture the 30% ITC through Section 48/48E. The $8,400+ gap that used to favor buying has collapsed, making leasing competitive on both a monthly and cumulative basis.
Yes, but the math is different. Without the 30% ITC, your payback period extends from 7–9 years to 10–14 years. You still save $50,000–$80,000 over 25 years. But the question is whether tying up $28,000+ in a 10-year payback makes sense when a lease gives you savings from day 1 with $0 risk.
Typical solar lease payments range from $80–$160/month depending on system size and your state. In high-rate states like Massachusetts ($0.33/kWh), your lease payment is usually 20–30% below your current electric bill — meaning you save money from month one. PPA rates are typically $0.10–$0.18/kWh, well below utility rates.
The OBBBA (signed July 4, 2025) requires solar projects to "begin construction" before July 4, 2026 to qualify for the Section 48/48E ITC. If this deadline passes, third-party solar owners lose the 30% credit — which means lease and PPA payments would increase significantly. Starting the process by spring 2026 is critical.
Most solar leases include a buyout option after year 5–7, typically at fair market value (which decreases over time as the system ages). NuWatt's Propel program is specifically designed for this: a third-party owner holds the system for 5 years, then transfers ownership to you automatically — no buyout fee required.
Sunrun is a legitimate national provider with strong financing. However, they typically use subcontracted installers, may include 2.9% annual escalators in lease terms, and don't offer ownership-transfer programs like Propel. Compare total 25-year cost, escalator rates, and post-install support before choosing.
After July 4, 2026, the Section 48/48E ITC may be eliminated for new projects. MACRS bonus depreciation drops from 20% to 0% in 2027. This means lease and PPA payments would be 15–25% higher than current rates. Additionally, there is no indication Congress will reinstate Section 25D for homeowners. Waiting almost certainly means paying more.
Yes — NuWatt's Propel program. A third-party owner holds the system for 5 years (capturing the 30% ITC under Section 48/48E), then transfers full ownership to you with no buyout fee. You get ITC savings through lower monthly payments during years 1–5, then full ownership from year 5 onward. Currently available in Maine and Texas.
Every month you wait is a month of savings lost. Cash buyers get $0 in federal credits. Lease and PPA customers still capture the 30% ITC — but only if construction begins before July 4, 2026.
Permitting takes 4–8 weeks. Utility interconnection takes another 2–4 weeks. If you start in March or April 2026, you give your project the best chance to qualify. If you wait until summer, it may be too late.