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The federal residential solar tax credit (Section 25D) expired December 31, 2025. Homeowners buying with cash or a loan get $0 in federal credits. Here is why Texas solar still makes financial sense — and what your real options are in 2026.
Section 25D: EXPIRED. The Residential Clean Energy Credit ended December 31, 2025 under the OBBBA (signed July 4, 2025). Homeowners who purchase solar with cash or a loan receive $0 in federal tax credits. All cost figures on this page reflect the full installed price with no federal credit.
The loss of the 30% federal credit adds 2-3 years to payback, but Texas solar remains a strong financial investment. Here is why:
With Section 25D expired, the upfront cost for cash and loan buyers is the full installed price. No federal credit, no discount. Here is a 10 kW system breakdown:
The loss of the 30% ITC means a typical Texas homeowner pays $6,600 more for the same 10 kW system than they would have in 2024 or 2025. This adds approximately 2-3 years to your payback period. However, Texas solar costs have dropped to among the lowest in the country ($2.20/W average), partially offsetting the credit loss. The national average is $2.85/W — meaning Texas homeowners save $6,500 on installation costs compared to the rest of the country.
TX Tax Code Section 11.27 saves $8,000-$15,000 over 25 years. Your property taxes do not increase when you install solar.
If you are in the Austin Energy service area, the $2,500 flat rebate plus 9.91 cents/kWh Value of Solar makes Austin the best solar deal in Texas.
In the deregulated ERCOT market, REPs like TXU offer retail-match buyback (effectively 1:1 net metering) and Green Mountain offers 8.5 cents/kWh fixed.
Texas averages $2.20/W — 23% below the national average of $2.85/W. Large competitive installer market and fast permitting drive costs down.
5.1-6.0 peak sun hours per day. A 10 kW system produces 14,500-18,000 kWh per year. El Paso leads at 6.0 hours/day.
Up to $8,000 for income-qualified households. HEAR is pending in TX (SECO RFP phase), but funds of ~$690M are allocated and available through 2031.
Section 48/48E (the commercial ITC) is still active for projects beginning construction before July 4, 2026. The third-party system owner — the financing company in a lease or PPA — claims the 30% credit. Not you. Not the installer. The savings flow through as lower monthly payments.
1. A solar financing company (SunRun, Sunnova, Tesla, etc.) installs panels on your roof and retains ownership.
2. The financing company claims the 30% Section 48/48E ITC on their tax return because they are the system owner.
3. You pay a fixed monthly lease payment or a per-kWh PPA rate that is lower than what it would be without the ITC.
4. You do NOT own the panels. You cannot claim the property tax exemption. But your out-of-pocket cost is significantly lower.
| Method | Federal Credit | Monthly Payment | Ownership | Prop Tax Exempt |
|---|---|---|---|---|
| Cash Purchase | $0 | $0 | You own | Yes |
| Solar Loan | $0 | $150-250/mo | You own | Yes |
| Solar Lease | 30% (to TPO) | $100-170/mo | Company owns | No |
| PPA | 30% (to TPO) | 12-18¢/kWh | Company owns | No |
The commercial ITC (Section 48/48E) requires that projects begin construction before July 4, 2026. After that date, even lease and PPA arrangements lose access to the 30% credit. If you are considering a lease or PPA, acting before this deadline is critical. Talk to your solar provider about their construction timeline.
With the federal credit gone, the 100% property tax exemption under TX Tax Code Section 11.27 is now the single most valuable solar incentive in Texas. It saves thousands — and most homeowners do not even know it exists.
Full system value exempt from property taxes
On a typical $22,000 system at 2.0-2.5% tax rate
Form 50-123, county appraisal district
When you install solar panels, your home value increases by the cost of the system. In most states, that means higher property taxes. Texas exempts 100% of the added value from property tax assessment. For a $22,000 system in Harris County (Houston) with a 2.31% tax rate, you save approximately $508 per year — that is $12,710 over 25 years. Without this exemption, you would pay that much more in taxes just for going solar.
Without the federal tax credit, getting the best return on your exported solar energy is more important than ever. In the deregulated ERCOT market, your Retail Electric Provider (REP) sets your buyback rate — not the utility.
Exports credited at your consumption rate. Effectively 1:1 net metering. Oncor territory only. 12 or 24 month contracts.
Highest fixed buyback rate among major REPs. 36-month contract. 100% renewable. Oncor and CenterPoint territories.
Available in all four deregulated TDU territories. 100% solar. 24-month contract. Credits roll over monthly.
Austin Energy customers do not shop REPs — Austin Energy uses a Value of Solar tariff that credits all solar exports at 9.91 cents/kWh. Combined with the $2,500 rebate, Austin has the shortest payback period in Texas (6-8 years) even without the federal tax credit. Credits roll over monthly but expire at year-end.
Payback periods for a 10 kW cash purchase with no federal credit. Accounts for local rebates, utility rates, and the property tax exemption.
| City | Gross Cost | Rebate | Net Cost | Annual kWh | Payback (yrs) |
|---|---|---|---|---|---|
| Houston | $22,000 | $0 | $22,000 | 15,900 | 10-11 |
| Dallas | $22,500 | $0 | $22,500 | 16,200 | 9-11 |
| AustinBest | $23,000 | $2,500 | $20,500 | 16,500 | 6-8 |
| San Antonio | $22,000 | $0 | $22,000 | 16,500 | 10-12 |
| El Paso | $21,500 | $0 | $21,500 | 18,000 | 8-10 |
| Fort Worth | $22,000 | $0 | $22,000 | 16,200 | 9-11 |
| McAllen | $21,000 | $0 | $21,000 | 16,800 | 9-11 |
| Lubbock | $21,500 | $0 | $21,500 | 17,100 | 9-11 |
All figures assume cash purchase, $0 federal 25D credit, property tax exemption filed, and average solar buyback rates. Austin includes the $2,500 Austin Energy rebate. Savings estimates use 3% annual rate escalation.
See your estimated costs, production, and savings without the federal tax credit. Select your city and system size.
Estimate your solar cost, payback period, and 25-year savings for any major TX metro.
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.
CenterPoint delivery area. Deregulated — choose a solar buyback REP for best export value. High humidity reduces panel efficiency slightly. Strong solar irradiance despite cloud cover. Largest TX solar market by installed capacity.
Cost Range
$2.00–$2.40/W
Peak Sun Hours
5.3 hrs/day
Avg Electric Rate
$0.14/kWh
County Tax Rate
2.31%
Annual Production
15,476
kWh/year
Annual Savings
$1,800
per year
Payback Period
12.2
years
25-Year Savings
$65,627
total
Estimates based on average 2026 TX solar pricing, 5.3 peak sun hours/day, 0.5%/year panel degradation, 3%/year electricity rate increase, and TX property tax exemption (Tax Code §11.27). Actual costs vary by installer, roof condition, and system configuration. Section 25D residential ITC expired Dec 31, 2025 — $0 federal tax credit for cash/loan purchases.
The calculator reflects $0 federal tax credit for cash and loan purchases. Section 25D expired December 31, 2025.
TX Tax Code Section 11.27 exempts 100% of your solar system value from property taxes. The calculator factors this into your 25-year savings.
Common questions about going solar in Texas without the federal tax credit.
City-by-city pricing, cost factors, and how to get the lowest price per watt.
Read guideProperty tax exemption deep dive, sales tax reality, and county-by-county savings.
Read guideWhich financing option makes sense now that the 25D ITC is gone for homeowners.
Read guideComplete overview of going solar in Texas — costs, incentives, and timeline.
Read guideLast updated: February 18, 2026. Prices, rebate amounts, and utility programs may change. Contact NuWatt Energy or your local utility for current information.
The tax credit is gone — but Texas solar still works. Get accurate pricing for your city, roof, and usage. NuWatt Energy connects you with licensed Texas solar contractors who will give you an honest assessment.