Loading NuWatt Energy...
We use your location to provide localized solar offers and incentives.
We serve MA, NH, CT, RI, ME, VT, NJ, PA, and TX
Loading NuWatt Energy...
Section 25D is dead. Massachusetts homeowners who buy solar get $0 from the IRS. But Section 48E lets lease and PPA companies still claim the 30% ITC — and pass those savings to you as $80-120/mo lease payments or $0.10-0.15/kWh PPA rates.
30%
Section 48E ITC
$80-120/mo
Lease Payment
$0.10-0.15
PPA Rate
Jul 4, 2026
Construction Deadline
Two tax code sections, two very different fates
On July 4, 2025, the OBBBA (One Big Beautiful Bill Act) was signed into law. It eliminated Section 25D — the residential solar investment tax credit that had been available to homeowners since 2005.
Before the OBBBA, a Massachusetts homeowner who purchased an 8 kW solar system for $25,200 could claim a $7,560 federal tax credit on their personal tax return. That era is over. Section 25D expired December 31, 2025. If you buy solar with cash or a loan in 2026, you receive $0 from the IRS.
But Congress left another pathway intact: Section 48E. This provision has existed since 1962 (originally as Section 48). It provides the same 30% ITC, but to the business entity that owns the energy property. For solar, this means the financing company that owns a leased or PPA system can still claim the full credit — and pass the savings to you.
The third-party ownership model explained
With a solar lease or PPA, you do not own the panels. A financing company (called a third-party owner, or TPO) purchases the system, installs it on your roof through a contractor like NuWatt, and owns it for the contract term. Because the TPO owns the system, they claim Section 48E benefits. Here is how the money flows:
A financing company buys an 8 kW solar system at $3.15/W = $25,200. They contract with NuWatt to install it on your roof. The TPO owns the panels, inverter, and mounting hardware.
The TPO files IRS Form 3468 and claims the 30% Investment Tax Credit: $7,560 on a $25,200 system. This goes 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 20% first-year bonus depreciation. Approximate additional benefit: ~$3,990 on our $25,200 example.
The TPO receives ~$11,550 in combined tax benefits ($7,560 ITC + ~$3,990 MACRS). These savings are baked into your lower lease payment or PPA rate. Without Section 48E, the TPO would charge you significantly more. Your effective system cost drops from $3.15/W to approximately $2.20/W.
Section 48E is not a loophole. It has been part of the IRS tax code since 1962. Congress intentionally designed it so financing companies can deploy capital into solar at scale, passing benefits to homeowners as lower costs. The only thing that changed in 2025 is that the homeowner pathway (25D) was eliminated — making the TPO pathway the only remaining federal benefit for residential solar.
Both leverage Section 48E, but they charge you differently
You pay a fixed monthly amount regardless of how much solar electricity the system produces. In Massachusetts, typical lease payments for an 8 kW system run $80-120 per month.
Example monthly savings:
Electric bill: $220/mo → Lease: $100/mo = $120/mo saved
You pay a per-kWh rate for the solar electricity your system generates. Massachusetts PPA rates typically run $0.10-0.15/kWh — compared to $0.28-0.32 from your utility.
Example rate savings:
Eversource: $0.2836/kWh → PPA: $0.12/kWh = 58% cheaper
| Feature | Solar Lease | Solar PPA |
|---|---|---|
| Payment structure | Fixed monthly ($80-120/mo) | Per kWh ($0.10-0.15/kWh) |
| Production risk | You bear (low-sun months = same payment) | TPO bears (you pay only for power made) |
| Best months | Same cost year-round | Summer = more power, higher bill |
| Annual escalator | 0-3% typical | 1-3% typical |
| Budgeting | Most predictable | Varies with production |
| Contract length | 20-25 years | 20-25 years |
| Maintenance | TPO handles | TPO handles |
| System ownership | TPO owns | TPO owns |
| Section 48E ITC | TPO claims 30% | TPO claims 30% |
| Best for | Budget certainty | Maximum savings in sunny months |
High rates + strong incentives = exceptional TPO economics
Massachusetts has some of the highest residential electricity rates in the nation. The wider the gap between your utility rate and a PPA rate, the more you save.
TPO-owned systems can enroll in SMART 3.0 and receive $0.03/kWh for 20 years. The TPO collects this revenue and factors it into lower lease/PPA pricing for you.
8 kW system: ~9,600 kWh/yr × $0.03 = $288/yr SMART income for TPO → lower rates for you
If your lease/PPA includes a battery, you can earn demand response revenue. Revenue terms depend on your TPO contract.
Massachusetts exempts solar from both sales and property taxes, regardless of ownership model.
Based on an 8 kW system in Massachusetts (March 2026 pricing)
| Category | Cash | Solar Loan | Lease | PPA |
|---|---|---|---|---|
| Upfront Cost | $25,200 | $0 down | $0 down | $0 down |
| Monthly Payment | $0 | $180-250/mo | $80-120/mo | Per kWh used |
| Federal Tax Credit | $0 (25D dead) | $0 (25D dead) | 30% via 48E (TPO) | 30% via 48E (TPO) |
| Effective $/W | $3.15/W | $3.15/W + interest | ~$2.20/W (TPO) | ~$2.20/W (TPO) |
| You Own System | Yes | Yes | No (TPO owns) | No (TPO owns) |
| SMART 3.0 Income | You keep ($288/yr) | You keep ($288/yr) | TPO keeps | TPO keeps |
| MA State Tax Credit | $1,000 | $1,000 | TPO claims | TPO claims |
| Maintenance | You handle | You handle | TPO handles | TPO handles |
| Electric Rate Risk | None (you make power) | None | Fixed payment | $0.10-0.15/kWh locked |
| 25-Year Savings | $75K-95K | $55K-70K | $25K-40K | $30K-45K |
| Payback Period | ~10-12 yr (no ITC) | ~12-14 yr (no ITC) | Day 1 savings | Day 1 savings |
| Best For | Long-term investors | Ownership seekers | Predictable bills | Maximum day-1 savings |
Note: Cash and loan purchases yield higher 25-year total savings because you own the system and keep SMART income, net metering credits, and the $1,000 MA state tax credit. However, they require significant upfront capital with $0 federal tax credit. Lease and PPA provide immediate day-1 savings with zero upfront cost.
Section 48E requires projects to begin construction before the deadline
To qualify for the 30% ITC under Section 48E, the TPO must begin construction before July 4, 2026. The IRS defines “begin construction” through two safe harbors:
Meaningful physical work begins at the project site — such as installing mounting hardware on the roof.
At least 5% of total project cost has been incurred — typically satisfied when the TPO places equipment orders.
For most residential lease and PPA projects, signing the TPO agreement and placing equipment orders is sufficient to meet the “begin construction” requirement. Projects must then be placed in service within 4 years of beginning construction.
March 2026
Get your free solar assessment
March-April 2026
Compare lease vs PPA options, review contracts
April-May 2026
Sign TPO agreement, permits filed
May-June 2026
Equipment ordered (satisfies IRS safe harbor)
Before Jul 4, 2026
Construction begun per IRS definition
Jul-Oct 2026
Installation, inspection, PTO from utility
From assessment to permission to operate
NuWatt evaluates your roof, shading, electric usage, and utility to design an optimized system. Takes 24-48 hours.
Compare lease (fixed monthly) vs PPA (per kWh) options. Review contract terms, escalators, and end-of-term options.
The financing company (TPO) processes your agreement. This starts the Section 48E clock -- construction must begin before July 4, 2026.
NuWatt handles local permits and interconnection applications. Equipment is ordered -- this satisfies the IRS "begin construction" requirement.
Professional installation typically takes 1-2 days. Municipal inspection follows. Then utility interconnection (4-8 weeks for Eversource/NGrid).
Utility approves your system, installs bi-directional meter. You start generating solar electricity and saving money immediately.
The clock is ticking. Section 48E construction must begin before July 4, 2026. Get your free solar assessment and compare lease vs PPA options for your Massachusetts home.
Solar lease and PPA questions for Massachusetts homeowners
The federal residential solar tax credit (Section 25D) expired December 31, 2025, when the OBBBA was signed into law on July 4, 2025. Massachusetts homeowners who buy solar with cash or a loan now receive $0 in federal tax credits. The MA state tax credit ($1,000) still exists, but the federal benefit is gone for individual buyers.
You do not personally receive the tax credit, but you benefit indirectly. With a solar lease or PPA, a third-party financing company (TPO) owns the system and claims the 30% commercial ITC under Section 48E. This is approximately $7,560 on a typical 8 kW system. The TPO passes these savings to you through lower monthly lease payments ($80-120/mo) or discounted PPA rates ($0.10-0.15/kWh vs $0.28-0.32 utility rate).
A solar lease charges a fixed monthly payment ($80-120 for a typical 8 kW system in Massachusetts) regardless of how much electricity the system produces. A PPA (Power Purchase Agreement) charges you per kilowatt-hour of electricity generated, typically $0.10-0.15/kWh. Both require $0 down, both are maintained by the system owner, and both benefit from Section 48E. A PPA can save more during high-production months; a lease provides more predictable budgeting.
Construction must begin before July 4, 2026. The IRS defines "begin construction" through two safe harbors: (1) Physical Work Test where meaningful physical work begins at the site, or (2) Five Percent Safe Harbor where at least 5% of total project cost has been incurred. For residential lease/PPA 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.
TPO-owned systems installed on Massachusetts residential rooftops can enroll in SMART 3.0 and receive $0.03/kWh for 20 years. With a lease or PPA, the SMART payments go to the system owner (the TPO), not to you. However, the TPO factors this guaranteed revenue into their pricing model, which is one reason MA lease/PPA rates are competitive. On an 8 kW system, SMART generates approximately $288/year for the TPO.
If the TPO installs a battery alongside the solar panels, the system can enroll in ConnectedSolutions (Eversource: $275/kW summer + $50 winter; National Grid: $225/kW + $50 winter). Whether the DR revenue goes to you or the TPO depends on your contract. Unitil does not participate in ConnectedSolutions. Always review your TPO agreement for battery demand response revenue terms.
Buying gives higher 25-year total savings because you keep SMART income, net metering credits, and the $1,000 MA state tax credit. But buying requires $25,000+ upfront with $0 federal credit. Leasing or a PPA provides $0 down, immediate savings vs your electric bill, and the TPO captures Section 48E. For most homeowners without $25,000+ in liquid savings, a lease or PPA is now the stronger option in the post-25D landscape.
Typical solar PPA rates in Massachusetts range from $0.10-0.15/kWh in 2026. Compare this to Eversource at $0.2836/kWh, National Grid at $0.32/kWh, or Unitil at $0.2833/kWh. That represents 47-65% savings on your solar electricity. Most PPAs include a 1-3% annual escalator, but even after 25 years, the PPA rate typically remains below the projected utility rate.
At the end of a typical 20-25 year contract, you usually have three options: (1) Renew the lease/PPA at a reduced rate, (2) Purchase the system at fair market value (often very low after 20+ years of depreciation), or (3) Have the TPO remove the system at no cost. Most homeowners choose to purchase the system for a nominal amount and then own it outright for its remaining useful life.
There is no indication that the residential solar tax credit (Section 25D) will return. It was eliminated under the OBBBA signed July 4, 2025, with no sunset clause and no scheduled restoration. Meanwhile, Section 48E has a construction deadline of July 4, 2026. Waiting risks losing access to TPO solar at the lowest rates. Massachusetts electricity rates rise 3-5% annually, making every year of delay more expensive.
Complete guide to solar costs, incentives, and timeline in Massachusetts.
Read guideSide-by-side financing comparison with 25-year savings projections.
Read guideDeep dive into how Section 48 works for homeowners.
Read guideHonest analysis of whether solar works without 25D.
Read guideSMART 3.0 rates, adders, and how to maximize your incentive payments.
Read guideEarn $225-$1,500/year from battery demand response.
Read guide