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The One Big Beautiful Bill Act killed the residential solar tax credit and set a construction-start deadline for the commercial ITC. Here is exactly what changed, what still works, and what you need to do before time runs out.
Quick Answer
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, eliminated the residential solar ITC (Section 25D) as of December 31, 2025. Homeowners buying solar with cash or a loan receive $0 in federal tax credits. The commercial ITC (Sections 48/48E) is still available but requires construction to begin before July 4, 2026. Third-party financing (leases, PPAs, NuWatt Propel) can still access the commercial credit because the financing company — not the homeowner — claims it. The FEOC domestic content bonus (+10%) and MACRS bonus depreciation (20%) also expire on or shortly after this deadline.
Residential solar tax credit (25D) expired Dec 31, 2025 — homeowners who buy solar with cash or a loan get $0 federal credit
Commercial ITC (48/48E) requires construction to begin before July 4, 2026 — just 113 days from now
FEOC domestic content bonus (+10%) also expires July 4, 2026 — Silfab 440W panels qualify
MACRS bonus depreciation drops from 20% in 2026 to 0% in 2027 — accelerated write-offs are vanishing
Third-party ownership (Propel, leases, PPAs) still accesses 48/48E — the financing company claims the credit
State incentives (SMART, REG, net metering, rebates) are unaffected by the OBBBA and remain available
The One Big Beautiful Bill Act (OBBBA) is a sweeping budget reconciliation law signed by President Trump on July 4, 2025. It covered taxes, spending, immigration, defense, and energy policy in a single legislative package — hence the name.
For the solar industry, the OBBBA was the most consequential legislation since the Inflation Reduction Act (IRA) of 2022. While the IRA expanded clean energy tax credits, the OBBBA significantly rolled them back. The key changes:
The bottom line: if you are a homeowner buying solar with your own money, the federal government is no longer helping you. If you are a business or using third-party financing, there is still a window — but it closes on July 4, 2026.
From 2006 through 2025, homeowners who installed solar panels could claim a percentage of the system cost as a federal income tax credit. Under the IRA, that credit was 30% — meaning a $30,000 solar system earned a $9,000 credit.
As of January 1, 2026, that credit is $0. The OBBBA did not reduce it or phase it down. It ended it. If you install solar on your home in 2026 and pay for it with cash or a solar loan, you will not receive any federal tax credit.
8 kW System
$24,000
Typical installed cost
Old 25D Credit (30%)
$7,200
What you would have saved
2026 25D Credit
$0
Current federal credit
Section 25C covered heat pumps, insulation, windows, and other energy efficiency upgrades — up to $2,000 per year for heat pumps and $1,200 for other measures. It also expired December 31, 2025. If you are installing a heat pump in 2026, there is no federal credit for that either.
State incentives still exist. Programs like Mass Save (MA), Efficiency Maine, Energize CT, Clean Heat RI, and NJ Whole Home are state-funded and were not affected by the OBBBA. These can still provide thousands of dollars in heat pump and solar rebates. Check your state's programs for current availability.
The commercial Investment Tax Credit under Sections 48 and 48E of the Internal Revenue Code is still available — but only for projects that begin construction before July 4, 2026. This credit is claimed by the system owner, which for commercial projects is the business, and for residential third-party ownership structures is the financing company.
The IRS provides two safe harbor methods to prove you began construction before the deadline:
Pay at least 5% of total project cost before July 4, 2026. This is the most common method because it is easy to document.
Example: For a $200,000 commercial system, put down $10,000 before the deadline.
Begin significant physical work at the project site or on custom components before July 4, 2026.
Preliminary activities (permitting, site surveys) do not count. Actual construction work does.
The 4-year completion window: Once you begin construction, you have until July 4, 2030 to place the system in service. You do not need to finish the installation before the deadline — you just need to start it.
FEOC stands for Foreign Entity of Concern — specifically companies headquartered in, owned by, or controlled by entities in China, Russia, Iran, or North Korea. Under Section 48/48E, solar projects using equipment from non-FEOC (i.e., domestically manufactured or allied-nation) sources can claim an additional 10% domestic content bonus on top of the 30% base ITC.
This bonus is especially valuable for commercial projects. A 40% ITC (30% base + 10% domestic content) on a $500,000 commercial installation means an extra $50,000 in tax credits compared to the base rate.
| Panel | Origin | FEOC Compliant | +10% Bonus |
|---|---|---|---|
| Silfab 440W | Washington & New York, USA | ||
| Hyundai 440W | South Korea / China supply chain | ||
| REC 460W | Singapore / Norway HQ |
NuWatt's Propel financing program requires Silfab 440W panels specifically because FEOC compliance is mandatory for the third-party ITC claim and the domestic content bonus. If you choose Propel, you automatically get FEOC-compliant equipment.
The full ITC stack with domestic content: 30% base + 10% domestic content + 10% energy community + 10-20% low-income = up to 70% ITC for qualifying commercial projects. For more details, see our FEOC deadline guide.
The Modified Accelerated Cost Recovery System (MACRS) allows businesses to depreciate solar equipment over 5 years. On top of this, bonus depreciation lets you write off a large percentage of the system cost in the first year.
The bonus depreciation schedule has been declining since its 2022 peak, and it hits zero in 2027:
2024
60%
Bonus depreciation
2025
40%
Bonus depreciation
2026
20%
Bonus depreciation
2027
0%
Bonus depreciation
For a $500,000 commercial solar system placed in service in 2026 (after claiming the 30% ITC, the depreciable basis is reduced by half the credit — so $500,000 minus $75,000 = $425,000 depreciable basis):
20% bonus = $85,000 first-year deduction
+ standard 5-year MACRS on remaining $340,000
Total year-1 deduction: ~$153,000
0% bonus = $0 bonus deduction
Standard 5-year MACRS only on $425,000
Total year-1 deduction: ~$85,000
The difference — nearly $68,000 in first-year deductions — represents real cash-flow value for businesses. At a 21% corporate tax rate, that is approximately $14,000 in additional tax savings just from the depreciation timing.
If you are a homeowner considering solar in 2026, here is the honest breakdown of your options:
Federal help: $0. You own the system, so you would claim 25D — but 25D is gone. The commercial ITC (48/48E) does not apply because you are an individual, not a business.
Why it can still make sense: State incentives, utility savings, net metering credits, and rising electricity rates mean solar often pays for itself in 7-12 years even without federal credits. Your savings come from avoided electricity costs, not tax credits.
The commercial ITC still works here. With Propel, a financing company owns the solar system on your roof and claims the ITC under Section 48/48E. You get the benefit through lower monthly payments — the tax credit savings are passed through to you as reduced costs.
The catch: The financing company must begin construction before July 4, 2026. That means you need to sign up in time for them to execute contracts and make the 5% deposit before the deadline.
Similar to Propel, a lease or PPA company owns the system and claims 48/48E. The same July 4, 2026 deadline applies. The difference is ownership structure and terms — with a lease you pay a fixed monthly amount, with a PPA you pay per kilowatt-hour generated.
Be cautious: Not all lease/PPA companies pass through FEOC bonus savings. Ask specifically whether they use FEOC-compliant equipment and whether the domestic content bonus reduces your rate.
Solar without federal credits is more expensive upfront but still delivers a solid return through utility savings and state incentives. In high-rate states like Massachusetts ($0.28+/kWh) and Rhode Island ($0.29+/kWh), payback periods remain under 10 years for most systems. The federal credit loss hurts, but it does not break the economics of solar in the Northeast.
President signs the One Big Beautiful Bill Act. Residential ITC (25D) and energy efficiency credit (25C) set to expire December 31, 2025.
Section 25D (solar ITC) and Section 25C (heat pumps, insulation) officially expire. Homeowners who did not claim these credits by year-end lose them permanently.
Commercial ITC (48/48E) and FEOC domestic content bonus are still available for projects that begin construction before the deadline.
Section 30C credit for EV charger installations ends. Up to $1,000 residential, $100,000 commercial per unit.
Projects must have begun construction (5% safe harbor or physical work) before this date to claim the commercial ITC, domestic content bonus, energy community bonus, and low-income bonus.
Bonus depreciation for solar falls from 20% to 0%. Only the standard 5-year MACRS schedule remains for systems placed in service in 2027+.
Determine your ownership type. Homeowners buying cash/loan: focus on state incentives. Business owners or Propel customers: the 48/48E deadline applies directly.
Request a site assessment and detailed proposal from NuWatt. We model all applicable credits, state incentives, and financing options for your specific situation.
Select your panel tier and financing structure. If using Propel or a commercial installation, Silfab 440W panels qualify for the FEOC domestic content bonus.
Execute a binding construction contract and make at least a 5% deposit. This satisfies the IRS safe harbor test for "beginning construction" before the deadline.
Retain all contracts, invoices, and proof of payment. Your tax advisor will use these records to substantiate the safe harbor claim. The system must be placed in service within 4 years.
| Incentive | Before OBBBA (2025) | After OBBBA (2026) |
|---|---|---|
| Residential Solar ITC (25D) | 30% of system cost | $0 — Expired Dec 31, 2025 |
| Energy Efficiency Credit (25C) | 30% for heat pumps, insulation | $0 — Expired Dec 31, 2025 |
| Commercial ITC (48/48E) | 30% base credit | 30% if construction begins before July 4, 2026 |
| Domestic Content Bonus | +10% for US-made equipment | +10% if construction begins before July 4, 2026 |
| Energy Community Bonus | +10% | +10% if construction begins before July 4, 2026 |
| Low-Income Bonus | +10-20% | +10-20% if construction begins before July 4, 2026 |
| MACRS Bonus Depreciation | 60% first-year (2024) | 20% in 2026, 0% in 2027 |
| EV Charger Credit (30C) | Up to $1,000 residential | Expires June 30, 2026 |
| State Incentives | Varies by state | Unchanged — still available |
The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025. It eliminated the residential solar Investment Tax Credit (Section 25D) as of December 31, 2025, and set a July 4, 2026 construction-start deadline for the commercial ITC under Sections 48 and 48E. Homeowners buying solar with cash or a loan receive $0 in federal tax credits.
No. The residential ITC (Section 25D) expired on December 31, 2025. Homeowners who purchase solar with cash or a loan in 2026 receive zero federal tax credit. The only way to access the remaining commercial ITC (Section 48/48E) is through a third-party ownership structure like a solar lease, PPA, or programs like NuWatt Propel, where the financing company — not you — claims the credit.
The IRS recognizes two methods to prove you began construction before the deadline: (1) the 5% Safe Harbor Test — pay at least 5% of total project cost before July 4, 2026, or (2) the Physical Work Test — start significant physical work at the project site. Most commercial projects use the 5% safe harbor because it is straightforward to document with a contract and deposit.
FEOC stands for Foreign Entity of Concern. Solar projects using equipment manufactured outside of FEOC countries (China, Russia, Iran, North Korea) can claim an additional 10% ITC bonus on top of the 30% base credit. This domestic content bonus requires construction to begin before July 4, 2026. NuWatt uses Silfab 440W panels (made in USA) which are FEOC-compliant.
The bonus depreciation rate under MACRS drops from 20% in 2026 to 0% in 2027. Commercial solar projects placed in service in 2026 can depreciate 20% of the system cost in year one, plus standard 5-year MACRS depreciation. After 2027, only the standard 5-year schedule remains — no first-year bonus.
Yes. NuWatt Propel uses a third-party ownership model where the financing company (not the homeowner) owns the system and claims the commercial ITC under Section 48/48E. Because the credit is claimed by a business entity, it is not affected by the residential ITC expiration. However, the financing company must begin construction before July 4, 2026, which is why acting now matters.
Yes, but only until June 30, 2026. The Section 30C credit provides up to $1,000 for residential EV charger installations and up to $100,000 per unit for commercial installations. It expires on June 30, 2026 — not December 31 — so the window is even shorter than the solar construction deadline.
State incentives vary significantly and are unaffected by the OBBBA. Massachusetts offers SMART 3.0 production payments and ConnectedSolutions battery incentives. Rhode Island has the REF rebate ($0.65/W) and REG program. Maine has net billing at retail rates. New Hampshire, Connecticut, New Jersey, and other states maintain their own incentive programs. NuWatt helps customers stack all available state and utility incentives.
Whether you are a business owner looking to lock in the commercial ITC, or a homeowner exploring Propel financing, NuWatt can help you understand exactly what is available and what makes financial sense for your situation.
Disclaimer: This article provides general information about federal solar tax credits and the OBBBA. It is not tax advice. Tax credit eligibility depends on your specific circumstances, filing status, and tax liability. Consult a qualified tax professional before making financial decisions based on this information. NuWatt Energy is a solar installation company, not a tax advisory firm.
Sources: Internal Revenue Code Sections 25C, 25D, 30C, 48, 48E. IRS Notice 2023-29 (Begin Construction). One Big Beautiful Bill Act (Public Law, July 4, 2025). MACRS depreciation schedules per IRC Section 168.