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...
The residential solar ITC (Section 25D) expired December 31, 2025. Vermont homeowners who buy solar with cash or a loan get $0 from the IRS. But there is a legal, congressionally-designed path to still access the 30% credit — through third-party ownership under Section 48/48E.
30%
ITC Rate (Section 48)
$10,230
Example ITC (11 kW)
Jul 4, 2026
Construction Deadline
A 64-year-old tax code provision — not a loophole
Section 48 of the Internal Revenue Code has existed since 1962. It provides an Investment Tax Credit (ITC) to the owner of qualifying energy property — solar panels, wind turbines, battery storage, and other energy systems. The critical word in the statute is “owner.”
For decades, two parallel pathways existed for solar tax credits. Section 25D let individual homeowners claim the ITC on their personal tax return when they purchased solar with cash or a loan. Section 48 let businesses and financing companies claim the ITC when they owned solar systems — including systems installed on residential rooftops through leases and PPAs.
On July 4, 2025, the OBBBA (One Big Beautiful Bill Act) eliminated Section 25D. The homeowner pathway is dead. But Section 48 — the business/TPO pathway — remains active for projects beginning construction before July 4, 2026.
This is not a loophole. Congress designed it this way.
Section 48 was created to encourage capital deployment into energy infrastructure. Financing companies invest billions in solar systems, claim the ITC as intended by the tax code, and pass savings to homeowners through lower monthly payments. This mechanism has been reviewed and upheld by the IRS, Treasury, and Congress for over six decades.
Section 48E, created by the Inflation Reduction Act (August 2022), extended the investment tax credit with technology-neutral rules. Together, Sections 48 and 48E provide the legal framework that allows third-party solar financing to continue delivering federal tax benefits — even after Section 25D's expiration.
Two different tax code sections, two different claimants, two very different outcomes in 2026.
| Feature | Section 25D (DEAD) | Section 48/48E (ACTIVE) |
|---|---|---|
| Tax code section | Section 25D | Section 48 / 48E |
| Who claims the credit | Homeowner (on personal return) | System owner / TPO (financing company) |
| IRS form used | Form 5695 | Form 3468 |
| Credit rate | 30% (was) | 30% (still active) |
| Current status | EXPIRED Dec 31, 2025 | ACTIVE through July 4, 2026 |
| Applies to | Cash or loan purchases | Lease, PPA (TPO models) |
| MACRS depreciation | Not available to homeowners | 5-year accelerated + 20% bonus (2026) |
| Domestic content bonus | N/A (credit is dead) | +10% with FEOC-compliant panels |
| Energy community bonus | N/A (credit is dead) | +10% if project in qualifying area |
| Net effect for homeowner | $0 federal benefit | Lower monthly payment via TPO savings |
Tax code section
25D
Section 25D
48/48E
Section 48 / 48E
Who claims the credit
25D
Homeowner (on personal return)
48/48E
System owner / TPO (financing company)
IRS form used
25D
Form 5695
48/48E
Form 3468
Credit rate
25D
30% (was)
48/48E
30% (still active)
Current status
25D
EXPIRED Dec 31, 2025
48/48E
ACTIVE through July 4, 2026
Applies to
25D
Cash or loan purchases
48/48E
Lease, PPA (TPO models)
MACRS depreciation
25D
Not available to homeowners
48/48E
5-year accelerated + 20% bonus (2026)
Domestic content bonus
25D
N/A (credit is dead)
48/48E
+10% with FEOC-compliant panels
Energy community bonus
25D
N/A (credit is dead)
48/48E
+10% if project in qualifying area
Net effect for homeowner
25D
$0 federal benefit
48/48E
Lower monthly payment via TPO savings
A step-by-step breakdown of how Section 48 tax benefits translate into real savings on your monthly bill.
A third-party owner (financing company) purchases a solar system — for example, an 11 kW system at $3.10/W costs approximately $34,100. The TPO owns the panels, inverter, and racking. They contract with an installer (like NuWatt) to mount the system on your roof.
The TPO files IRS Form 3468 and claims the 30% Investment Tax Credit on the system cost. On a $34,100 system, that is $10,230 in federal tax credits. This goes directly 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 a 20% first-year bonus. On our $34,100 example, MACRS provides roughly $5,400 in additional tax benefits over 5 years. This is a commercial tax benefit unavailable to individual homeowners.
The TPO receives approximately $15,630 in combined tax benefits ($10,230 ITC + ~$5,400 MACRS). These savings are baked into your lower monthly lease payment or per-kWh PPA rate. Without Section 48, the TPO would need to charge you significantly more. This is not a loophole — it is the intended mechanism Congress designed to encourage solar deployment at scale.
System Cost
$34,100
25 x Silfab 440W
Section 48 ITC
-$10,230
30% to TPO
MACRS (5-yr)
-$5,400
20% bonus in 2026
TPO Tax Benefits
~$15,630
Passed to you as savings
Three system sizes showing how Section 48 ITC and MACRS translate to real savings for Vermont homeowners. Based on $3.10/W average VT pricing.
Smaller homes, 600–800 sq ft roof
Average VT home, covers full usage
Large homes, heat pump + EV charging
Vermont's net metering structure affects how Section 48 economics work here.
Vermont's net metering program, administered primarily through Green Mountain Power (GMP), works differently than simple 1:1 retail net metering in other states. For residential net-metered systems, GMP provides generation credits at approximately $0.17–$0.20/kWh — which is the blended value of energy, capacity, and renewable energy credits.
When a TPO owns the solar system (as in a lease or PPA), the net metering credits become part of the TPO's revenue model. The TPO factors GMP's credit rate into their pricing, which is why Vermont PPA rates typically start at $0.10–$0.15/kWh rather than the $0.08–$0.11/kWh you might see in higher-rate states like Connecticut.
GMP Rate
~$0.21/kWh
~75% of VT customers
VEC Rate
~$0.19/kWh
Rural Vermont co-op
BED Rate
~$0.17/kWh
Burlington only
Lower rates mean smaller spreads — but Section 48 still delivers value.
Vermont's lower electric rates ($0.17–$0.21/kWh vs $0.27–$0.30/kWh in CT/MA) create a narrower savings spread with TPO pricing. But consider: without Section 25D, a cash-purchased system requires $25,000–$43,000 upfront with $0 in federal tax credits. A Section 48 TPO arrangement eliminates that barrier entirely, providing immediate savings at $0 down. The question is not whether the savings are as large as Connecticut — it is whether $0 down with day-one savings beats $35,000 upfront with no ITC.
Not all financing captures the ITC. Here is which options benefit from Section 48 and which do not.
Fixed monthly payment for 20–25 years. The TPO owns the system and claims the 30% ITC + MACRS. You pay a predictable monthly amount that is lower than your current electric bill.
Advantages
Limitations
VT Note: With GMP at ~$0.21/kWh, the spread between your rate and lease payment is narrower than higher-rate NE states. Lease economics still work but margins are tighter.
You pay per kilowatt-hour at a rate lower than your utility rate. The TPO owns the system, claims Section 48 ITC + MACRS, and sells you the power at a discounted rate.
Advantages
Limitations
VT Note: At $0.11–0.15/kWh vs GMP $0.21/kWh, you save 29–48% on solar electricity. The savings are real but smaller than in states with $0.27–$0.30/kWh rates.
NuWatt’s third-party ownership program using FEOC-compliant Silfab 440W panels. The financing company claims Section 48 ITC + MACRS + domestic content bonus. Propel is not yet available in Vermont but is coming soon.
Advantages
Limitations
VT Note: Propel is COMING SOON to Vermont. In the meantime, standard solar lease and PPA options can capture Section 48 benefits. Contact NuWatt for the latest availability.
You own the system outright or finance with a personal/home equity loan. Because you own it, there is NO Section 48 benefit — and Section 25D is dead. You get $0 in federal tax credits.
Advantages
Limitations
VT Note: You own it and get GMP net metering credits, but 25D is dead — $0 ITC. Vermont’s lower electric rates ($0.17–$0.21/kWh) mean longer payback without federal incentives.
Not all panels qualify for the full ITC stack. Here is what you need to know.
FEOC stands for Foreign Entity of Concern. Under guidance from the Treasury Department and IRS, solar panels manufactured by or containing critical components from FEOC-designated entities (primarily Chinese-owned companies) face restrictions on certain ITC bonuses.
Standard Section 48/48E credit
FEOC-compliant panels required
Project in qualifying census tract
FEOC Compliance Deadline: July 4, 2026
After this date, projects using non-FEOC panels may face additional restrictions beyond losing the domestic content bonus. If you are considering a TPO arrangement in Vermont, verify that the financing company plans to use FEOC-compliant panels before signing.
Misinformation about the solar tax credit is rampant. Here are the facts.
“Section 48 is a loophole for solar companies.”
Section 48 has been part of the IRS tax code since 1962 — 64 years. It was specifically designed to encourage investment in energy property by providing an ITC to the entity that owns the qualifying system. Congress intentionally structured it so that financing companies could deploy capital into solar at scale. There is nothing hidden, creative, or exploitative about it.
“I get the 30% tax credit directly on my tax return.”
No. With a lease or PPA arrangement, the third-party owner (TPO) claims the ITC on their corporate tax return using IRS Form 3468. You benefit indirectly through lower monthly payments or a reduced per-kWh rate. If you want to claim the credit directly, you would need to purchase the system outright — but Section 25D is dead, so you would receive $0.
“Solar leases are always a bad deal.”
This advice was accurate when Section 25D was alive. Homeowners could claim 30% themselves, making cash or loan purchases clearly superior. In 2026, the calculus has changed. With $0 in homeowner tax credits, leases and PPAs that leverage Section 48 can deliver better economics than a loan at 6.99–7.99% APR with no ITC. In Vermont, where GMP charges ~$0.21/kWh, a PPA at $0.11–0.15/kWh still provides meaningful day-one savings.
“The installer claims the tax credit.”
The installer (contractor) does not claim the ITC. The credit goes to the entity that owns the qualifying energy property — the financing company or TPO. The installer is paid for labor and materials. This is a common misunderstanding that leads homeowners to ask the wrong questions during the sales process.
“I should wait for Congress to bring back Section 25D.”
The OBBBA (One Big Beautiful Bill Act), signed July 4, 2025, eliminated Section 25D with no sunset clause and no scheduled return. There is no pending legislation to restore it. Meanwhile, Section 48/48E itself has a construction deadline of July 4, 2026. Waiting risks losing access to both the homeowner credit (already gone) and the TPO credit (expiring soon).
“Vermont’s low electric rates make solar not worth it.”
Vermont’s rates ($0.17–$0.21/kWh) are lower than Massachusetts or Connecticut, which means longer payback periods with a cash purchase. But Section 48 TPO changes the equation: with $0 down and a PPA at $0.11–0.15/kWh, you save from day one regardless of baseline rates. Plus, Vermont’s property tax exemption and 6% sales tax exemption reduce total cost of ownership, and GMP’s net metering provides stable credit value.
The construction deadline for Section 48/48E is approaching. Here is the timeline every Vermont homeowner needs to understand.
Section 48E created with technology-neutral ITC rules. 25D extended through 2032 (at the time).
Residential solar ITC killed immediately. Homeowners who buy with cash or loan receive $0. Section 48/48E given a 1-year grace period.
The first full calendar year with no residential solar ITC. Every cash or loan solar purchase in Vermont gets $0 from the IRS.
You are here. TPO arrangements signed now have ample time to begin construction before the deadline. Permit and interconnection timelines in Vermont run 6–10 weeks through GMP.
Projects must “begin construction” (physical work test or 5% safe harbor) before this date. After this, new TPO projects may lose the 30% ITC entirely.
Meaningful physical work begins at the project site or at a factory for components specifically designed for the project. Mounting hardware installation, foundation work, or panel manufacturing orders count. Preliminary activities (permits, surveys, engineering) do not.
The taxpayer (TPO) incurs at least 5% of the total project cost before the deadline. On a $34,100 system, that is approximately $1,705 in binding commitments. Equipment orders with non-refundable deposits typically satisfy this test. Continuous construction or continuous efforts must follow.
Practical impact: If you sign a TPO agreement and the financing company places equipment orders before July 4, 2026, the project qualifies. The system does not need to be installed by that date — it must be placed in service within 4 years of beginning construction.
10 questions we hear most from Vermont homeowners about the solar ITC in 2026.
Section 48 is the Investment Tax Credit (ITC) provision that has existed in the IRS tax code since 1962. It provides a tax credit to the owner of qualifying energy property — such as solar panels. Section 25D was the residential energy credit that allowed individual homeowners to claim the ITC on their personal tax return. Section 25D expired on December 31, 2025 (eliminated by the OBBBA). Section 48/48E remains active for projects beginning construction before July 4, 2026. The key difference: 48 goes to the system owner (the financing company in a lease/PPA), while 25D went to the homeowner.
Not directly. Section 25D is dead — if you buy solar with cash or a loan, you receive $0 in federal tax credits. However, if you finance through a solar lease or PPA, the third-party financing company (TPO) claims the 30% ITC under Section 48/48E. The savings are passed to you through lower monthly payments or a discounted per-kWh electricity rate.
Green Mountain Power (GMP) provides net metering credits for solar generation. For net-metered systems, GMP pays approximately $0.17–$0.20/kWh in generation credits. When a TPO owns the system through a lease or PPA, the net metering arrangement is typically structured so that the TPO receives the generation credits as part of their revenue stream, and you pay a lower per-kWh rate or fixed lease payment. The TPO factors GMP’s credit rates into their pricing model.
Not yet. Propel is currently available in Maine and Texas, with Vermont expansion planned. In the meantime, Vermont homeowners can access Section 48 benefits through standard solar lease and PPA arrangements. Contact NuWatt for the latest on Propel availability in Vermont.
The IRS defines “begin construction” through two safe harbors: (1) Physical Work Test — meaningful physical work begins at the site (foundation, mounting hardware installation), or (2) Five Percent Safe Harbor — at least 5% of the total project cost has been incurred. For residential TPO 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 of beginning construction.
Vermont’s rates are lower than most NE states (GMP ~$0.21/kWh vs $0.27–$0.30/kWh elsewhere), which means the PPA savings spread is narrower. However, Section 48 TPO still provides value: a PPA at $0.12/kWh saves $0.09/kWh on every kilowatt-hour, which adds up to $1,100+/year on an 11 kW system. The $0 down, day-one savings model works regardless of baseline rate — the savings are just proportionally smaller.
FEOC stands for Foreign Entity of Concern. Under the IRA and subsequent guidance, solar panels manufactured by or containing components from a Foreign Entity of Concern (primarily Chinese-owned companies) may lose eligibility for certain ITC adders, particularly the 10% domestic content bonus. FEOC-compliant panels like the Silfab 440W are manufactured without FEOC components, ensuring eligibility for the full ITC stack. The FEOC compliance deadline is July 4, 2026.
No. The TPO retains a portion of the tax benefits as profit — this is how the financing model works. However, competition among TPO providers keeps lease and PPA rates low. In Vermont, typical PPA rates are $0.10–0.16/kWh compared to GMP’s $0.21/kWh, so homeowners still see meaningful savings even after the TPO retains its share.
Vermont Electric Cooperative (VEC) charges ~$0.19/kWh and Burlington Electric Department (BED) ~$0.17/kWh, both lower than GMP’s ~$0.21/kWh. Lower rates mean a narrower spread with TPO pricing. BED customers in particular may see tighter economics. However, Section 48 still delivers $0-down access and day-one savings — the total savings over 20–25 years are proportional to the rate differential.
For projects that begin construction before July 4, 2026, the 30% ITC remains available as long as the project is placed in service within 4 years. After July 4, 2026, new projects may face reduced or eliminated ITC rates depending on future legislation. There is currently no indication that Section 48 will be extended beyond this deadline under the current administration.
Deep dive into lease vs PPA structures, rates, and contract terms for Vermont.
Side-by-side financing comparison with 25-year savings projections.
Honest analysis of whether solar still works in Vermont without Section 25D.
City-by-city pricing, system sizes, and cost breakdowns across Vermont.
How your utility territory affects solar savings and net metering value.
Third-party ownership with FEOC-compliant Silfab 440W panels — coming soon to VT.
Section 25D is gone. Section 48/48E is still here — but the clock is ticking. Find out how much you can save with a TPO arrangement that captures the 30% ITC before the July 4, 2026 construction deadline.
Free quote • No obligation • NABCEP-certified installers • Silfab 440W FEOC panels available