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Section 25D expired December 31, 2025. Zero dollars for homeowner solar purchases. Vermont never had a state rebate either. Here is an honest look at what remains and whether solar still pencils out.
Federal ITC
$0
25D expired
State Rebate
$0
never existed
Payback
~13 yrs
longest in NE
48/48E Deadline
Jul 4
2026 (PPA/lease)
Two major federal tax credits expired on December 31, 2025. Here is what they were and what the loss means for Vermont homeowners.
Expired December 31, 2025. $0 for homeowner cash/loan solar purchases. Do NOT reference residential ITC.
A 10 kW system at $3.05/W = $30,500. At 30%, that would have been $9,150 in savings. Now $0.
Expired December 31, 2025. $0 for heat pumps, insulation, etc.
Previously covered up to $2,000 for heat pumps and $1,200 for insulation/weatherization. Now $0. HEAR rebates may partially replace once launched in VT.
Six reasons Vermont solar can still make financial sense in 2026, despite the loss of federal incentives and the absence of state rebates.
Vermont exempts solar equipment, installation labor, and battery storage from the 6% state sales tax. On a 10 kW system at $30,500, this saves approximately $1,830. It is automatic — no application needed.
Under 32 V.S.A. section 3802, solar systems under 50 kW are exempt from property tax assessment. Solar adds ~$20,000 in home value that is NOT taxed, saving approximately $400/year. Over 25 years, that is $10,000.
Residential systems under 15 kW receive the blended rate ($0.1839/kWh) plus a positive adjustor, for an effective rate of ~$0.1439/kWh locked for 10 years. However, the PUC has cut rates 7 consecutive years, so every year you wait means a lower locked rate.
GMP offers a battery lease ($55/mo for 2 Powerwalls, 27 kWh) or BYOD incentive (up to $10,500). Batteries increase self-consumption from ~70% to ~90%, reducing your reliance on declining NM credits. Plus backup power and VPP participation.
If a financing company owns the system, they can claim Section 48/48E at 30% for projects beginning construction before July 4, 2026. This is the ONLY way to access any federal tax credit. The savings are passed through as a below-utility electricity rate. Deadline is July 4, 2026.
Solar + heat pump + battery creates an energy ecosystem that insulates you from rising fossil fuel and electricity costs. Once HEAR launches in VT ($29.2M allocated), the heat pump portion may get rebates up to $8,000 for income-qualified households. The solar + battery combo maximizes self-consumption and backup resilience.
A 13-year payback is the longest in New England. Here is where every dollar goes and what you get back over 25 years.
Total Cost
$30,500
out of pocket
Est. 25-Year Savings
~$51,850
electricity + tax exemptions
Net Profit (25 yr)
~$21,350
after system cost
Assumes 70% self-consumption at GMP retail rate, 30% NM export at Cat I rate, 2.5% annual rate escalation, property tax exemption of ~$400/yr. Panel degradation 0.4%/yr. Cash purchase, no interest.
You plan to move within 8-10 years (not enough time to recoup cost)
Your roof faces north or has heavy shading (production drops 20-40%)
You are a BED customer at $0.1837/kWh (lowest VT rate = slowest payback)
You cannot afford $29,000+ upfront and do not want a PPA/lease
Your roof needs replacement soon (add $10-15K for new roof first)
How Vermont solar economics compare to other New England states in 2026. All states lost the 25D ITC.
| State | Payback | State Incentive | Net Metering | Unique Advantage |
|---|---|---|---|---|
| Vermont | ~13 yrs | None (never had) | Cat I positive adjustor (declining) | GMP battery program, 6% sales tax exempt |
| Massachusetts | ~7-8 yrs | SMART 3.0 ($0.03-0.06/kWh, 20 yrs) | NM 1:1 retail credit | ConnectedSolutions $275/kW |
| Rhode Island | ~8-9 yrs | REF rebate ($0.65/W, max $5K) | 80% retail (post-April 2023) | REG program $0.27/kWh 15-20 yrs |
| New Hampshire | ~9.5 yrs | REPEALED (SB 303) | NEM 2.0 ~85% retail (locked to 2041) | No sales tax, NEM lock through 2041 |
All states lost Section 25D (federal residential ITC) on Dec 31, 2025. Payback estimates assume cash purchase, average electric rates, and standard system sizes. Individual results vary by roof, utility, and consumption patterns.
Section 48/48E is still active at 30% for third-party owned systems beginning construction before July 4, 2026. This is the ONLY way any federal tax credit applies to Vermont solar right now.
Construction must BEGIN by July 4, 2026. Given permitting and CPG requirements in VT, you need to sign a PPA/lease by April-May 2026 at the latest to ensure the deadline is met.
Answers to the most common questions about going solar in Vermont without federal tax credits.
Not as a homeowner. Section 25D expired December 31, 2025. If you purchase solar with cash or a loan, you receive $0 in federal tax credits. The only way to access any federal credit is through a third-party owned system (PPA or lease) where the financing company claims the Section 48/48E ITC at 30%. This option requires construction to begin before July 4, 2026.
It depends on your situation. With a ~13-year payback and 12+ years of free electricity afterward, the 25-year economics are still positive. Key factors that make it work: sales tax exemption saves ~$1,830, property tax exemption saves ~$400/year ($10,000 over 25 years), net metering Cat I still has a positive adjustor, and the GMP battery program adds backup value. If you plan to stay in your home 15+ years and have a south-facing roof, it can make sense.
Section 25D was the homeowner residential solar tax credit — it expired Dec 31, 2025. Section 48/48E is the commercial/third-party ITC — it is still active at 30% for systems beginning construction before July 4, 2026. 48/48E can only be claimed by the SYSTEM OWNER, which in a PPA or lease arrangement is the financing company (not you, not the installer). The financing company passes some of the savings through as a lower rate.
In a PPA (Power Purchase Agreement) or solar lease, a financing company owns the system on your roof and claims the 48/48E ITC at 30%. You pay a fixed monthly rate below your utility rate — $0 down, immediate savings. The financing company uses the ITC to offer you a lower rate than they otherwise could. This option disappears after July 4, 2026 when 48/48E construction deadline passes.
Vermont has the longest payback in New England at ~13 years. MA has SMART 3.0 and ConnectedSolutions (~7-8 year payback). RI has REF rebates and REG (~8-9 years). NH has NEM 2.0 locked through 2041 (~9.5 years). CT has Energize CT rebates (~8-9 years). Vermont lacks any state incentive program and has declining net metering rates. However, the GMP battery program is nationally unique and adds significant value.
When you install solar, your Category I net metering adjustor is locked for 10 years from your interconnection date. This protects you from the annual PUC rate cuts during that period. After 10 years, your adjustor resets to whatever the current rate is. This is another reason to install sooner — you lock in a higher adjustor before the next annual reduction.
Vermont has $29.2 million allocated for HEAR rebates but has NOT launched the program yet. There is no confirmed launch date. HEAR provides rebates for heat pumps (up to $8,000 for low-income), not directly for solar. However, a solar + heat pump bundle could benefit once HEAR launches. The risk of waiting: net metering rates decline every year, and the 48/48E deadline (July 4, 2026) is approaching fast for PPA/lease options.
Green Mountain Power offers a battery lease ($55/month for 2 Powerwalls or 2 Enphase batteries, 10-year term) or BYOD incentive ($850-950/kW, max $10,500). Batteries provide backup during outages and participate in GMP's ~50 MW virtual power plant. For solar customers, a battery increases self-consumption from ~70% to ~90%, reducing reliance on declining NM credits and adding ~$200/year in additional value through TOU arbitrage.
Dive deeper into the specific programs that make Vermont solar work.
City-by-city pricing for all 8 VT markets
Read moreCategory rates, PUC cuts, and CPG rules
Read morePowerwall lease, BYOD, and VPP details
Read moreSales tax and property tax savings
Read moreWhich financing option saves most in VT?
Read moreSee exact pricing for your roof and utility
Read moreNo tax credit does not mean no savings. Get a customized analysis for your roof, utility, and budget. Includes PPA/lease options with 48/48E while it lasts.
PPA/lease deadline: July 4, 2026. Net metering rates declining annually. The best time to lock in is now.