What the Recent Tax Credit Changes Actually Mean for Solar

The solar tax credit conversation shifted in 2025 with the passage of the One Big Beautiful Bill, a large federal tax and budget package that made changes across many parts of the tax code—including clean energy incentives.

Since then, a lot of headlines have focused on what’s “ending” or “going away.” That framing has caused understandable confusion, especially for homeowners trying to decide whether solar still makes sense.

The reality is more nuanced.

The changes mainly affect how solar is structured and who claims tax credits, not whether solar works or whether it remains a strong option for homes and businesses.

What Changed — and What Didn’t

The recent legislation adjusted the timeline for the Residential Clean Energy Credit, which historically applied to homeowner-owned solar systems.

Under the updated rules:

• The 30% federal tax credit for homeowner-owned residential solar systems is set to expire at the end of 2025.

• To qualify, a system must be owned by the homeowner and placed in service before that deadline.
  
  

What did not change:

• Solar remains fully legal and supported

• Utilities still allow grid-tied residential solar

• Net metering and billing structures remain in place

• Solar technology itself is unchanged
  
  

In other words, solar didn’t “lose support.” The change primarily affects ownership-based tax treatment.

Why the Credit Was Always Tied to Ownership

The residential solar tax credit has always been tied to who owns the system.

That means:

• Homeowners who owned their system could potentially claim the credit during tax filing

• Homeowners who leased their system or used a power purchase agreement (PPA) generally did not claim the credit directly, because they did not own the equipment
  
  

This distinction existed long before the One Big Beautiful Bill. The recent change simply makes that difference more visible.

What This Means for Solar Leases

Solar leases operate under a different structure than ownership.

With a lease:

• The system is owned by a third party

• The tax credit is claimed by the system owner, not the homeowner

• The value of that credit is often reflected indirectly in lease pricing or energy rates
  
  

Because of that structure, the recent changes to the homeowner-owned tax credit do not eliminate the core value of leased solar.

For many households, leases have always been appealing because they focus less on tax outcomes and more on:

• Predictable energy costs

• Lower upfront barriers

• Simplicity and reduced responsibility

• Flexibility if housing plans change
  
  

Those fundamentals remain intact.

Solar Was Never Only About the Tax Credit

While tax credits helped accelerate adoption, they were never the only reason solar made sense.

Homeowners who are satisfied with their solar decision often point to:

• Greater stability in energy costs

• Reduced exposure to long-term utility rate increases

• Better alignment between how their home uses and produces energy

• A system structure that fits their timeline and preferences
  
  

Ownership and leasing simply approach those goals differently.

A Note on Commercial Solar

The recent tax changes also affect commercial solar, but in a different way.

For businesses, solar incentives have historically been handled through:

• Separate sections of the tax code

• Business tax credits

• Depreciation rules that do not apply to residential homeowners
  
  
  

Commercial solar projects often evaluate incentives using tools like accelerated or bonus depreciation, which are not part of the residential tax credit discussion. As a result, the expiration of the homeowner-owned residential credit does not mean commercial solar incentives disappeared.

The key takeaway is that residential and commercial solar follow different tax frameworks, and changes to one do not always translate directly to the other.

A More Balanced Way to Think About the Change

Rather than viewing the tax credit update as solar becoming “worse,” it’s more accurate to see it as solar becoming more clearly segmented:

• Ownership may still make sense for homeowners who want to invest upfront and potentially use tax credits.

• Leasing may make more sense for homeowners who prefer predictability, simplicity, or who don’t want their decision tied to tax filing outcomes.

• Commercial solar continues to follow its own incentive and depreciation structures.
  
  
  

None of these paths are inherently better—they serve different needs.

The Takeaway

The One Big Beautiful Bill changed who benefits from certain tax credits, not whether solar delivers value.

Solar leases were never dependent on homeowners claiming a tax credit, and they continue to offer a straightforward way to access solar without tying the decision to personal tax circumstances.

For anyone considering solar today, the most important questions haven’t changed:

• How does solar fit my home or business?

• How long do I plan to stay?

• Which structure aligns with how I want to manage energy costs?
  
  

When those questions are answered clearly, the role of incentives becomes supportive—not decisive.

VirginiaSolar.org was created to give Virginia homeowners clear, unbiased information about solar—so decisions are made with confidence, not pressure.

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