Last week, the President signed the “Big Beautiful Bill” into law — a sweeping piece of legislation that, among other provisions, ends federal tax incentives for residential and commercial solar installations effective January 1 of next year. The news has sent shockwaves through the renewable energy sector and sparked a sudden rush among homeowners and businesses eager to lock in their projects before the federal benefits disappear.
The Expiring Tax Credit
For nearly two decades, the cornerstone of U.S. solar growth has been the Federal Solar Investment Tax Credit (ITC). First introduced in 2006, the ITC allowed homeowners and commercial property owners to deduct a significant percentage of their solar installation costs from their federal taxes. For most of its existence, that rate was 30%, later dipping slightly before being restored to 30% under the Inflation Reduction Act in 2022.
Here’s how it worked: if a homeowner installed a $20,000 solar system, the ITC reduced their federal tax liability by $6,000. Businesses installing larger systems could see six- or even seven-figure tax savings. These credits applied to not just solar panels, but also batteries, inverters, wiring, and labor. Importantly, the ITC was a credit, not a deduction—meaning it directly reduced the amount of tax owed, dollar for dollar.
The Coming Change
The “Big Beautiful Bill” changes all of that. In a dramatic shift away from federal renewable energy subsidies, the ITC will sunset entirely at the end of December. There will be no gradual phase-out, no reduced rates, and no grandfathering for projects begun in 2025. To qualify, systems must be installed and operational by December 31, 2025. Contracts signed this fall but completed next spring won’t make the cut.
Get Your Energy Independence
The result? Solar installers across the country are already reporting a spike in inquiries. Phone lines are jammed, and online quote requests are surging. Some companies are warning that their installation schedules may be booked solid through year’s end within the next few weeks. This mirrors what happened in states like Nevada and Hawaii when local solar incentives ended abruptly — demand skyrocketed in the short term before falling off sharply afterward.
The Time to Act Is Now
For homeowners and businesses considering solar, the message is clear: act quickly. The 30% ITC has been one of the most powerful tools for making solar affordable. Without it, payback periods will lengthen by several years, and some projects that made financial sense under the credit may no longer pencil out.
While some state and local incentives will remain — such as property tax exemptions, sales tax waivers, and renewable energy rebates—these vary widely and rarely match the scale of the federal ITC. Financing options like solar loans and leases will still be available, but monthly costs will be higher without the federal offset.
Industry advocates are warning that the loss of the ITC could slow the nation’s progress toward clean energy goals. Opponents of the credit argue that solar has matured to the point where it can compete without federal subsidies, and that taxpayer dollars should be redirected elsewhere.
In the meantime, the clock is ticking. If you’ve been on the fence about going solar, this summer may be your last, best chance to take advantage of one of the most generous federal incentives in renewable energy history.