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Maryland incentives and policy

Is there still a federal solar tax credit?

Written by the Soleil Energy Corp Team Last updated Editorial guidelines

Close view of a solar panel corner with a red maple leaf and dew.

Not for a homeowner who buys solar now. The Internal Revenue Service (IRS) says the federal solar tax credit for homeowners is gone for any installation finished after December 31, 2025. People who installed earlier can still carry forward unused credit, and a company that owns a leased system may qualify for a different credit.1234

When did the homeowner credit end?

The Residential Clean Energy Credit (Internal Revenue Code section 25D) covered 30 percent of qualified costs for systems installed from 2022 through 2025.3 Public Law 119-21, signed July 4, 2025, ended it for expenditures made after December 31, 2025, instead of 2034.1

You’ll hear this called the “One Big Beautiful Bill” change. Any article that promises the credit into the 2030s is out of date.

The same law set separate dates for the business credit that applies to solar companies. This table puts the dates in order.

Date What happened or applies
July 4, 2025 Public Law 119-21 signed; section 25D ends for expenditures after 20251
December 31, 2025 Last day for a homeowner expenditure to count under section 25D12
July 4, 2026 Twelve months after enactment. The end-of-2027 cutoff for solar under the business credit applies to facilities whose construction begins after this date5
December 31, 2027 Under section 48E(e)(4), the business credit does not apply to solar property placed in service after this date, for facilities covered by the July 4, 2026 rule5
Federal solar credit datesSource: 125
  1. July 4, 2025Public Law 119-21 signed; section 25D ends for expenditures after 2025
  2. December 31, 2025Last day for a homeowner expenditure to count under section 25D
  3. July 4, 2026Twelve months after enactment. The end-of-2027 cutoff for solar under the business credit applies to facilities whose construction begins after this date
  4. December 31, 2027Under section 48E, the business credit does not apply to solar property placed in service after this date, for facilities covered by the July 4, 2026 rule

The first two rows are the ones that touch a homeowner’s purchase. The last two matter to whoever owns a leased or commercial system, covered below.

Does paying early save a 2026 installation?

No. The credit follows the date the installation is complete, not the date you pay. The IRS answers the exact question: a taxpayer who paid on or before December 31, 2025 can’t claim the credit if the installation finished after that date.2

Here’s a hypothetical. A homeowner signs in October 2025 and pays a deposit in November. The crew finishes in February 2026. That system doesn’t qualify, because the expenditure counts as made in 2026.2

New construction runs on a different clock. For a home being built or rebuilt, section 25D treats the expenditure as made when you start original use of the structure. If that happens after December 31, 2025, the credit is gone. A tax professional should handle that case instead of the ordinary installation test.2

Can I still claim credit from an older installation?

Yes, if the system went in by the end of 2025. You claim the credit for the tax year the property was installed, not the year you file, and the IRS says any unused portion carries into later tax years, so filing in 2026 for an older system is normal.3

The IRS instructions for the 2025 Form 5695 say to use the form to take any carryforward from 2024 or to carry the unused portion to 2026.3 That carryforward comes from a credit earned under the earlier rules and gives a new installation no eligibility.

A big refund doesn’t mean you can use a big credit. The credit is nonrefundable, so it can’t exceed the tax you owe for the year, and a refund says nothing about that.3

Low tax liability slows how fast you can use an older credit, but it can’t bring back eligibility for a system finished after the cutoff. Keep your installation records, invoices and earlier returns, and let your preparer separate a first claim for an earlier installation from a carryforward.

What about leases and power purchase agreements?

The owner makes the claim. If a company owns the panels on your roof, the credit question moves to that company. The business credit is the Clean Electricity Investment Credit (section 48E), which the IRS describes as an investment credit for taxpayers with a qualified facility, claimed on Form 3468.6

Your situation Who can claim a federal credit What to read
You bought a system and it was finished in 2026 or later Section 25D covers no expenditure made after December 31, 202512 Your purchase price before any incentives
You bought and finished the system in 2025 or earlier You, for the tax year of installation, with any unused credit carried forward3 Your old return and Form 5695
A company owns the system (lease or power purchase agreement) The owner may be able to claim section 48E, subject to its rules46 Payment schedule, escalator, transfer and buyout terms

Section 48E(i) denies the credit for leased solar water heating property and small wind property. The text of that denial leaves out solar-electric property.4 Whether a particular lease or power purchase agreement (PPA) owner can claim the credit is a question for that owner’s tax adviser.

Three more rules sit on the owner’s side:

  • The end-of-2027 service cutoff for solar applies to facilities whose construction begins after July 4, 2026, which is 12 months after the law was enacted. Public Law 119-21 makes that amendment apply only to those later-start facilities.5
  • Section 48E(b)(6) says a qualified facility doesn’t include one whose construction begins after December 31, 2025 if it includes material assistance from a prohibited foreign entity. The IRS announced guidance on that rule on February 12, 2026.7
  • Whether your provider passes any of its credit through to you as a lower price is a contract term, and an advertised owner credit is not money you can claim on your own return.

Business owners weighing a commercial project can read our guide to the commercial solar tax credit deadline or see the utility-scale solar page. Commercial tax eligibility is a separate question for a tax adviser.

Could Congress bring the credit back?

Only by changing the law. The text of section 25D that Cornell Law School publishes still ends the credit for expenditures made after December 31, 2025.1 Until Congress acts, plan around the rules as they stand, not around a hoped-for restoration.

At least one bill would restore it. H.R. 5862, the American Energy Independence and Affordability Act, was introduced October 28, 2025. Its section 106 would move the homeowner credit’s end date back to property placed in service after December 31, 2034. Its last recorded action is the October 28, 2025 referral to the House Ways and Means Committee, and the Congress.gov record, last updated April 9, 2026, shows nothing since.89 Check Congress.gov for anything newer. A bill sitting in committee can’t be planned around.

If you’re looking at a 2027 installation, have a tax professional recheck the law right before you sign, and treat an installer’s prediction the same way.

What Maryland and county benefits can I use instead?

Maryland has one rebate program and two tax exemptions on solar equipment, and none of them works like the federal credit. County programs vary too, so a benefit in one county may not exist in yours. Start with the table, then check your own county’s finance office.

Item What it is What to check
Maryland Solar Access Program Rebate for income-eligible households. The Maryland Energy Administration (MEA) lists the fiscal year 2027 (FY27) application deadline as 3:00 p.m. Eastern on May 31, 2027, and says the portal may close earlier if requests exceed the budget.10 MEA’s upfront rebate reservation request (its Step 1), and a contractor from MEA’s participating list
Sales and use tax on solar equipment State law exempts solar energy equipment from the sales and use tax.11 Whether each item fits the statutory definition
Real property tax on solar property State law exempts solar energy property from real property tax, except as section 8-240 provides.12 Equipment versus the rest of the property
County property-tax credits Montgomery County’s Finance page says its solar and geothermal property-tax credit was suspended effective November 8, 2011, and no credits are granted for applications received after November 8, 2012.13 Your own county’s finance office

MEA’s page showed 22.58 percent of the $10 million FY27 solar access budget requested and 12.78 percent reserved, as of its October 19, 2026 update.10 A new application can’t be completed without choosing a contractor from MEA’s published list.10 Ask any installer whether it is on the program’s contractor list.

Keep the federal question apart from the bigger decision about residential solar. For the state picture, see our guide to Maryland solar incentives, and for the cost side, is solar worth it in Maryland. The solar frequently asked questions page covers how a roof assessment works.

Five checks before you sign a proposal

  1. Work out who will own the equipment, and whose tax return would claim each credit the proposal mentions.
  2. Match the timing to the rule. For an older claim, gather proof that the installation was complete, or that you began original use of a newly built home.2
  3. Get a proposal that lists each incentive on its own line, with the administrator’s name and the assumptions behind eligibility.
  4. For a Maryland rebate, confirm with MEA when the reservation step has to be finished, and choose a contractor from MEA’s participating list.10
  5. Have a tax professional check any tax credit, and compare contracts using only benefits that the professional and the administrator can support.

An older installation, an unused credit, third-party ownership and a new-build home each follow their own test, so match your situation to the right row before you rely on a number. A tax professional can run your return.

For a review of your roof and electric bill, book a free consultation or call (301) 953-4140.

Solar savings and incentive eligibility depend on your roof, your usage, your utility, and your tax situation. Incentive programs change and some have limited funding. We are not tax advisors — we will review your bill with you and tell you what you may qualify for. Confirm any tax credit with a qualified tax professional.

State and utility programs may be available, depending on your location, utility and project. The federal Residential Clean Energy Credit does not apply to property placed in service after December 31, 2025. Confirm current eligibility with the program administrator and a qualified tax professional; we can review your bill and project with you.

Program rules decide who qualifies. Ask any installer whether it is on the program’s contractor list.

Sources (13)

  1. U.S. Congress, Public Law 119-21, section 70506, signed July 4, 2025, https://www.congress.gov/119/plaws/publ21/PLAW-119publ21.htm ; Cornell Law School Legal Information Institute, 26 U.S. Code section 25D(h), current text (undated page), https://www.law.cornell.edu/uscode/text/26/25D ; both read October 25, 2026. ↩ ↩2 ↩3 ↩4 ↩5 ↩6

  2. IRS, Frequently asked questions about Public Law 119-21 modifications (FS-2025-05), question 7, August 21, 2025, https://www.irs.gov/newsroom/faqs-for-modification-of-sections-25c-25d-25e-30c-30d-45l-45w-and-179d-under-public-law-119-21-139-stat-72-july-4-2025-commonly-known-as-the-one-big-beautiful-bill-obbb ; 26 U.S. Code section 25D(e)(8), current text (undated page), https://www.law.cornell.edu/uscode/text/26/25D ; read October 25, 2026. ↩ ↩2 ↩3 ↩4 ↩5 ↩6 ↩7

  3. IRS, Residential Clean Energy Credit, page last reviewed July 4, 2026, https://www.irs.gov/credits-deductions/residential-clean-energy-credit ; IRS, Instructions for Form 5695 (2025), page last reviewed April 30, 2026, https://www.irs.gov/instructions/i5695 ; read October 25, 2026. ↩ ↩2 ↩3 ↩4 ↩5 ↩6

  4. 26 U.S. Code section 48E(a), (b) and (i), current text (undated page), https://www.law.cornell.edu/uscode/text/26/48E ; solar-electric property category in section 25D(d)(2), https://www.law.cornell.edu/uscode/text/26/25D ; read October 25, 2026. ↩ ↩2 ↩3

  5. U.S. Congress, Public Law 119-21, section 70513(a) and (g)(5), signed July 4, 2025, https://www.congress.gov/119/plaws/publ21/PLAW-119publ21.htm ; 26 U.S. Code section 48E(e)(4), current text (undated page), https://www.law.cornell.edu/uscode/text/26/48E ; read October 25, 2026. ↩ ↩2 ↩3

  6. IRS, Clean Electricity Investment Credit, page last reviewed January 5, 2026, https://www.irs.gov/credits-deductions/clean-electricity-investment-credit ; read October 25, 2026. ↩ ↩2

  7. 26 U.S. Code section 48E(b)(6), current text (undated page), https://www.law.cornell.edu/uscode/text/26/48E ; IRS, IR-2026-23, February 12, 2026, https://www.irs.gov/newsroom/treasury-irs-provide-guidance-for-certain-energy-tax-credits-regarding-material-assistance-provided-by-prohibited-foreign-entities-under-the-one-big-beautiful-bill ; read October 25, 2026. ↩

  8. U.S. Government Publishing Office, H.R. 5862 (119th Congress) as introduced, October 28, 2025, https://www.govinfo.gov/content/pkg/BILLS-119hr5862ih/html/BILLS-119hr5862ih.htm ; read October 25, 2026. ↩

  9. U.S. Government Publishing Office, bill status data for H.R. 5862, updated April 9, 2026, https://www.govinfo.gov/bulkdata/BILLSTATUS/119/hr/BILLSTATUS-119hr5862.xml ; Congress.gov bill record for H.R. 5862 (latest action October 28, 2025; record updated April 9, 2026), https://www.congress.gov/bill/119th-congress/house-bill/5862 ; both read October 25, 2026. ↩

  10. Maryland Energy Administration, Maryland Solar Access Program (FY27 page; funding announcement issued July 29, 2026; budget table last updated October 19, 2026), https://energy.maryland.gov/residential/Pages/incentives/Maryland-Solar-Access-Program.aspx ; read October 25, 2026. ↩ ↩2 ↩3 ↩4

  11. Maryland General Assembly, Tax-General Article section 11-230, current text (undated page), https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gtg&section=11-230&enactments=false ; read October 25, 2026. ↩

  12. Maryland General Assembly, Tax-Property Article section 7-242, current text (undated page), https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gtp&section=7-242&enactments=false ; read October 25, 2026. ↩

  13. Montgomery County Department of Finance, Property Tax Credit and Exemption Information (Renewable Energy Devices entry), current page (undated), https://www.montgomerycountymd.gov/department-finance/taxes/county-taxes-tax-information/property-tax-credit-exemption-information ; read October 25, 2026. ↩

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