For those who were considering solar for their home in the future, the timeline for their solar installation may have just sped up to warp speed. In the early morning hours of May 22, 2025, House Bill (H.R.1), more commonly known as the “One Big Beautiful Bill Act,” narrowly made its way through The House of Representatives with a tight 215-214 vote.
H.R.1 is a comprehensive legislation package aiming to implement key pieces of President Trump’s “America First” agenda. It encompasses several major initiatives including: tax reforms, defense and border security, health and social programs, energy and environmental policies, and education.
Supporters argue the bill’s tax provisions will stimulate growth while critics of the bill cite concerns around its fiscal impact, the cut of social programs, health care access, and environmental concerns.
Some of the environmental concerns surround the elimination of Internal Revenue Service (IRS) Code 25D, more commonly known as the 30% Solar Tax Credit (ITC). This comes as a shock to many as the most recently, the credit was extended to 2032 under the Inflation Reduction Act (IRA). Now homeowners have a sped up timeline to install, and the industry which has grown to employ 279,447 faces its most pivotal crossroads yet.
What Is The Solar Tax Credit?
For 20 years, the Solar Investment Tax Credit (ITC) has been the backbone of solar savings for both homeowners and business owners alike. This has encouraged solar installations in the US while fueling job growth in solar energy. With the tax credit, 30% of a solar and/or battery installation is eligible for a dollar for dollar federal income tax credit off the total system cost. For outright purchases and loans this tax credit belongs to the solar purchaser. For leased systems, the financing company will retain the rights to the tax credit and often be able to package the savings into a lower rate for the customer.
Originally established in 2006 under the Energy Policy Act of 2005 during George W. Bush’s second term, the tax credit was worth a full 30% until 2020 when the first “step down” to 26% started. Reset to 30% in 2022 with the Inflation Reduction Act, the credit was not meant to last forever although there was meant to be a generous period for the credit to be phased out gracefully.
| Installation Year | Credit % |
| 2022–2032 | 30% |
| 2033 | 26% |
| 2034 | 22% |
| 2035 onward | 0% |
Proposed Changes Under H.R.1
- Termination of the 30% Residential Solar Tax Credit: The bill seeks to end the credit for systems placed in service after December 31, 2025.
- Accelerated Phase-Out for Commercial Projects: The bill accelerates the phase-out of tax credits for commercial solar installations.
- Third Party Leased Systems: The legislation would also eliminate the credit for systems that are leased to third parties, affecting homeowners who opt for solar leases instead of purchasing systems outright.
Impact on the Solar Industry
If enacted, the termination of the solar tax credit could have several effects:
- Increased Costs for Homeowners: Without the tax credit, the upfront cost of solar installations will rise.
- Job Losses in the Solar Industry: The Solar Energy Industries Association warns that the bill could lead to the closure of 331 solar manufacturing facilities nationwide and the loss of up to 330,000 solar-related jobs.
- Reduced Investment in Renewable Energy: The repeal of clean energy tax credits could deter private investments, potentially reducing them by $285 billion by 2030.
What Should Homeowners Do Now?
Given the forfeiture of 30% of the project cost, homeowners considering solar installations should act swiftly:
- Stay Informed: Monitor legislative developments, as the Senate has yet to vote on H.R.1, and changes to the bill are possible. If you feel so inclined, please contact your local senator and urge them to take action against this policy: https://solarpowersamerica.org/campaign/defend-american-energy/
- Install Before December 31, 2025: To qualify for the current 30% tax credit, systems must be installed by the end of 2025. Be sure to consult with your installer on their installation timeline to ensure you are in the queue before the end of the year. Solar involves permitting and utility approvals which can take some time.
Contact Public Service Solar today to get started on your solar installation and claim the 30% solar tax credit!
