Since 2006, the Federal Solar Investment Tax Credit has helped improve the affordability of solar systems for homeowners. This solar incentive is delivered as a 30% tax credit on the cost of a solar installation. For nearly two decades, this incentive has allowed more homeowners to take control of their energy and leverage the power of the sun to save on utility costs.
In 2022, the credit was nearing the end of its lifespan until the Biden administration approved an extension to the full amount of the ITC through 2032. However, changing priorities of the current administration could cause this plan to change dramatically.
In the current 2025 budget proposal making its way through the US Congress, the residential ITC is set to be completely eliminated at the end of 2025. That means this may be your final year to get a 30% tax credit on a solar installation project.
Let’s dive into the details.
How the Current Budget Proposal Affects the Solar ITC
As part of the US House Budget Proposal, the 25D tax credit would be amended. Traditionally, at the end of this credit’s approved period, it would be phased out over time, with the credit amount reducing over a two-year period before being eliminated. Under the existing plan, the credit would be limited to 26% in 2033, 22% in 2034, before being cancelled in 2035.
However, the current budget proposal that has been approved by the House Budget Committee and the House Ways and Means Committee would completely eliminate this credit following December 31st, 2025.
This policy change comes as a surprise to many across the clean energy industry, as the ITC has long enjoyed bipartisan approval. It was first signed into law by President George W. Bush and has been renewed under every subsequent administration.
What’s Next?
While the policy change looks poised to proceed, it’s important to note that this change is not set in stone. The House and Senate still need to pass the budget, but it failed to get off the ground the first go around. Amendments to the budget’s provisions are likely incoming prior to its passage, but there is no indication as of now whether or not those changes will include keeping the existing ITC structure. The bill must first pass the House Rules Committee, where edits to the ITC language could be made. There is some concern among solar experts that the credit could be phased out even sooner.
If the ITC isn’t protected during the amendment phases of the budget, it seems likely that there will be no more federal residential tax credit under this administration going into 2026.
Go Solar in Austin Prior To Its Expiration
We’ve seen how families, neighbors, and communities benefit from the ITC. It’s been a centerpiece of the solar incentive structure that has helped make more Texans energy independent. With its imminent cutoff, we’re encouraging anyone who’s been considering solar to make the switch now. On average, Texans save around $3,000 for a 5 kW system thanks to the ITC. With solar, you have control over your energy spending, not stuck at the whims of price spikes from utility providers.
Reach out to the team at ATX Solar today to get your solar system installation scheduled for 2025 so you don’t miss out on claiming a 30% tax credit for the installation.
