Why Residential Solar Still Pays Off Without the Federal Tax Credit
Sadly, the 30% Residential Clean Energy Investment Tax Credit (ITC), which has made residential solar significantly more affordable, accessible, and therefore more equitable, will expire on December 31, 2025. This is due to the “One Big Beautiful Bill” (OBBBA) signed into law on July 4, 2025. After that date, homeowners will only get a tax credit if their state offers one, or if they are able to take advantage of other local incentive programs that are available. The Residential Clean Energy ITC was, across the country, the best incentive to go solar.
The Good News
Even without federal incentives, solar generates substantial savings through lower electricity bills, providing protection from rising utility rates. We all know, utility rates will never trend downward. Over time, this means continuous savings that accumulate to exceed initial costs. As utilities become more expensive, a solar system’s value increases.
Payback Periods
In addition to keeping utility costs at bay, the payoff can still be good for residential solar. Depending on your roof and the size of your solar system, your payback period can still remain significantly less than the lifespan of the system. For example, currently, a payback period for a typical solar system with the residential clean energy ITC lands somewhere between 5-7 years. Whereas without the ITC, the payback period may be closer to 7-10 years. That is still a great payoff for a system that is warrantied for 25 years.
Increased Home Value
Solar-equipped homes often sell for higher prices; studies estimate a 4–5% resale value premium, making solar both an energy and real estate investment.
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Even though the 30% federal tax credit disappears after December 31, 2025, residential solar remains a solid, long-term investment. Ongoing energy bill savings, rising utility costs, state/local incentives and home resale value boosts, all make solar well worth considering, even beyond federal support.
Additional Commentary:
- Commercial solar installations are still eligible for the federal 30% ITC, and should remain that way, unless something else changes, until 2027.
- Massachusetts continues to offer a 15% tax credit for residential solar, capped at $1,000. We hope to see MA uncap the state tax credit, which would make the loss of the federal ITC hurt a lot less. So far, there have been no public announcements that they intend to do this.
https://www.nerdwallet.com/article/mortgages/the-solar-tax-credit-is-ending?utm_source=chatgpt.com
https://www.paradisesolarenergy.com/blog/solar-tax-credit-changes-2025?utm_source=chatgpt.com
https://arma.solar/obbba-2025-solar-tax-credit-changes/?utm_source=chatgpt.com