Disclaimer: This blog is for general information only and is not tax or legal advice. Consult a qualified tax professional for guidance specific to your situation.
TL;DR
· For 2025, homeowners can still claim a 30% Residential Clean Energy Credit (IRC §25D) for solar PV and stand‑alone batteries ≥3 kWh. The credit is nonrefundable and unused amounts can carry forward under existing §25D(c) rules.
· Under the new federal law commonly called the “One Big Beautiful Bill Act” (OBBBA), the §25D homeowner credit ends for expenditures made after December 31, 2025. In practical terms, 2025 is the last year to create a new homeowner solar/battery credit under current rules.
What You Can Claim Today (2025)
· Credit amount: 30% of eligible project costs for solar PV and qualified battery storage (≥3 kWh). Eligible costs include equipment, labor, wiring, and interconnection.
· Refundability & carryforward: The credit cannot create a refund by itself (nonrefundable). Any unused amount can carry forward to future years; multiple advisors indicate this should still apply to credits generated on your 2025 return, pending any IRS transition guidance.
· Who qualifies: You must own the system installed at your U.S. primary or secondary residence (not leased/third‑party owned). Claim it on Form 5695 for the tax year the system is installed and placed in service.
· Rebates & discounts: Upfront rebates generally reduce your project’s creditable cost basis. Keep documentation for any state/utility incentives.
How the OBBBA (“new BBB”) Changes Things
· Early sunset for homeowners: §25D is terminated for expenditures made after December 31, 2025 (no phase‑down for 2033–2034 anymore).
· “Expenditures made” vs. “placed in service”: Until Treasury/IRS issue transition rules, best practice is to have your system operational by 12/31/2025 and keep proof of payments made in 2025.
· Carryforward on 2025 credits: Industry and tax advisories indicate carryforward should remain available for credits created on your 2025 return. Await formal IRS guidance to confirm procedural details.
· After 2025: There is no §25D homeowner credit. Some households may still benefit indirectly through third‑party ownership (leases/PPAs) where the project owner potentially claims a business credit under §48E, subject to compressed eligibility windows.
Key Deadlines & Action Checklist (Homeowners)
· Target completion by December 31, 2025: contract signed, equipment ordered, permits approved, and system inspected/operational.
· Document 2025 expenditures: keep invoices, proof of payment, and final approvals.
· Coordinate with your installer on permitting, interconnection, meter swaps, and AHJ inspections that could push you past year‑end.
Quick Example (2025)
· Project cost (after any true rebates): $24,000
· 25D credit (2025): $7,200 (30% of $24,000)
· If your 2025 federal tax is less than $7,200, you reduce it to $0 and carry the remainder forward to 2026+ (subject to IRS rules).
FAQ
· Does a stand‑alone battery qualify? Yes, if the capacity is at least 3 kWh.
· Will I get a check back? No. The credit is nonrefundable; it reduces the tax you owe. Unused amounts can carry forward under §25D(c).
· Do rebates reduce my credit? Usually yes—rebates/point‑of‑sale discounts generally reduce the project cost basis used to compute the credit.
· What if my project slips into 2026? Under the OBBBA, expenditures after 12/31/2025 are ineligible for §25D. Plan accordingly and watch for IRS transition guidance.
Sources
1. Holland & Knight – One Big Beautiful Bill Act (alerts timeline and summary): https://www.hklaw.com/en/insights/publications/2025/06/senate-moves-to-scale-back-clean-energy-tax-credits-latest-updates
2. RSM – Tax bill significantly changes clean energy credits: https://rsmus.com/insights/services/business-tax/obbba-tax-clean-energy.html
3. Arnold & Porter – From IRA to OBBBA: A New Era for Clean Energy Tax Credits: https://www.arnoldporter.com/en/perspectives/advisories/2025/07/from-ira-to-obbba-a-new-era-for-clean-energy-tax-credits
4. Kirkland & Ellis – OBBBA Alert (PDF): https://www.kirkland.com/-/media/publications/alert/2025/08/one-big-beautiful-bill-act-brings-big-changes-to-green-energy-tax-credits--publications--kirkland--e.pdf
5. Congress.gov – H.R.1 (119th Congress): One Big Beautiful Bill Act: https://www.congress.gov/bill/119th-congress/house-bill/1/text
6. EnergySage – The solar tax credit is ending (homeowner explainer): https://www.energysage.com/news/solar-tax-credit-ending-questions-answered/
7. Tax Foundation – OBBBA green energy tax credit changes: https://taxfoundation.org/blog/big-beautiful-bill-green-energy-tax-credit-changes/
8. ENERGY STAR – Battery Storage Technology Tax Credit (≥3 kWh): https://www.energystar.gov/about/federal-tax-credits/battery-storage-technology
9. Rewiring America – Federal 25D battery storage tax credit (≥3 kWh; 2025 deadline): https://homes.rewiringamerica.org/federal-incentives/25d-battery-storage-tax-credit
10. Solar.com – What OBBBA means for the 25D solar tax credit: https://www.solar.com/learn/trump-and-the-fate-of-the-30-solar-tax-credit/
Disclaimer: This blog is for general information only and is not tax or legal advice. Consult a qualified tax professional for guidance specific to your situation.
