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Solar Tax Credit in 2026: What DMV Owners Can Still Claim

The residential federal solar tax credit expired at the end of 2025. The business credit is still here, with two hard dates attached. Here is what applies to a DMV home or small commercial roof right now.

By the Go Solar DMV news desk · Nov 4, 2026 · 5 min read

Solar Tax Credit in 2026: What DMV Owners Can Still Claim

Key facts

Solar tax credit 2026: where federal law stands

If you are a homeowner buying a system with cash or a loan, the federal solar tax credit is no longer available to you. The Section 25D Residential Clean Energy Credit was terminated by the One Big Beautiful Bill Act, Public Law 119-21, signed July 4, 20255. The IRS instructions for Form 5695 state that you can't claim residential clean energy credits for expenditures made after December 31, 20252. That is settled law, not a proposal.

Businesses are in a different position. Qualifying commercial solar projects may still receive the 30% Section 48E Clean Electricity Investment Credit in 2026 when the applicable requirements are met8. The difference between the two tracks — ended for homeowners buying outright, still available for businesses — is the single most important thing to understand before signing anything this year9.

So when you price a residential project in Maryland, Virginia or the District today, build the math on state and local programs and net metering, and treat the federal line as zero unless you are going the lease or power purchase route.

Solar tax credit expiration: the 2025 cutoff and why 'placed in service' matters

The common DMV scenario this winter is a contract signed in 2025 with a system energized in 2026. It does not qualify. IRS guidance is explicit that a residential clean energy credit can't be claimed for property installed or constructed after December 31, 2025, even if payment is made for the property on or before that date3.

Section 25D turns on the placed-in-service date, not the contract or payment date, and it terminated after December 31, 2025, so a system first operational and authorized in 2026 falls outside it4. In practice, placed in service sits at the end of permitting, utility interconnection review and permission to operate — not at the end of the crew's last day on the roof8.

One claim circulating on solar pages is worth correcting: there is no separate federal home battery credit running in 2026. Home battery storage was covered under the same Section 25D credit that expired December 31, 20251. If a salesperson tells you otherwise, ask them to show you the statute.

Solar tax credit for businesses: July 4, 2026 and the 2027 deadline

Section 48E(e)(4), added by the OBBBA, accelerates termination of the credit for wind and solar facilities whose construction begins after July 4, 2026. If construction begins after that date, the property must be placed in service by December 31, 2027 to qualify5. Facilities that began construction on or before July 4, 2026 are not subject to that placed-in-service deadline5.

That is the whole reason commercial owners have been moving quickly. Anyone who did not establish beginning of construction by July 4, 2026 is now working a hard clock to energization at the end of 20276. In Dominion and Pepco territory, interconnection queue time — not construction time — is usually the binding constraint on that date.

Two additional requirements shape 2026 commercial projects. For projects beginning construction in 2026, at least 40% of the value of the system must come from non-FEOC companies to be eligible for 48E or 45Y10. And under IRS Notice 2025-42, the 5% safe harbor is not available for solar projects above 1.5 MW (AC) that began construction after September, which affects larger ground-mount and industrial sites rather than typical commercial rooftops11.

If you are a small business owner weighing a 2026 start, the question to answer first is not panel brand. It is whether your schedule, including AHJ plan check and interconnection, realistically lands permission to operate before the end of 20278.

Leases and PPAs: the credit exists, but it is not yours

Third-party ownership is the one residential path where a federal credit still touches the project. The financing company claims the Section 48E credit, not the homeowner and not the installer7. Whatever value that credit carries shows up, if at all, inside the rate you are quoted.

Financing companies that began construction before the deadline can continue to honor Section 48E credit pass-throughs on systems installed through 2027; those that missed it cannot7. So there is one practical question for any lease or PPA salesperson at your kitchen table this winter: did your fund begin construction on or before July 4, 2026, and what is the evidence? A vague answer is an answer.

Solar tax credit Virginia, Maryland and D.C.: what survives in 2026

Washington, D.C. has the strongest stack in the region, and none of it depends on Congress. D.C. does not have a standalone solar income tax credit; the primary financial incentives are the SREC program, with certificates trading at $360 to $400 per MWh against a Solar Alternative Compliance Payment ceiling of $440, 1:1 net metering through Pepco, and a property tax exemption on added home value15. D.C. systems earn SRECs for 15 years from installation14. DOEE's Solar for All is a separate program; as of mid-2026 it is waitlisted for new applicants, with FY2026 funds largely reserved12.

Maryland runs a grant plus an SREC market. The income-qualified Solar Access Program pays $750 per kW up to a maximum of $7,500, and systems placed in service between July 1, 2024 and January 1, 2028 can earn 1.5x Certified SRECs under the Brighter Tomorrow Act17. The FY26 program carried a $12,000,000 budget from the Strategic Energy Investment Fund16. Funding cycles open and close, so confirm current availability with the Maryland Energy Administration before you count on a grant. On SREC value, reported numbers vary: one exchange lists the 2026 Maryland SREC at $40, and in early 2026 one major broker offered $42.50 on a variable basis or $29.50 locked for three years18. The compliance payment that effectively caps those prices is scheduled to decline from $45 per MWh in 2026 to $22.50 in 203018.

Virginia has the thinnest stack, but the piece that matters most held. On April 30, 2026, the State Corporation Commission finalized Dominion's new NEM 2.0 tariff, replacing the prior arrangement19. In its order the SCC preserved one-to-one kWh crediting and left existing solar customers grandfathered20. Residential systems up to 25 kW qualify with investor-owned utilities such as Dominion, 20 kW with electric cooperatives, and surplus credits roll from month to month20. A solar facility of 25 kW DC or less on a home is wholly exempt from state and local taxation under Code of Virginia §58.1-366120. For Appalachian Power customers, full retail net metering was preserved after the SCC rejected APCo's 2025 proposal to cut credit value20.

State-by-state detail changes faster than federal law does. Our running summaries live on the solar incentives page, with a separate breakdown for Virginia.

Solar tax credit form: Form 5695 and the 2025 tax year

Form 5695, Residential Energy Credits, is the form homeowners used to claim the Section 25D credit. The 2025 instructions carry the termination language directly: you can't claim residential clean energy credits for expenditures made after December 31, 20252.

If your system was placed in service during 2025, the 2025 filing is where it belongs, and your tax preparer is the right person to confirm how any unused amount is handled2. If your system was placed in service in 2026, Form 5695 has no line for it3. Business filers do not use Form 5695 at all; Section 48E is a business credit claimed by the project owner9.

If you are trying to work out what is left on the table for a specific roof and utility, start with the numbers for your own address rather than a national average. You can see what solar can do for your home and we will walk the local stack with you.

Questions people ask

Is there a solar tax credit in 2025 I can still claim?

If your system was placed in service on or before December 31, 2025, it falls inside the Section 25D window; the credit terminated for expenditures made after that date2. Claim it on Form 5695 for the 2025 tax year and have your preparer confirm the details for your situation2.

Is there a solar tax credit in 2027?

Not for homeowners buying a system outright — Section 25D ended after December 31, 20252. For businesses, 2027 matters as a deadline rather than an opportunity: projects that began construction after July 4, 2026 must be placed in service by December 31, 2027 to qualify for the Section 48E credit5.

Does Virginia have a state solar tax credit?

The research does not show a Virginia state income tax credit for solar. What Virginia does offer is net metering with one-to-one kWh crediting, preserved in the SCC's 2026 order on Dominion's NEM 2.0 tariff, and a tax exemption under Code of Virginia §58.1-3661 for residential solar facilities of 25 kW DC or less20.

I signed my contract in 2025 but we turned the system on in 2026. Do I get the credit?

No. A residential clean energy credit can't be claimed for property installed or constructed after December 31, 2025, even if payment was made on or before that date3. Section 25D turns on the placed-in-service date, so a system first operational and authorized in 2026 falls outside it4.

Can I still get a federal credit through a solar lease or PPA?

The credit exists in that structure, but the financing company claims the Section 48E credit, not the homeowner and not the installer7. Providers that began construction before the July 4, 2026 deadline can continue to honor pass-throughs on systems installed through 2027; those that did not cannot7.

Sources

  1. Home Energy Tax Credits 25C & 25D: Expired Dec 2025 — What's Still Available in 2026 - energyrebatecalculator.com
  2. 2025 Instructions for Form 5695 Residential Energy Credits - irs.gov
  3. IRS FAQs: OBBBA Energy Credit Guidance - creativeplanning.com
  4. Clean Energy Tax Credits After OBBBA - ietaxattorney.com
  5. Navigating safe-harbor rules for solar and wind Sec. 48E facilities - thetaxadviser.com
  6. The solar investment tax credit in 2026: what current law says after the 2025 tax act - taxfieldguide.com
  7. Solar Incentives & Tax Credits in 2026: The Complete Guide - integratesun.com
  8. 30% Commercial Solar Tax Credit in 2026 - douglasscolony.com
  9. Federal Solar Tax Credit 2026: What Businesses Can Claim - currentenergy.net
  10. The Final Version of the Solar Tax Credit Changes from the One Big Beautiful Bill - solarinsure.com
  11. July 4 ITC Safe Harbor Deadline: How to Lock in Today’s Eligibility Requirements until 2030 - solaredge.com
  12. Washington D.C. Solar Incentives, Tax Credits & Rebates 2026 - energysage.com
  13. Solar Installation Washington DC - aduusolar.com
  14. Solar Panels Washington DC: Incentives & Costs (2026) - solarenergynerds.com
  15. Solar Panels in Washington DC: 2026 Installation Guide & Incentives - cityrenewables.com
  16. Wes Moore, Governor Aruna Miller, Lt. Governor Paul G. Pinsky, Director - energy.maryland.gov
  17. Maryland Solar Incentives 2026: Grants, SRECs & Tax Breaks - mysolarfy.com
  18. Maryland Solar Incentives, Tax Credits & Rebates 2026 - energysage.com
  19. Solar Panels in Virginia (2026): Cost, Payback, and the New Rules - iamhome.app
  20. Virginia Solar 2026: Costs, Incentives & Net Metering - mysolarfy.com

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