Solar Investment Tax Credit: The 30% Credit Ended in 2025

Updated October 2026: the federal solar tax credit this post describes ended for systems installed after December 31, 2025, so it no longer applies to new systems. Illinois SRECs and utility rebates still apply for Illinois homes.

What Was the Solar Investment Tax Credit (ITC)?

The federal solar energy tax credit was a 10-year extended tax credit that homeowners could claim on federal income taxes for a percentage of the cost of a solar photovoltaic (PV) system, starting with systems installed in 2022. The bill includes $370 billion in spending for renewable energy and climate measures. As written in the Inflation Reduction Act of 2022, the tax credit was set at 30% with a planned step down to 26% in 2033 and 22% in 2034, but the One Big Beautiful Bill Act of July 2025 ended it for systems installed after December 31, 2025. Battery storage systems qualified for the 30% credit too. Add to that rebates for heat pumps (up to $8,000), heat pump water heaters ($1,750), induction stoves ($840), and upgrades to one’s home electrical system ($4,000), and you could potentially see how solar begins to pay for itself over time.

What Did It Cover?

Panels: The credit covered solar PV panels or PV solar cells. Additional equipment: The credit covered other solar system components, including the balance-of-system equipment and wiring, inverters, and other mounting equipment. Batteries: The ITC covered any storage devices, such as solar batteries, charged exclusively by your solar PV panels. This claim worked even if the storage was activated in a subsequent tax year to when the solar energy system was installed. Storage devices were still subject to the installation date requirement. Labor: Labor costs for on-site preparation, assembly, or original solar installation. Coverage also included the permitting fees, inspection costs, and developer fees. Sales tax: The credit also covered any sales taxes applied to these eligible expenses.

How Did This Change Things?

The Inflation Reduction Act removed historically strict requirements and allowed more storage energy projects to qualify you for a 30% tax credit, even if they were stand-alone facilities. Batteries that connected to a solar power project continued to qualify for the credit, even if they were no longer being charged by solar power.

Is the Credit Still Available?

No. The Inflation Reduction Act set the 30% credit to run into the 2030s, but the One Big Beautiful Bill Act, signed in July 2025, ended it for home solar systems installed after December 31, 2025. Systems installed by that date still qualify. If you’re a homeowner in the State of Illinois, state and utility incentives still apply. Phoenix’s typical Illinois system, 9 kW of Tesla solar panels plus one Powerwall, costs about $40,000 before incentives, and incentives take about $26,700 off: a prepaid PPA (about $8,000), Illinois SRECs (about $12,000) and utility rebates (about $6,700).

Ready to Make the Switch to Solar?

If you’re also ready to invest in a renewable future, Phoenix Exteriors is here to help you start your solar journey! We have fully customizable solar kits and panels that will fit whatever needs your home may have. We want to help you save the planet and your wallet. Ready to make the switch to solar? Book a solar appointment with Phoenix here. Get a free solar estimate here.

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