Every claim on this page checked against primary sources on July 28, 2026

What survives federally

The credit that survived, and what it pays

Section 48E is the successor to the old investment tax credit, written to be technology-neutral: it turns on whether a facility's anticipated greenhouse gas emissions rate is not greater than zero, which solar satisfies. Its rate is set in two tiers, and the tier almost every distributed system lands in is the higher one:

Clause (ii) then sets the alternative rate at 30 percent for any qualified facility that meets one of three conditions, the first of which is a maximum net output of less than 1 megawatt measured in alternating current. A rooftop array is smaller than that by a factor of roughly a hundred, so residential-scale solar reaches 30% on capacity alone, without prevailing wage or apprenticeship compliance. 26 U.S.C. § 48E(a)(2)(A)(ii)

Energy storage runs on a parallel structure in § 48E(a)(2)(B): 6% base, 30% for capacity under one megawatt. 26 U.S.C. § 48E(a)(2)(B)

Who can actually claim it

A business making a qualified investment in a generating facility. That is the entire eligibility test, and it is why the repeal produced the outcome it did: a homeowner buying panels is not making a business investment, and a company that owns panels on that homeowner's roof is. Congress wrote a leasing restriction into § 48E(i), but drafted it against property described in § 25D(d)(1) and (4) — solar water heating and small wind — and photovoltaic panels are § 25D(d)(2), which is not named. Buying versus leasing in 2026 quotes that subsection in full and works through what it means for a household decision; it is the single most consequential thing on this site.

The 2027 cliff

Section 48E is not permanent for solar. The July 2025 law added a termination that is closer than most of the market has priced in:

"Applicable facility" is defined in subparagraph (B) as a qualified facility that uses wind or uses solar energy to produce electricity. Subparagraph (C) is the exception that matters for batteries:

So storage does not share the solar cliff. A battery placed in service at a solar facility in 2029 can still be qualified investment even though the panels next to it could not. That asymmetry is one reason storage-heavy offerings are likely to outlast panel-only ones in the third-party market, and it is worth knowing before reading a 25-year contract.

The escape hatch, and the deadline that has already passed

The 2027 termination applies only to facilities whose construction begins after July 4, 2026. Begin construction on or before that date and the facility is outside the new termination entirely. IRS Notice 2025-42 is the guidance on what "begin construction" means, and it deliberately narrowed the options:

For applicable wind and solar facilities, the notice makes the Physical Work Test the sole method of establishing that construction began before July 5, 2026 — the long-standing Five Percent Safe Harbor is withdrawn for this purpose. The test turns on physical work of a significant nature, with no minimum dollar amount, and expressly excludes preliminary activities: planning, designing, securing financing, obtaining permits and licenses, site clearing, surveys and studies. The notice is effective for facilities whose construction had not begun before September 2, 2025. IRS Notice 2025-42, §§ 3 and 7

Section 6 of the same notice carves out the small end of the market:

Once construction has begun, the facility still has to be finished. Section 4.04 of the notice deems the continuity requirement satisfied if the facility is placed in service by the end of a calendar year no more than four calendar years after the year construction began — so a project that started in 2026 has through December 31, 2030 under that safe harbor. IRS Notice 2025-42, § 4.04

Selling the credit, and taking it as cash

Two mechanisms make § 48E usable by parties who cannot use a tax credit, and both came through the repeal intact.

Transferability. Section 6418 lets an eligible taxpayer sell all or part of an eligible credit to an unrelated taxpayer for cash, and the clean electricity investment credit under § 48E is on the eligible list at § 6418(f)(1)(A)(xi). The July 2025 law added one restriction rather than removing the mechanism:

Direct pay. Section 6417 lets an "applicable entity" elect to treat the credit as a payment of tax — cash back rather than a liability offset. The definition at § 6417(d)(1)(A) covers any organization exempt from income tax, any State or political subdivision, the Tennessee Valley Authority, Indian tribal governments, Alaska Native Corporations, and any corporation operating on a cooperative basis that furnishes electric energy to persons in rural areas. Section 48E is applicable credit number (12) on the § 6417(b) list. 26 U.S.C. § 6417(b) and (d)(1)(A)

Depreciation, which is not a credit and is now permanent

An owner of solar equipment held as business property depreciates it, and a homeowner never could. The July 2025 law made the 100% additional first year depreciation deduction permanent for eligible property acquired after January 19, 2025 — replacing the annual phase-down that had been stepping the deduction toward zero. Treasury and the IRS issued Notice 2026-11 on the point in January 2026. IRS news release, Jan. 14, 2026

Stated plainly: in 2026 the tax code offers the owner of a residential solar array a 30% investment credit plus an immediate deduction of the depreciable basis, and offers the resident of the house nothing. That is the shape of the change, and it is larger than the headline repeal on its own suggests.

The adders, briefly

Three increases sit on top of the § 48E rate. They matter mostly to commercial and community-scale projects rather than to a single roof, but they are part of what survived:

The restriction that will decide the next few years

This is the newest and least covered part of federal solar law, and it is not a rate change — it is a sourcing test that can disqualify a project entirely.

Section 7701(a)(51)(A) defines a "prohibited foreign entity" as a specified foreign entity or a foreign-influenced entity. Three separate provisions of § 48E then bite. Subsection (d)(6) denies the credit outright to a taxpayer that is itself a prohibited foreign entity. Subsections (b)(6) and (c)(3) go further and reach the supply chain:

"Material assistance" is measured by a ratio. Section 7701(a)(52) defines material assistance from a prohibited foreign entity as a material assistance cost ratio below a threshold that rises every year, so a project must show an increasing share of non-prohibited sourcing simply to stay eligible:

Treasury and the IRS have not issued final rules on any of this. What exists is interim guidance — Notice 2026-15, published in the Internal Revenue Bulletin on March 9, 2026 — which sets out safe harbors taxpayers may use to compute the ratio while proposed regulations are drafted, and says exactly how long that reliance lasts:

The practical reading: the rules that determine whether 2026-and-later projects qualify at all are still being written, and the safe harbor everyone is relying on has a built-in expiry tied to a publication that has not happened yet. Anyone quoting you a settled federal number for a project starting construction now is quoting past the end of the guidance. We recheck this page on a schedule for exactly that reason.

What did not survive

For completeness, because most searches that land here are really asking about a house: § 25D and § 25C are terminated for anything completed after December 31, 2025, all six categories of § 25D property with them, and no replacement residential credit has been enacted. The federal solar tax credit in 2026 covers that in full, including the carryforward that a 2025 installation may still be able to use.

What this page does not cover yet

Stated because a silent gap and a checked answer look identical from outside:

• The § 45Y production credit's own statutory text. Notice 2025-42 describes § 45Y(d)(4) as terminating that credit for applicable wind and solar facilities placed in service after December 31, 2027 on the same beginning-of-construction schedule as § 48E, and that is the basis for saying so here. We have not yet read § 45Y in the U.S. Code ourselves, so nothing further about it is claimed.
• The exact domestic content percentages in § 48E(a)(3)(B), and the annual capacity figure and expiry in the § 48E(h) low-income allocation program. Both are read and both are omitted above pending a second independent verification pass, per this site's rule for numbers.
• The proposed regulations under § 7701(a)(52). They had not been published as of the verification date. When they are, the reliance window quoted above starts running out.
• State-level treatment of third-party ownership. That is on the state pages, program by program, because it is where a federal advantage most often gets given back.