Green Energy Tax Credits 2026: Every Credit & Rebate Still Available

What Expired at End of 2025

The Inflation Reduction Act of 2022 established an ambitious schedule of residential and commercial clean energy credits designed to run through 2032-2035. The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, dramatically accelerated the sunset of most residential credits. Here is what terminated on December 31, 2025:

Section 25D — Residential Clean Energy Credit

This was the 30% federal credit covering rooftop solar panels, battery storage systems (minimum 3 kWh capacity), solar water heaters, fuel cells, small wind turbines, and geothermal heat pumps. Originally scheduled to provide 30% through 2032, 26% in 2033, and 22% in 2034 before expiring, the OBBBA terminated it at the close of 2025. Systems placed in service January 1, 2026 or later receive zero federal residential tax credit.

Per the Tax Foundation's analysis of the OBBBA, this represents one of the largest rollbacks of residential energy incentives in recent legislative history. Homeowners who completed installations through December 31, 2025 can still claim the credit on their 2025 tax return via IRS Form 5695.

Section 25C — Energy Efficient Home Improvement Credit

The 25C credit covered heat pumps ($2,000 annual cap), heat pump water heaters ($2,000), insulation and air sealing ($1,200), windows ($600), doors ($500), and electrical panel upgrades ($600). It provided up to $3,200 per year in credits for qualifying efficiency improvements. This credit also expired December 31, 2025.

For homeowners who planned efficiency renovations in stages, this termination is significant. If you were planning to upgrade your heat pump in 2026 expecting to claim $2,000 back, that credit is no longer available federally.

What Federal Credits Are Still Available in 2026

Not everything was eliminated. Two meaningful federal opportunities remain for homeowners in 2026.

Section 30C — EV Charging Equipment (Through June 30, 2026)

The Alternative Fuel Vehicle Refueling Property Credit provides a 30% credit (up to $1,000 for residential) on the cost of an EV charging station and its installation. This credit was extended under the OBBBA but only through June 30, 2026. If you install a Level 2 home charger before that deadline, you can claim up to $1,000 in federal tax savings.

A typical Level 2 home charger installation runs $1,000-$2,500 including hardware and electrician labor. At 30%, the federal credit offsets $300-$750 of that cost. Combined with state EV incentives in California, New York, and Colorado, the net cost of home charging infrastructure remains manageable. Use our EV Home Charging Cost Calculator to estimate your net installation cost before the June 30 deadline.

Section 45L — New Energy Efficient Home Credit

If you are a homebuilder or developer rather than a homeowner, Section 45L provides $2,500 to $5,000 per new home that meets Energy Star or Zero Energy Ready standards. This credit remains active for homes sold through 2032. It does not directly benefit existing homeowners retrofitting their homes.

State Green Energy Tax Credits in 2026

State-level incentives are the primary mechanism for residential green energy savings in 2026. Unlike federal credits, these are set by state legislatures and utility commissions and were largely unaffected by the OBBBA. The range is enormous: some states offer nothing, while others provide thousands in savings.

Solar-Specific State Tax Credits

• New York: 25% state income tax credit, capped at $5,000. On a $22,000 solar system (post-negotiation), this delivers a $5,000 state credit. Combined with the NY-Sun incentive program, New York remains one of the most incentive-rich states for solar despite the federal credit expiration.
• South Carolina: 25% state tax credit with no dollar cap. This is the most generous uncapped state solar credit in the country. On a $25,000 system, you receive $6,250 in state tax credits — partially compensating for the lost federal ITC. Because these are nonrefundable credits, they only offset tax you actually owe in a given year, so before installing it helps to estimate your real federal-plus-state burden using an effective tax rate calculator at LevyIO to confirm you can absorb the full credit. Credits carry forward 10 years if not fully used in year one.
• Massachusetts: 15% state tax credit, up to $1,000 — modest on its own, but stacks with the SMART performance program and SREC income (more below).
• Oregon: $2,500 state tax credit for solar systems, plus a separate $2,500 credit for battery storage. Install both and you receive $5,000 in state credits.
• Utah: 25% credit, up to $1,600. Utah also has strong net metering policies, making the full savings package competitive.
• Iowa: 15% state tax credit, up to $5,000, available through 2027. Iowa's generous cap makes it effective for larger systems.
• Arizona: 25% credit capped at $1,000. Modest dollar amount, but Arizona's average 6.5 peak sun hours makes panel production among the highest in the nation, improving payback periods independently.

Efficiency Upgrade State Incentives

Several states have filled the gap left by the expired Section 25C credit with their own efficiency programs. Massachusetts MassSave offers 0% interest loans up to $25,000 for heat pumps, insulation, and weatherization — no tax credit required. California's Energy Upgrade California program provides rebates of $1,000-$6,500 for heat pump installations. New York's NY Affordable Heat program offers significant rebates for heat pumps, particularly for low-to-moderate income households.

The DSIRE database at dsireusa.org remains the definitive resource for current state programs. Policies change frequently, and some programs have annual funding caps that exhaust early in the calendar year.

SREC Markets Still Paying in 2026

Solar Renewable Energy Certificates represent one of the most underappreciated ongoing income streams for solar homeowners. Every 1,000 kWh (1 MWh) your panels produce earns one SREC, which you sell to utilities needing to meet Renewable Portfolio Standard (RPS) requirements. SREC income continues for years after installation, independent of any tax credit.

For a typical 8 kW system generating approximately 10 MWh annually, SREC income varies dramatically by state. In Massachusetts, where SREC prices have historically ranged from $200-$280 per MWh, this translates to $2,000-$2,800 per year. Over the 10-year SREC qualification period, that's $20,000-$28,000 in cumulative income — often more than the original system cost. Washington D.C.'s SREC market, consistently among the most valuable in the nation, has seen prices reach $300-$400 per MWh.

New Jersey's TREC (Transition Renewable Energy Certificate) program pays $80-$90 per MWh for systems under 150 kW, guaranteed for 15 years through a state-backed program. The long contract term removes market price risk. Maryland SRECs trade at $50-$70 per MWh, and Pennsylvania SRECs at $15-$25 per MWh — lower values but still meaningful income.

SREC income is taxable as ordinary income but does not affect the basis of your solar system for other purposes. Platforms like SRECTrade and Flett Exchange facilitate SREC sales for homeowners.

Utility Rebates and Performance Incentives

Many utilities operate their own incentive programs funded through ratepayer mechanisms or public benefit funds. These are entirely separate from federal and state tax credits and remain active in 2026.

Massachusetts' SMART program (Solar Massachusetts Renewable Target) is among the most structured. It pays $0.06-$0.12 per kWh generated for 10-20 years depending on system size. The rate is locked at interconnection, providing long-term revenue certainty. An 8 kW system generating 10,000 kWh annually earns $600-$1,200 per year from SMART alone — on top of net metering bill credits.

New York's NY-Sun program offers upfront per-watt incentives ranging from $0.20-$0.40/watt for residential systems. On an 8 kW system, this means $1,600-$3,200 upfront. The program operates through Con Edison, National Grid, and NYSEG service territories with slightly different rates.

Property tax and sales tax exemptions function as passive incentives. Over 35 states exempt solar installations from property tax assessment increases. On a $25,000 system that adds $15,000-$20,000 to home value, this exemption prevents $150-$600 in additional annual property taxes. At least 25 states also exempt solar equipment purchases from state sales tax, saving 4-9% on equipment costs. Use our Solar Savings Calculator to estimate total savings including utility rebates and tax exemptions.

Third-Party Solar: The 48E Credit Workaround

Here's the nuance most coverage misses: while homeowner-owned solar systems lost the residential ITC, commercial entities that own solar equipment installed on residential rooftops may still access the Section 48E Investment Tax Credit through 2027. This directly impacts solar leases and power purchase agreements (PPAs).

When you sign a solar lease or PPA, the installation company retains ownership of the panels and claims the commercial tax credit. They pass a portion of those savings to you through lower lease rates or below-market electricity rates. Under the OBBBA, the 48E credit for commercial solar remains active through 2027 for projects that begin construction before July 4, 2026, and are placed in service before December 31, 2027.

The practical implication: a solar lease signed in mid-2026 from a company that began construction before July 4, 2026 may still pass through some ITC benefit in pricing. Ask installers directly whether they are factoring 48E credits into lease rates. For homeowners who want solar without the upfront purchase cost, leases may now offer more competitive economics relative to purchased systems than was the case when both ownership models had access to the 30% credit.

The tradeoff with leases remains: you do not own the system, you cannot claim state tax credits that require ownership, and the lease can complicate home sales. For a detailed comparison, see our Solar Lease vs. Buy guide.

Is Solar Still Worth It Without the Federal ITC?

This is the question every homeowner is asking in 2026. My honest answer as an energy consultant: it depends on where you live, your current electricity rate, and whether your state has strong supplemental incentives.

Solar panel costs have fallen approximately 90% since 2010 according to the International Renewable Energy Agency (IRENA). A system that cost $50,000 a decade ago costs $20,000-$28,000 today. The federal ITC made the math work even in marginal markets — without it, location and electricity rates become the dominant variables.

Per the U.S. Energy Information Administration, the average national residential electricity rate reached approximately $0.17/kWh in 2025. But state averages range dramatically: Hawaii at $0.43/kWh, California at $0.31/kWh, and Massachusetts at $0.29/kWh make solar pencil out even without federal incentives. States like Louisiana ($0.12/kWh) and Wyoming ($0.11/kWh) present much longer payback periods.

Using a concrete example: in Massachusetts, a homeowner with a $25,000 solar system might net $5,000 in electricity savings annually (given the high utility rates), plus $2,000 in SMART performance payments, plus $2,500 in SREC income — totaling $9,500 per year in value. Even without the federal credit, the simple payback is under 3 years. That same math in a low-electricity-cost state without SRECs or performance payments might show a 12-15 year payback, which is harder to justify.

The key variables for your decision: your state's electricity rate, available state credits and SREC programs, your roof's sun exposure (use our Solar Panel Calculator to estimate production), and your tax situation for state credit utilization.

State-by-State Incentive Comparison (2026)

This table covers the key states with the strongest incentive packages available to homeowners installing solar in 2026. Federal tax credits are excluded because they no longer apply to residential solar.

*Total incentive value estimates for a typical 8 kW residential solar system. Actual values depend on system size, utility territory, and individual state program availability. SREC values fluctuate with market conditions.

Frequently Asked Questions