How to Detect Expired ITC Claims in Solar Quotes

After the OBBBA expired the Section 25D residential solar tax credit on December 31, 2025, some solar companies continue to quote the 30% federal credit as if nothing changed. This is the #1 deception in the 2026 solar market, and it can cause you to sign a contract based on misleading savings projections. Here's exactly how to detect it.

What Changed: A Quick Recap

Before January 1, 2026, homeowners who purchased and owned a solar system could claim a 30% federal tax credit on their personal tax return under Section 25D (via IRS Form 5695). This credit reduced your tax bill dollar-for-dollar by 30% of the total installed cost.

The OBBBA expired Section 25D effective December 31, 2025. For owned residential systems installed in 2026 or later, there is no federal tax credit. However, Section 48E remained available at 30% for leased systems, PPAs, commercial properties, and rental properties, with a construction-start deadline of July 4, 2026 (a Saturday; under IRC 7503 the effective deadline rolled to Monday, July 6, 2026, and has now passed).

The confusion between these two credits is what unscrupulous (or uninformed) installers exploit.

Red Flag #1: The Quote Shows "Federal Tax Credit: -$7,200"

Look at the cost breakdown on any solar quote. If you see a line item that subtracts a dollar amount labeled "Federal Tax Credit," "Federal ITC," or "30% ITC" from the gross cost, and you're buying an owned system for your primary residence, this is wrong.

Example: A quote shows:

• Gross cost: $24,000
• Federal Tax Credit: -$7,200
• Net cost: $16,800

This $7,200 credit does not exist for an owned residential system installed in 2026. Your actual net cost is $24,000, $7,200 higher than the quote suggests. The installer may argue that "the ITC is still available" (referring to Section 48E), but 48E applies to lease/PPA/commercial, not to you as a homeowner buying your own system.

Red Flag #2: "You'll Get $X Back at Tax Time"

Some installers verbally tell homeowners they'll receive a check or tax refund for the credit amount. This is misleading for two reasons:

1. The credit is non-refundable. Even when it existed, Section 25D could only reduce your tax bill to zero; it couldn't create a refund by itself. If you owed $4,000 in taxes and had a $7,200 credit, you'd save $4,000 and carry forward $3,200.
2. For 2026+ owned residential, the credit doesn't exist. There's nothing to claim.

Red Flag #3: "The Government Is Paying 30% of Your System"

This phrasing is technically true for lease/PPA arrangements (where the installer claims the credit) but deeply misleading when applied to a purchase. The government isn't "paying" anything; a tax credit reduces what you owe. And for owned residential systems, there is no credit to reduce anything.

Red Flag #4: The Savings Projection Assumes a 30% Credit

Some installers don't explicitly list the credit but build it into the savings projection. The quote shows "Total 25-year savings: $45,000" but that figure assumes you received a $7,200 tax credit upfront. Without the credit, actual savings drop to $37,800, a difference that changes the payback calculation.

How to check: Ask the installer to provide a savings calculation both with AND without the federal tax credit. If they can't or won't, that's a warning sign.

Red Flag #5: The Installer Can't Specify Which Tax Code Section Applies

Ask the installer: "Which IRS code section does this credit fall under: Section 25D or Section 48E?" and "Who claims the credit: me or your company?"

Legitimate answers:

• "Section 48E, and our company claims it" (correct for a lease/PPA)
• "Section 48E, and you claim it on your business return" (correct for commercial/rental)
• "There is no federal credit for owned residential systems in 2026" (honest and correct)

Suspicious answers:

• "The 30% credit is still available" (without specifying which section)
• "You'll claim it on Form 5695" (that's Section 25D, now expired)
• "The ITC was extended through 2032" (false; Section 48E now required construction to begin before July 4, 2026, and 25D is gone)
• "Don't worry about it, our tax team handles it" (vague and evasive)

The Lease/PPA Exception

For lease and PPA arrangements, scrutinize the claim instead of accepting it: 26 USC 48E(i) denies the 48E credit for solar leased to a home (effective tax years beginning after July 4, 2025), so a residential lease generally has no 30% credit behind it on new contracts. The credit is genuinely alive for commercial and rental projects that began construction before July 4, 2026, and whether a PPA structured as a power sale (not an equipment lease) avoids 48E(i) is an open question. So when a salesperson says "the installer claims the 30% under 48E," ask which code section and ownership structure supports it — on a leased residential system, that credit generally no longer exists. Your benefit in a legitimate deal comes through lower monthly payments, not a tax credit.

The deception occurs when this credit is presented as available to you on a purchased system for your primary residence.

What to Do If You Find an Expired ITC Claim

1. Point it out to the installer. Some are genuinely uninformed about the OBBBA changes. Their response tells you a lot; a reputable installer will correct the quote.
2. Get the corrected quote in writing. If they update the numbers, confirm the revised quote removes the expired credit and recalculates all savings projections.
3. If they insist the credit is valid, ask for it in writing: the specific IRS code section, who claims it, and which form to file. Then verify with a CPA.
4. Report the installer. If they knowingly misrepresent tax benefits, you can file a complaint with the FTC, your state attorney general, or SEIA's consumer protection program.
5. Get quotes from other installers. This is the single best protection. Compare multiple quotes using our Quote Comparison Tool.

Verify Any Quote With Our Tools

• Solar Quote Comparison Tool: Normalizes quotes and flags expired ITC claims automatically
• Tax Credit Eligibility Checker: Verifies which credit you qualify for in 30 seconds
• OBBBA Deadline Tracker: Checks construction-start deadline and FEOC compliance
• ROI Calculator: Calculates payback and savings with current 2026 rules (no expired credits)