The 30% Solar Credit Pass-Through: Deadline Passed, Here's Who Still Has It
On December 31, 2025, the residential solar tax credit, Section 25D, expired. For six more months, homeowners had one remaining route to the 30%: a solar lease or Power Purchase Agreement (PPA), where the installer claims the commercial Section 48E credit and passes the value to you through lower financing terms. That window is now closed. The statutory construction-start deadline was July 4, 2026 — a Saturday — and under IRC 7503 it rolled to Monday, July 6, 2026. That deadline has passed. On top of it, 26 USC 48E(i) denies the 48E credit for solar property leased to a home (tax years beginning after July 4, 2025), so the pass-through reliably survives only in commercial and rental projects.
What remains is grandfathered projects only: signed deals with a documented construction start before the deadline, established through the Physical Work Test or the 5% safe harbor, and placed in service by December 31, 2027. Those projects keep the 30% pass-through exactly as originally structured. If you are evaluating solar as a new customer today, no financing structure carries a federal credit — and any installer who says otherwise needs to show you the pre-deadline construction-start documentation.
⚠ The 30-second summary
The 48E pass-through is not dead — but it is closed to new entrants. Grandfathered lease/PPA projects (construction start documented before July 4/6, 2026) keep the 30% embedded in their contract terms. New signings carry $0 federal credit, so the lease-vs-buy decision now runs on rates, escalators, and net-metering — not taxes.
What Is Section 48E?
Section 48E is the Clean Electricity Investment Credit. It carried a 30% base credit rate and is part of the tech-neutral Clean Electricity framework that succeeds the older Section 48. Unlike 25D, which was a personal tax credit for homeowners, 48E is a commercial credit; it's claimed by the entity that owns the solar asset as a business investment.
That distinction was the whole story between January and July 2026:
- Section 25D (expired): personal credit, claimed by a homeowner who owns their system. Gone as of Dec 31, 2025.
- Section 48E (closed to new starts): commercial credit, claimed by the owner of the system; for a lease or PPA, that's the installer or developer, not you. New projects lost eligibility when the construction-start deadline passed on July 4/6, 2026.
The 30% federal credit still exists at the same rate for grandfathered projects; it lives on the commercial side of the tax code, and its value reaches a homeowner only through the pass-through built into their pre-deadline contract.
Lease vs PPA vs Cash: Who Still Gets the Credit?
How you pay for solar determined whether the 30% credit reached you at all — and when you signed determined whether it still does. Here's the side-by-side as of August 2026:
| How You Pay | Who Owns It | Does the 30% Credit Reach You? | How You Receive the Value |
|---|---|---|---|
| Cash / Loan purchase | You | No. 25D expired; you can't claim 48E personally | No federal credit available to you |
| Solar Lease | Installer | Only if grandfathered — construction began before Jul 4, 2026 (rolled to Jul 6 under IRC 7503) | Lower fixed monthly lease payment, baked in at signing |
| PPA | Installer / Developer | Only if grandfathered — construction began before Jul 4, 2026 (rolled to Jul 6 under IRC 7503) | Lower per-kWh rate, baked in at signing |
The takeaway: buying outright in 2026 never carried a federal credit for you, and after the July deadline, newly signed leases and PPAs don't either. The 30% lives on only inside grandfathered pre-deadline contracts.
How Installers Structured the Pass-Through
For grandfathered deals, the 48E credit is an asset the installer monetized, and competitive installers used it to make their offers more attractive. In practice, the 30% value showed up in contracts in a few common ways:
- A lower monthly lease payment. The installer calculated what the system would cost to lease without the credit, then reduced the payment to reflect the 48E value they'd capture. You see a flat monthly number that's already discounted.
- A lower per-kWh PPA rate. Under a PPA you pay for the electricity the system produces. The 48E value let the installer offer a lower cents-per-kWh rate, often below your utility's retail rate.
- Prepaid or down-payment options. Some installers let you prepay a lease or PPA for a larger upfront discount, effectively taking more of the 48E value as a lump sum rather than spread across the term.
The important thing to understand is that the credit was embedded in the financing terms, not handed to you separately. You won't see a line item labeled "48E credit." You'll see a monthly payment or kWh rate that is lower than it would be in a world with no credit. This structure is why a post-deadline installer cannot "add" the 30% back — there is no credit behind a new signing to embed.
Monthly Payment Comparison: With vs Without Pass-Through
The table below is an illustrative example, not a quote, for a sample ~8 kW residential system. It shows how the 48E pass-through lowered payments on grandfathered deals compared to a hypothetical no-credit scenario. Real numbers vary by location, system, and installer. Post-deadline quotes should price at the no-credit level.
| Scenario (~8 kW system) | Monthly Cost | Where the 30% Shows Up |
|---|---|---|
| Hypothetical lease, no credit | ~$185/mo | Not available |
| Grandfathered lease with 48E pass-through | ~$150/mo | Built into the lower payment at signing |
| Hypothetical PPA, no credit | ~$0.17/kWh | Not available |
| Grandfathered PPA with 48E pass-through | ~$0.14/kWh | Built into the lower rate at signing |
Over a 20-year term, that ~$35/month difference on a grandfathered lease adds up to thousands in savings — and it exists only because that project locked in Section 48E before the construction-start deadline. A new quote that shows these discounted numbers owes you an explanation: either the project is genuinely grandfathered, or the credit is being misapplied.
If You're a New Customer: What to Do Instead
The pass-through is no longer a reason to choose a lease or PPA, because a new signing carries no federal credit on any path. Your decision now runs on the fundamentals:
- Run the post-deadline math. Our Post-48E Payback Calculator models payback with $0 federal credit and your state incentives stacked in — the honest baseline for every 2026 decision.
- Compare all four financing paths. The Financing Comparison tool models cash, loan, lease, and PPA over 25 years on post-deadline terms, so you can see which wins without any tax credit.
- Read the decision guide. Our Lease vs PPA Homeowner Guide walks the post-deadline choice step by step, including the questions to ask and the red flags to avoid.
- If a quote claims the 30%, verify it. Ask for the construction-start documentation proving the project began before July 4, 2026 (rolled to Monday, July 6 under IRC 7503). A legitimate grandfathered project has it; an evasive answer is a red flag. See Detecting Expired ITC Claims.
Compare lease vs PPA vs buying on post-deadline terms
Model all four financing paths over 25 years with the $0-federal-credit reality built in — and see exactly what changed when the 48E window closed. Free, no sign-up.
Get your personalized comparison →Questions & Answers
Can I still get the solar tax credit in 2026?
Not through a new signing. The residential Section 25D credit (30%) expired on December 31, 2025, and the Section 48E construction-start deadline (statutory July 4, 2026 — a Saturday — rolled to Monday, July 6, 2026 under IRC 7503) has passed. The only projects that retain the 30% are grandfathered ones with a documented construction start before that deadline — including lease and Power Purchase Agreement (PPA) deals where the installer claims the commercial 48E credit and passes the value to you through lower payments. If you are signing a new contract now, there is no federal credit on it.
What is Section 48E and does it apply to residential homes?
Section 48E is the Clean Electricity Investment Credit, a commercial tax credit set at a 30% base rate. It is part of the tech-neutral Clean Electricity framework and succeeds the older Section 48. A homeowner cannot claim 48E directly on a personal return. Third-party-owned systems (lease or PPA) whose construction began before the July 2026 deadline qualified, because the installer/developer claims 48E on the system they own on your roof. That construction-start window is now closed for new projects.
What is the difference between Section 25D and Section 48E?
Section 25D was the Residential Clean Energy Credit, a personal tax credit a homeowner claimed for a system they owned. It expired December 31, 2025. Section 48E is a commercial credit claimed by the system owner (the installer or developer for leased systems). Section 48E itself survived 25D by 18 months, but its construction-start deadline (statutory July 4, 2026, rolled to Monday, July 6, 2026 under IRC 7503) has now passed — so the 30% value only flows through financing structures for grandfathered projects with a documented pre-deadline construction start.
Can I claim the 48E credit myself if I buy my system?
No. Section 48E is a commercial credit, not a personal one, so a homeowner who buys a system for their primary residence cannot claim it on their individual taxes. If you buy with cash or a loan after 25D expired, there is no federal credit available to you personally — and for projects whose construction began after the July 2026 deadline, the 48E route is closed for installers too.
How does the 30% credit reach me through a lease or PPA?
For grandfathered projects that began construction before the July 2026 deadline: the installer or developer owns the system and claims the 30% Section 48E credit on their taxes. They embed the value of that credit into the financing terms they offer you, typically as a lower monthly lease payment or a lower per-kWh PPA rate. You never file anything related to the credit; your benefit is the reduced cost baked into your contract. New lease/PPA signings after the deadline do not carry the credit — and note that 26 USC 48E(i) separately denies the 48E credit for solar leased to a home, so the pass-through reliably survives only in commercial and rental grandfathered projects.
Is a solar lease or PPA better than buying in 2026?
Neither path carries a federal credit for new signings anymore. Buying with cash or a loan lost its credit when Section 25D expired December 31, 2025, and new leases/PPAs lost theirs when the Section 48E construction-start deadline (July 4/6, 2026) passed. Your decision now runs on local electricity rates, net-metering terms, escalators, and end-of-term options — not on tax credits. Compare both paths with your actual numbers using a financing comparison that models the $0-federal-credit reality.
Does the pass-through lower my monthly payment or my total cost?
For grandfathered pre-deadline deals, yes, in most structures. The 48E credit value is embedded in the contract terms, so compared to a hypothetical scenario with no credit, the monthly payment is lower and the total cost over the term is lower. How much passed through varied by installer; some emphasized a low monthly payment, others a lower overall cost. If a new quote claims to include the 30%, ask for the construction-start documentation that proves the project was grandfathered — and ask whether 48E(i) applies, since it denies the credit for solar leased to a home while leaving commercial and rental deals intact.
Where can I compare lease vs PPA vs buying now?
Use our Financing Comparison tool to model cash, loan, lease, and PPA side by side over 25 years, with the post-deadline $0-federal-credit reality built in. It turns every offer into numbers you can compare. See the personalized comparison link below.
The Section 48E pass-through was the single most important change for homeowners to understand in the first half of 2026 — and its closure is the defining fact of the second half. The 30% credit didn't vanish when Section 25D expired; it moved to the commercial side of the tax code for 18 months, then closed to new starts when the July 4/6, 2026 construction-start deadline passed. Homeowners with grandfathered contracts collect the value every month in a lower bill. Everyone else should price both paths with zero federal credit and let the local economics decide.