2025 – Is this your last chance to claim the solar tax credit?

Homeowners and renters are constantly in the quest for energy-efficient solutions and financial incentives to support sustainable living. It is also significant to note the changes in the federal tax code that could impact your ability to claim valuable tax credits.

One such provision on the chopping block? The Residential Clean Energy Credit (RCEC).

What is RCEC?

The RCEC has been a cornerstone of federal efforts to promote renewable energy adaptation among U.S. households. This non-refundable tax credit allows eligible taxpayers to claim 30 percent of the cost of qualified clean energy improvements installed at their primary or secondary residence. Qualifying systems include:

Solar electric panels
Solar water heaters
Geothermal heat pumps
Small wind energy systems
Other eligible renewable energy property

Homeowners, second homeowners such as vacation homeowners, and renters can claim the credit, provided they reside in the home. Landlords and property owners who do not reside in the property are not eligible.

Current law and scheduled phaseout

Under current law, the RCEC offers a 30 percent tax credit for qualified equipment placed in service between 2022 and 2032. Starting in 2033, the credit begins to phase down.

26 percent for property placed in service in 2033
22 percent in 2034
Expires for property placed in service after 2034

But a key provision may accelerate the end.

Section 112006 of H.R. 1 would eliminate eligibility for the RCEC beginning in 2026.

Section 70506 of the U.S. Senate passed version of H.R. 1 terminates the RCEC beginning in 2026.

This means that property placed in service after December 31, 2025, would no longer qualify, regardless of the broader phaseout schedule. If the law is enacted, this effectively makes 2025 the last year to claim the RCEC.

Updated July 5, 2025: The U.S. House of Representatives passed the Senate version on July 3. The president signed the new law on July 4.

What does this mean for you?

If you plan to invest in solar panels, geothermal systems, or similar renewable energy equipment, approach the decision as though the clock is ticking.

The full 30 percent credit is still available for qualifying installations completed and placed in service by December 31, 2025. But wait one day longer, and you could get nothing.

Since the credit is non-refundable, it cannot generate a refund beyond your tax liability, but unused portions can be carried forward to reducing future tax bills.

Act now

The Senate version is now the law. Ensure that your solar or other renewable energy property is in service by December 31, 2025. Given the quickly approaching date, you need to get started now. It takes time to identify what you want, buy it, and get it installed. And it must be installed to qualify for the credit.

BergerCPAFirst, with over 30+ years of experience, offers comprehensive tax preparation services for individuals and businesses nationwide. Our commitment is to provide personalized attention while ensuring compliance and maximizing tax benefits. If you have any questions or would like to schedule a consultation, please call (201) 587-9200 or send us an inquiry.