Your Guide to US Solar Incentives in 2025
The federal solar tax credit is set to expire on December 31, 2025. This guide provides details on available incentives across the US, including the federal tax credit and state-specific programs. It covers your eligibility for the incentives, how to claim them, and key considerations for 2025.
The reason why you need to act fast.
Solar installation can reduce electricity costs, increase your home’s value, and lower your carbon footprint. With utility rates on the rise and the federal credit set to expire by December 31, 2025, this year presents an opportunity for savings through incentives.
Federal Solar Tax Credits: 30% of the installation cost
The federal Investment Tax Credit (ITC) provides a 30% credit on solar installation costs, including panels, labor, and battery storage. For example, if you install a system worth $20,000, you are eligible for a $6,000 credit on federal taxes. It applies to solar systems installed on or before 31st December 2025, with no income limits or caps.
You are eligible for the tax credit if:
- If you own the system (leases or power purchase agreements do not qualify).
- You’ll need to do the installation at your primary US residence.
- Claim via IRS Form 5695 on the 2025 tax return. We recommend consulting a tax professional for detailed information.
This residential credit will end on January 1, 2026, following the reconciliation bill signed by the Honorable President of the US, Mr. Donald Trump, on July 4, 2025. According to research conducted by EnergySage, the average savings for homeowners like you are around $9,000 if the installation is completed before the deadline.
Additional Saving by Location: Solar Incentives State-Wise
States in the United States offer rebates, tax exemptions, and net metering to supplement the federal tax credit. These programs vary and can be combined with the ITC, depending on your location of residency. Below is a summary of incentives in selected states as of July 2025.
Note: Please refer to the state-wise incentive declarations and consult a tax professional for further guidance. This is just a guide.
| State | Incentive | Detail |
|---|---|---|
| California |
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| Massachusetts |
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| New York |
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| Arizona |
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| Florida |
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| Texas |
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| Colorado |
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| Maryland |
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| Hawaii |
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| Illinois |
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For the latest details, refer to governmental resources for valuable updates on the incentives and other programs mentioned above.
Steps to claim solar incentives
Follow the steps below to be eligible for the US Federal Tax Credit and other state-specific solar incentives.
- Evaluate energy needs, location, and system size to determine the optimal solution.
- Select and install a system before December 31, 2025, to qualify for the federal tax credit.
- File IRS Form 5695 with the 2025 tax return, including receipts and certifications. Take the help of your tax professional.
- Apply for state incentives through the relevant energy office.
Please ensure that you install your solar panels with certified installers. Use the guidance shared by the US Department of Energy on how to choose a qualified, certified, and experienced solar system installer.
Final Thoughts on Solar Incentives 2025
The federal credit is expiring soon, and reviewing options in 2025 can lead to significant savings for homeowners. Consider consulting local professionals for state-based incentives & tax rebates, as well as installation advice, to maximize benefits.
