House Passes 2025 Sunset for Federal Solar Tax Credit
On May 22, 2025, the House passed a version of the “One, Big, Beautiful Bill,” which would end the Section 25D, Residential Clean Energy Credit on December 31st, 2025. To qualify for the 30% tax credit, the residential system must be placed-in-service by the end of 2025. Prior to becoming law, the bill must pass the Senate and be signed by the President.
Crunched Timeline Creates Dilemma
Senate Timeline and Demand Surge: The Senate’s discussions, expected to extend through the summer until the debt ceiling forces action, will amplify consumer urgency to secure the Residential Solar Tax Credit before potential changes. Historically, policy uncertainty (e.g., ITC step-downs) has driven similar demand surges, straining installation pipelines.
Execution Capacity Constraints: Supply chains and labor shortages can lag behind demand spikes. At the national level, manufacturers and distributors are unprepared for volumes surge. At the local level, permitting offices, utilities and solar installers will experience extended timelines with increased volume.
Consumer Catch-22: Consumers face a dilemma to either sign contracts early to secure “placed in service” installations for the tax credit, or wait for the final bill. The catch is that by the time the final bill becomes law, the consumer may have missed the opportunity to secure a 2025 installation.
