End of the IRA Era: Solar Tax Credit Vanishes After 2025

Jessica Schroeder
End of the IRA Era: Solar Tax Credit Vanishes After 2025

End of the IRA Era: Solar Tax Credit Disappears After 2025

1. What Changed & When

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act, which significantly modifies clean energy incentives originally created under the 2022 IRA Utility Dive+13Holland & Knight+13buildwithbasis.com+13Solar+4GreenLancer+4Tax Law Center+4McGuireWoods+4KPM+4GreenLancer+4GreenLancer+1Solar+1.

Residential Clean Energy Credit (Section 25D)

  • The 30% federal credit for residential solar, batteries, wind, geothermal ends December 31 2025, with no phase‑out period GreenLancerGreenLancerKPM.

Commercial ITC & PTC (Sections 48E & 45Y)

Foreign Entity Restrictions & FEOC Rules

  • For projects beginning construction after Dec 31, 2025, credits are disallowed if there’s “material assistance” from prohibited foreign entities (PFEs/SFEs) or if effective control is determined Plante Moran+15White & Case+15Arnold & Porter+15.

Energy Efficiency/EV & Other Credits

  • EV credits (Section 30D) now expire September 30, 2025; Home improvement credit (25C) ends Dec 31, 2025; energy-efficient home builders credit (45L) ends June 30, 2026 Solar+5KPM+5NAHB+5.

2. Why It Matters

  • The residential solar credit has fueled rooftop installations nationwide; its abrupt end after 2025 could collapse home‑scale solar demand Solar.

  • Tight deadlines for commercial credits collide with project timelines—especially for utilities or municipal-scale systems that require land, permits, interconnection, and financing GreenLancer.

  • Market reaction: clean energy stocks plunged after House passage, with analysts warning of job losses, higher bills, and lost investment momentum—especially in GOP districts that benefitted from IRA investments Financial Times+3Reuters+3theguardian.com+3.

3. What Installers & Developers Should Do

  • Residential installers: prioritize permitting and physical installation before December 31, 2025 to claim Section 25D.

  • Commercial developers: begin substantial physical construction by July 4, 2026 (for full credit), and either complete by 2027 or fast‑track professional advice to maximize eligibility.

  • Document “begin construction” triggers carefully—deposit or paperwork alone likely does not suffice under IRS’s updated IRS rules and executive order from July 7, 2025 Tax Law Center+10GreenLancer+10Solar+10GreenLancer.

  • Review supply chains and equity structures to avoid foreign‑entity disqualifications under FEOC/45Y rules.

4. Outlook & Caveats

  • Senate and House provisions may still diverge—some reconciliation remains pending before full implementation.

  • Executive orders in early July further tighten definitions; IRS/Treasury guidance expected soon to finalize what counts as beginning construction White & Case+3Holland & Knight+3Akin - Akin, an Elite Global Law Firm+3GreenLancer.

  • Industries continue to push for gradual phase‑downs, safer harbor rules, and greater clarity—but momentum for rollback remains strong in GOP-led Congress Financial Timeswsj.com.

Next Steps

  • For residential solar installations: complete by Dec 31, 2025.

  • Developers: document substantial on‑site activity by July 4, 2026, and target Dec 31, 2027 service completion.

  • Conduct FEOC compliance review before initiating new projects in 2026 or later.

  • Communicate new timelines clearly to clients and finance partners.