The Impact of Trump’s Policies on the 30% Solar Tax Credit by 2025

**Trump and the Fate of the 30% Solar Tax Credit in 2025**

By Brian Lynch | Jun 26, 2025

With Trump in office and Republican majorities in both the House and Senate, many of the clean energy credits established by the Inflation Reduction Act are at risk of being weakened or eliminated through the budget reconciliation process, often referred to as the “One Big Beautiful Bill.” Among these is the 30% solar tax credit for homeowners, officially known as the 25D Residential Clean Energy Credit. This article will focus on the proposed changes to the 25D solar tax credit and their implications for homeowners interested in solar energy.

### Latest Updates

#### Is the Solar Tax Credit Going Away?

As of June 26, we were anticipating updated bill text from the Senate, but it has been delayed. It is still probable that we will see a new version of the “One Big Beautiful Bill” before the upcoming July 4th recess. While the renewable energy provisions are vital to many, they remain secondary in the overall debate surrounding the bill. The industry has taken this opportunity to advocate for a gradual phase-down of the tax credits, allowing the market to transition more naturally to a post-subsidy environment. This approach seems to be resonating, as discussions indicate that residential solar tax credits are “in play” and some technical issues from prior drafts are being addressed. However, it remains uncertain whether these changes will be included in the final signed law.

**What We’re Watching:**
– Will the consumer tax credit (25D) experience a gradual phase-out similar to corporate tax credits, or will it end 180 days after the bill is passed, as currently proposed?
– If the 25D is preserved, will it include “FEOC” provisions akin to the 48E tax credits?
– Will residential leases once again qualify for the tax credit as part of the phase-down, given their exclusion in the House bill and earlier Senate drafts?
– Will the phase-out follow the previously proposed Senate draft of 16% in 2026 and 6% in 2027?
– Will the domestic content bonus remain at 10% for qualifying systems (commercially owned only)?

### What Seems Likely

2025 remains an excellent time to invest in solar, with systems installed this year still eligible for the tax credit. There is currently no proposal from either the House or Senate for retroactive repeal of the tax credit. However, FEOC restrictions will be stringent. These restrictions would prevent companies under Chinese control from benefiting from U.S. taxpayer assistance, and components that receive “material assistance” from Chinese firms may jeopardize the tax credits for the entire project.

The Solar.com team will provide updates when the Senate releases new text.

### June 16 Update

The Senate Finance Committee released its proposal for the “One Big Beautiful Bill,” which includes changes to the timeline for phasing out the 30% residential solar tax credit. Instead of concluding on December 31, 2025, the Senate suggests that the 25D solar tax credit will end 180 days after the bill’s signing. If the bill is signed into law in July, this would likely set the deadline to January 2026. Homeowners must install their solar systems by this date to qualify for the credit.

### May 22 Update

On May 22, the House of Representatives passed the budget reconciliation bill, which includes a proposal to terminate the 30% residential solar tax credit by the end of 2025. This bill is on its way to the Senate, where a final vote is anticipated before the August recess, possibly before July 4. If the bill passes in its current form, residential solar and battery systems installed by December 31, 2025, will still be eligible for the Residential Clean Energy Credit.

### Why Are People Concerned About the Residential Solar Tax Credit?

The proposed elimination of the 30% tax credit for residential solar and battery storage, known as 25D, has caused significant concern. This proposal is part of the Budget Reconciliation process and has already passed the House. The Senate is expected to vote on it in July. The recent Senate Finance Committee proposal suggests ending the 25D residential solar tax credit 180 days after the bill is signed into law, potentially setting a deadline in January 2026. If this bill passes as currently written, homeowners who install systems by this deadline can still qualify for the 30% federal tax credit.

### What is the 30% Tax Credit for Solar?

Officially called the “Residential Clean Energy Credit,” this incentive allows solar system owners to receive a tax credit worth up to 30% of the eligible costs associated with a solar installation. For example, a project with an eligible cost basis of $30,000 would allow the owner to claim a $9,000 tax credit in the year the project is completed. This incentive originated during the oil crisis in 1978, was reinstated in 2005, and has continued to evolve. The Inflation Reduction Act of 2022 extended this tax credit at 30% through 2032, after which it will decrease by 4% annually until 2034.

### Is the Inflation Reduction Act (IRA) at Risk?

Yes, Republicans are pursuing significant cuts to the IRA through the budget reconciliation process, primarily to fund the Tax Cuts and Jobs Act (TCJA) extension. The House Ways and Means Committee introduced a measure in May 2025, which aims to weaken or eliminate several elements of the IRA, including the 30% solar tax credit for homeowner-owned solar and battery systems by the end of 2025. Although the Senate Finance Committee has slightly softened these cuts, there is still a significant risk that the solar tax credit may be phased out more abruptly than expected.

### Risks of Waiting for Policy Certainty

Homeowners may consider adopting a “wait and see” approach regarding the modifications to the reconciliation bill, but this strategy carries risks. The Senate is likely to vote before its August recess, possibly before July 4. After the Senate vote, the bill must return to the House for reconciliation before reaching the President’s desk. Delaying a decision could jeopardize your project, as it typically takes about ten weeks from contract signing to project completion. Any changes to the tax credit could lead to a rush in the market, extending timelines and threatening eligibility for the tax credit.

### Is 2025 a Good Time to Go Solar?

If you’re contemplating solar energy but haven’t signed a contract yet, now is the ideal time to act. Most materials needed for projects are available at pre-tariff prices, and there is a strong likelihood that your project will qualify for the full 30% solar tax credit. While interest rates are currently high, they might not significantly decrease in 2025. If they do drop in the future, solar loans can typically be refinanced. Your utility will likely continue to increase rates, making the urgency to go solar even more pressing. Connect with a Solar.com Energy Advisor today to develop a proposal and competitively price your project.

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*This content is for informational purposes only and does not constitute legal or tax advice.*