With passage of the 2025 federal budget reconciliation bill, the Residential Clean Energy Credit (Section 25) will be discontinued.
The federal tax credit currently provides a 30-percent tax credit for owners of a residential solar photovoltaic (PV) system. This credit was originally scheduled to begin phasing down in 2033, but is now set to expire at the end of this year.
For homeowners interested in owning their systems, this means that it must be placed in service prior to December 31, 2025. The IRS has equated “placed in service” with a completed installation. Final interconnection approval should not be required to receive the tax credit.
Solarize Philly partner installers, Exact Solar, Solr Standard, and Superior Solar Design, offer ownership options that allow homeowners to take advantage of this tax credit. We encourage homeowners who are considering solar panels to explore their options now.
Key Takeaways
☀️ Sign new solar PV contracts by August 1, 2025 to improve the likelihood that installers will have sufficient time to install the system by the end of the year.
☀️ A homeowner who signs a solar contract after August 1 can still qualify if their project is completed this year. Our installers will do their best to schedule your project in time to qualify for the credit.
☀️ Solar panels installed after January 1, 2026 will not qualify for the Residential Clean Energy Credit. Lease options as well as available incentives, such as solar renewable energy certificates (SRECs) and utility rebates, can help solar energy installation costs remain within reach for many Philadelphians.
Sign up with Solarize Philly to connect with our installer partners.
Our installers can give you a custom quote to understand whether solar makes sense for you and to see what your savings could be. Many homeowners will still see a solid return on their investment when purchasing solar, even without the tax credit, though we encourage you to take advantage of it while you still can!
Customers can either pay cash or finance their system. Most financing is structured to provide energy savings starting from the day solar is put in service. You’ll see an immediately lower electricity bill, and those savings will help to offset your financing payment. Once your system is paid off, you’ll have no financing payment and keep that reduced bill.
For homeowners who are unable or not interested in purchasing their solar, third-party ownership options are available via leases or power-purchase agreements (PPAs). You can still realize significant savings off your electric bill, all while helping to combat climate change. Commercial entities offering these third-party ownership options can still take advantage of this tax credit and factor it into their lease or PPA model. The federal reconciliation bill did alter the commercial solar tax credit’s eligibility timelines and requirements, but there is a longer timeline before lease or PPA projects are affected.
One of our Solarize Philly installers, PosiGen, offers a lease model with no income or credit requirements. PosiGen will only offer a solar lease if the project can guarantee energy savings. Want to better understand the PosiGen solar leasing model? Sign up and select the lease option
Solarize Philly installer partners, Exact Solar, Solr Standard, and Superior Solar Design, offer additional lease options (which may consider factors such as the homeowner’s credit and income). Pennsylvania BRIGHT is a new lease option being piloted this year by our green bank affiliate, the Philadelphia Green Capital Corps (PGCC), and Capital Good Fund. Find out if this option is right for you: Complete the Pennsylvania Bright interest form
PGCC will soon be launching Solar For All. Once available, Solar for All will provide another PPA option for low- to moderate-income homeowners in Bucks, Chester, Delaware, Montgomery, and Philadelphia Counties, guaranteeing those eligible homeowners 20 percent energy savings.
Questions about whether your project will qualify for the Residential Clean Energy Credit? Please reach out to Solarize@philaenergy.org.