Is the Federal Solar Tax Credit Gone in 2026? (Houston Guide)

If you've been putting off solar, you've already missed the biggest incentive — and a lot of websites haven't caught up. Here is the accurate, IRS-sourced picture for Houston homeowners in 2026, including the one path that still captures 30%.

Is the federal solar tax credit still available in 2026?

Not for homeowners who buy their system. The 30% Residential Clean Energy Credit (IRS Section 25D) expired at the end of 2025. The One Big Beautiful Bill Act, signed July 4, 2025, terminated it with a hard cliff — no phase-down, no partial credit. The IRS states plainly that the credit "will not be allowed for any expenditures made after December 31, 2025." (Source: IRS OBBB FAQ.)

So if you purchase solar in 2026 with cash or a loan, your federal tax credit is zero. This is the single most important — and most misreported — fact in solar right now. Many older articles still say "claim your 30% credit"; for purchased 2026 systems, that is no longer true.

What does "expenditure made" actually mean?

This trips people up, so the IRS spelled it out: an expenditure "is treated as made when the original installation of the item is completed." It is not the date you paid or signed. So a homeowner who paid a deposit in 2025 but had the system installed in 2026 does not qualify — the credit required the system to be installed (and placed in service) by December 31, 2025.

Can you still get 30% through a solar lease or PPA?

Yes — this is the one remaining path. If a company owns the system on your roof (a lease or power purchase agreement / PPA), that company can still claim the 30% commercial credit (Section 48E) and pass the value to you through lower monthly payments or a lower per-kWh rate.

The catch is timing: 48E solar projects generally must begin construction by July 4, 2026, or be placed in service by December 31, 2027, to lock in the 30%. The trade-off of a lease/PPA is ownership — you don't own the system, so you don't get the property-tax and home-resale benefits that come with buying.

Is solar still worth it in Houston without the tax credit?

For many homes, yes — the economics just rest on different pillars now. Even without the federal credit, Houston homeowners still have:

• A 100% Texas property-tax exemption on the home value solar adds (Tax Code §11.27) — see our Texas incentives guide.
• High, AC-driven electric bills (the Houston average is around $229/month) that solar offsets at roughly 16¢/kWh.
• CenterPoint's solar rebate (about $135/kW, up to roughly $2,025 in the Houston area).
• Grid-resilience value when paired with a battery — proven during Hurricane Beryl (see solar + battery backup).

The honest math: losing the 30% credit added roughly two to three years to payback, moving it from about 7–9 years to about 9–12 years for a cash purchase. For a high-bill Houston home with good sun — especially one that also wants backup power — solar still pencils out. For a heavily shaded roof or a home with low usage, it may be worth waiting. The full numbers are in our Houston solar cost guide.