It is not your credit
The finance company claims it. You benefit only if they price it into your monthly payment, and that is a commercial decision, not a dollar-for-dollar pass-through.
There is no federal tax credit for a home battery you buy in 2026. The 30% credit most websites are still advertising was Section 25D, and it was repealed — not reduced, not stepped down, repealed — for anything installed after 31 December 2025.
If you paid a deposit in 2025 and the work happened this year, you do not get it. If your install was finished in 2025, you probably still do. And there is one route to a federal credit left, but the credit belongs to a finance company rather than to you, and taking it can cost you a state rebate.
This page explains exactly where you stand. We would rather you knew before you spoke to anyone, including us.
What happened
The Inflation Reduction Act set the Residential Clean Energy Credit at 30% and ran it through 2032, with battery storage included as an eligible cost. For three years that was the arithmetic every quote in California was built on.
The One Big Beautiful Bill Act, signed on 4 July 2025, ended Section 25D after 31 December 2025 — roughly nine years early. The same law ended Section 25C, which covered heat pumps, insulation and windows, on the same date.
There was no phase-down. Previous expirations stepped from 30% to 26% to 22%. This one went to zero overnight.
That distinction matters, because a lot of sites still describe the credit as "reducing" or "expiring soon." It is neither. For a system you own and install in 2026, the federal credit is nothing.
Where you stand
The credit that applies to you depends on when the installation was completed and who owns the equipment.
| Your situation | Credit | Worth | Status |
|---|---|---|---|
| Installation completed in 2025, you own it | Section 25D | 30% of cost | Claimable on your 2025 return |
| Installed in 2026, you own it | Section 25D | Nothing | Repealed |
| Installed in 2026 under a lease or PPA | Section 48E | Up to 30%, to the owner | Active — not your credit |
| Heat pump, insulation, windows | Section 25C | Nothing | Repealed |
Section 48E is a commercial credit with its own construction-timing and placed-in-service rules, and those rules differ between solar and standalone storage. Tax positions are specific to your circumstances — confirm yours with a qualified tax professional before relying on any of this.
The rule most sites get wrong
This is the single most common error we see, and it costs homeowners real money. The credit follows the date the installation was completed, not the date you signed or paid. A deposit handed over in December 2025 does nothing for a system finished in February 2026.
It runs the other way too, and this part is better news. If your installation was completed in 2025 but your tax bill was too small to absorb the whole credit, the unused portion is not lost. It carries forward into later tax years.
We have met homeowners who assumed a low-tax year meant the credit was wasted, and who never claimed the carryforward. If that might be you, it is worth raising with whoever prepares your return.
The remaining route
Under a lease or power purchase agreement, a finance company owns the battery on your wall. Because the owner is a business, the system can qualify for the Section 48E commercial credit. This is now the main way federal money still touches residential storage — and it comes with four things worth understanding before you sign.
The finance company claims it. You benefit only if they price it into your monthly payment, and that is a commercial decision, not a dollar-for-dollar pass-through.
You are buying access to it. That affects what happens when you sell the house, refinance, or want the system removed or expanded.
California's SGIP rebate generally requires that you own the system. Choosing a lease to reach a federal credit can rule you out of the state one.
Section 48E has construction and placed-in-service deadlines that have already shifted once. Any provider quoting it should tell you which deadline their project sits behind.
We are not against leases. For a household with little federal tax liability, a lease can be the better answer. But it should be chosen on the total numbers, including the rebate you might be giving up — not because a 30% figure was mentioned and nobody said whose 30% it was.
If you installed in 2025
A 2025 completion still carries the full 30%. We are not tax advisers and we do not file returns, but this is the order it happens in, and we can supply the documentation from our side.
Establish when installation was actually finished, in writing. This is the fact the whole claim rests on.
Final invoice, equipment specifications, and evidence of what was installed and when. We hold copies of ours and will send them on request.
The residential credit is claimed on IRS Form 5695 and carried to your Form 1040. Your tax preparer will know the mechanics.
If your liability did not cover the full credit, the unused amount moves into later years. Make sure it is not left behind.
We do not quote federal tax credits on 2026 systems, because there are none to quote. If a company shows you a 30% federal credit on an owned battery this year, ask them which section of the code it comes from. The number should be zero.
What still pays
Here is the part that gets lost in the noise about the repeal. In California, the federal credit was never the main reason a battery paid for itself.
Under NEM 3.0, the power your panels export earns roughly 5 to 8 cents per kWh. The power you buy back during the 4pm to 9pm peak costs between 40 and 62 cents depending on your utility and tariff. A battery lets you keep your own power instead of selling it cheap and buying it back expensive. That gap did not change on 1 January.
California's SGIP rebate also still exists, though most budgets closed to new applications at the end of 2025. Worth knowing exactly where that stands before you budget around it.
Send us a recent utility bill and we will tell you:
No obligation, and no sales call unless you ask for one. If the numbers do not work on your house, we will say so.
Get in contact ↗Solari Storage installs batteries; we are not tax advisers and nothing on this page is tax advice. Federal tax law, credit eligibility and applicable deadlines change, and your position depends on your own circumstances, ownership structure and tax liability. Confirm anything on this page with a qualified tax professional before acting on it, and check current rules at irs.gov.
No. For a battery you buy and own, there is no federal tax credit in 2026. The 30% Residential Clean Energy Credit under Section 25D ended for systems installed after 31 December 2025. Any company still quoting a 30% federal credit on an owned system this year is working from outdated information.
It was repealed. The One Big Beautiful Bill Act, signed on 4 July 2025, ended Section 25D after 31 December 2025 — around nine years earlier than the Inflation Reduction Act had scheduled. The same law also ended Section 25C, which covered heat pumps, insulation and windows.
It stopped completely. Previous expirations of the residential credit stepped down gradually, from 30% to 26% to 22%. This one went to zero on a fixed date with no reduced-rate transition. That is why descriptions of the credit “reducing” or “expiring soon” are wrong — for an owned system in 2026 it is nothing.
Not on its own. The credit follows the date the installation was completed, not the date you signed or paid. A deposit handed over in December 2025 does nothing for a system finished in 2026. This is the detail most websites get wrong, and it is the one that costs homeowners the most.
Yes. If installation was completed on or before 31 December 2025, the full 30% credit still applies and you claim it on your 2025 federal return. The repeal is forward-looking — it does not remove credits already earned.
No. Any portion of the credit you could not use against your 2025 liability carries forward into later tax years. We have met homeowners who assumed a low-tax year meant the credit was wasted and never claimed the carryforward. If that might be you, raise it with whoever prepares your return.
The residential credit is claimed on IRS Form 5695 and carried to your Form 1040. You will need your final invoice, the equipment specifications, and evidence of when installation was completed. If we installed your system, we hold copies and will send them on request. Your tax preparer handles the filing itself.
Yes, but not one you claim yourself. Section 48E is a commercial investment credit, and it remains active. It applies where a business owns the equipment — which in a residential setting means a lease, a power purchase agreement or a similar third-party arrangement. The credit belongs to the system owner rather than to the homeowner.
Not directly. The company that owns the system claims the Section 48E credit, and whether any of that value reaches you depends on how they have priced the agreement. Ask any provider quoting a federal credit two questions: whose credit is it, and how is it reflected in what I pay. A straight answer to both tells you a lot.
It can. California’s SGIP rebate generally requires that you own the system, so a third-party ownership arrangement may rule you out of the state rebate. That trade-off is worth understanding before you sign anything, because reaching for a federal credit you do not claim can cost you a state one you would have.
No replacement was introduced. California’s SGIP rebate still exists and is the most valuable storage incentive remaining, but it was never designed as a substitute for the federal credit and most of its budgets closed to new applications at the end of 2025. There is no state tax credit for solar or storage in California.
There is no indication that it will. Section 25D was repealed rather than allowed to lapse, and nothing currently before Congress would reinstate it. We would not advise delaying or accelerating a purchase on the assumption that it returns.
In California, often yes — because the credit was never the main reason the numbers worked here. Under NEM 3.0, exported power earns roughly 5 to 8 cents per kWh while peak grid power costs between 40 and 62 cents depending on your utility and tariff. A battery keeps your own generation on your property instead of selling it cheap and buying it back expensive. That gap did not change on 1 January.
Section 25C, which covered heat pumps, insulation, windows and other efficiency upgrades, ended on the same date as Section 25D — 31 December 2025. The Section 30C credit for EV charging equipment ran slightly longer, ending on 30 June 2026. Neither applies to work done now.