The solar tax credit in 2026: what changed for Los Angeles homeowners

Did the 30% federal solar tax credit end?

Yes. For a system you buy and own, there is no federal tax credit in 2026.

The residential clean energy credit (Section 25D) paid back 30% of the cost of solar panels and home batteries of 3 kWh or more. Under Public Law 119-21, signed July 4, 2025, the IRS says the credit is not allowed for any expenditures made after December 31, 2025.

Timing turns on installation, not payment. The IRS treats an expenditure as made when the original installation is completed. A deposit paid in 2025 doesn't qualify a system that was finished in 2026.

If your system was completed in 2025, the credit belongs on your 2025 return (IRS Form 5695). If you missed it, ask a tax professional about an amended return.

Any quote that still subtracts 30% from the price of an owned system installed in 2026 is out of date.

What about solar leases and PPAs?

The company that owns the system may still claim a federal credit. You don't claim it yourself.

With a lease or power purchase agreement (PPA), a third party owns the panels and you pay for the system or its power each month. That owner can still claim the business clean electricity credit (Section 48E), subject to rules on when construction began, when the system goes into service (generally by the end of 2027), and where its components come from.

Whether any of that credit reaches you depends on the contract. Compare the lease or PPA total over its full term with the cost of buying the system, and ask the provider how the credit is reflected in your price.

California's property tax exclusion ends for new systems on January 1, 2027

A system completed by January 1, 2027 won't raise your property tax assessment.

California excludes qualifying active solar energy systems from the reassessment that new construction normally triggers (Revenue and Taxation Code Section 73). SB 710, signed in October 2025, keeps systems built before January 1, 2027 exempt until the property changes ownership. It did not extend the deadline.

Systems completed after January 1, 2027 aren't covered unless the Legislature extends the exclusion. Your county assessor could then add the system's value to your assessment.

Installing in late 2026? Finishing before the deadline depends on permitting and utility approvals as well as installation, so start early.

Other home energy credits that ended

• Energy efficient home improvement credit (Section 25C): not allowed for property placed in service after December 31, 2025.
• EV charger credit (Section 30C): not allowed for property placed in service after June 30, 2026.

California has no state income tax credit for home solar.

Is solar still worth it without the credit?

For many Los Angeles homes, yes. Without the credit, the savings come from your electric bill, so your utility's rules matter more than they used to. LADWP still credits the solar power you send to the grid against the power you use. SCE's Solar Billing Plan pays far less for exports, so a battery does more of the work.

Read LADWP vs SCE: how solar works with your utility, or send us a recent bill and we'll show you the numbers for your home.

Frequently asked questions

Can I still get the 30% federal solar tax credit in 2026?

No, not for a system you own. The residential clean energy credit (Section 25D) does not apply to expenditures made after December 31, 2025, and the IRS treats the expenditure as made when installation is completed.

Is there a federal tax credit for home batteries in 2026?

No. Battery storage of 3 kWh or more was covered by the same Section 25D credit, which ended for installations completed after December 31, 2025.

Do solar leases and PPAs still get a federal tax credit?

The company that owns a leased or PPA system may still claim the business credit under Section 48E, subject to construction-start, in-service and sourcing rules. You do not claim it yourself, so ask the provider how it is reflected in your price.

Does solar raise my property taxes in California?

Not if the system is completed by January 1, 2027. California excludes qualifying active solar systems from property tax reassessment until the property changes ownership. Systems completed after that date are not covered unless the law is extended.