For years, the residential solar tax credit was the line on every sales sheet: 30 percent off a home system, claimed on the owner's federal taxes. That credit is gone. The One Big Beautiful Bill Act, signed July 4, 2025, ended Section 25D for systems completed after December 31, 2025. If you install rooftop solar for a living, or you are deciding whether to start, you need to understand exactly what changed, what did not, and how it is reshaping who hires.
This is not tax advice for homeowners. It is a practical read for installers on where the work is going.
What Happened to the Residential Solar Tax Credit
The IRS FAQ on the law's changes is blunt: no Section 25D credit is allowed for expenditures made after December 31, 2025. Three details matter for anyone on a crew:
- Installation completion is the test. An expenditure counts as made when the original installation is completed, not when the contract is signed or the homeowner pays.
- Prepaying did not save the credit. The IRS says paying by December 31, 2025 does not preserve the credit if installation finished later.
- New construction follows a different rule. For systems built into a new or rebuilt home, timing depends on when the owner begins using the home.
That is why late 2025 felt like a sprint for many residential crews. Every customer-owned system had to be physically installed before year-end. SEIA notes that equipment shortages and the short window limited how much of that rush could actually be built.
Why the details matter to a crew
The installation-completed test turned the end of 2025 into a scheduling problem, not just a sales problem. A signed contract with a deposit was worth nothing for the credit if the crew could not get modules, racking and wiring finished in time. That pushed companies to prioritize jobs that were permitted and ready, to run longer days, and to pull in subcontract crews. It also left some homeowners with signed contracts for systems that no longer came with the credit they were promised, which led to cancellations early in 2026. If you were on a residential crew this year and saw the schedule thin out after January, that is the mechanism behind it.
What Still Gets a Federal Credit
The end of 25D did not end every solar incentive. The table below sorts out the main buckets as they stand in October 2026.
| Type of project | Federal credit status | What it means for installers |
|---|---|---|
| Homeowner-owned system (cash or loan) | No 25D credit for installs completed after Dec. 31, 2025 | Hardest sell; most exposed segment |
| Third-party owned home system (lease or PPA) | Owner can still pursue business-side credits, subject to the wind and solar deadlines | Main lifeline for residential volume |
| Commercial rooftop and ground mount | Business credits continue for projects that meet the construction deadlines | Steadier work, larger crews |
| Utility-scale | Same deadlines; projects begun by July 4, 2026 have a multi-year runway | Large but travel-heavy work |
The business-side deadline comes from the same law. According to IRS Notice 2025-42, the clean-electricity credits end for wind and solar facilities placed in service after December 31, 2027, unless construction began by July 4, 2026. Solar facilities of 1.5 MW (AC) or less, which covers residential leased systems, can still show they started construction with the simpler 5 percent spending safe harbor. Larger projects have to prove physical work.
The Market Numbers So Far
SEIA and Wood Mackenzie track installs every quarter, and the trend is clear:
- U.S. residential solar installed 4,647 MWdc in 2025, down 2 percent from 2024 (2025 Year in Review).
- Q1 2026 came in at 1,179 MWdc, up 6 percent year over year but down 15 percent from Q4 2025. SEIA credits projects that were installed before the deadline and interconnected in early 2026 for holding Q1 up (Q2 2026 report).
- SEIA now forecasts a 21 percent residential contraction for 2026. Besides 25D, it points to the bankruptcy of the second-largest national installer, limited tax equity and updated permitting data.
- It expects residential growth to return in 2027, averaging about 6 percent a year through 2031.
One more data point puts this in context. Residential system prices fell 7 percent year over year in Q1 2026, and module prices for distributed solar fell more than 20 percent. Cheaper hardware softens the blow for buyers, but it also squeezes margins for installers competing for fewer cash jobs.
How Installer Jobs Are Shifting
The 2024 baseline is the last full count before the policy change. IREC's National Solar Jobs Census 2024 found 280,119 solar workers, roughly flat from 2023. Installation and project development made up 178,713 of those jobs. The same report shows how quickly policy hits payrolls: California lost about 1,000 solar jobs in 2024, which IREC tied to state policy changes in its residential market.
Keep in mind what that 178,713 figure includes. Installation and project development covers residential, commercial and utility-scale work, plus the sales, permitting and design staff who support it. Residential crews are only one slice, which is why a sharp drop in rooftop demand does not show up as an equal drop across the whole solar workforce.
No census has yet measured the full effect of losing 25D, so be skeptical of anyone quoting exact layoff totals. Based on the market data, here is the realistic picture for 2026:
- Fewer cash and loan jobs. Shops that sold mainly to owners who planned to claim the credit have the biggest gap to fill.
- More lease and PPA work. Companies that install for third-party owners, or run their own lease programs, have a reason to keep crews busy through the July 2026 safe-harbor window and beyond.
- Batteries and service as fillers. Many residential contractors are leaning on storage retrofits, repairs and re-roofs of existing systems to keep crews working.
- Commercial and utility pull. These segments keep their credits longer and continue to hire (see our residential vs. utility-scale comparison).
The long-term outlook still points up. BLS projects solar PV installer employment to grow 37 percent from 2025 to 2035, with about 4,200 openings a year, per the Occupational Outlook Handbook. Treat that as a decade-long trend line, not a promise about 2026.
Questions to Ask a Residential Solar Employer in 2026
A job ad will not tell you how a company is handling the credit change. Ask directly in the interview. Our guide to reading solar job ads covers the basics; these are the 2026-specific questions.
- What share of your installs are cash or loan versus lease or PPA?
- Do you install for a third-party owner, and did they safe-harbor equipment before July 2026?
- How many installs is the crew scheduled for next month, and how does that compare with last year?
- Do you also do battery, commercial or service work when residential slows?
- Are installers paid hourly, or by the job or watt? (Piece pay hurts more in a slow market.)
- Has the company had layoffs or crew cuts in the past six months?
How to Protect Your Solar Career Through the Dip
- Add storage skills. Battery and backup work does not depend on the old homeowner credit for its value to the customer.
- Get your electrical hours counted. A registered electrical apprenticeship travels with you to commercial and utility work if residential stays slow.
- Earn a credential that moves across segments. NABCEP certification is respected in residential, commercial and utility work (see NABCEP Certification Explained).
- Be open to travel. Utility-scale projects that started construction before July 4, 2026 can run for several more years.
- Keep your hours documented. If you get laid off in a slow quarter, a record of systems installed, roof types and equipment brands makes the next interview much easier.
- Watch state programs. State rebates, net metering and local incentives now carry more weight than they did when the federal credit covered 30 percent.
Bottom Line
Losing the residential solar tax credit is a real hit to rooftop work in 2026, with SEIA forecasting a roughly 21 percent drop. It is not the end of residential solar. Leases, PPAs, batteries and service work keep many crews busy, and commercial and utility-scale projects keep federal credits longer. If you are in residential now, work for a company with lease or storage revenue, build skills that carry to commercial and utility jobs, and ask hard questions before you switch employers.