Short answer: the 30% federal Residential Clean Energy Credit (Section 25D) no longer applies to solar or battery systems whose installation was completed after December 31, 2025. If you buy a system in 2026, there is no federal credit to claim. What still lowers the cost for a Palmdale homeowner is a shorter list: California’s property-tax exclusion for systems finished before January 1, 2027, SGIP battery rebates for the households that qualify, the business credit that lease and PPA providers can still claim on third-party-owned systems, and, most importantly, the design choices that make a system actually save money under SCE’s Net Billing. Here is the full picture.
What ended, exactly
Public Law 119-21, signed July 4, 2025 and commonly called the One Big Beautiful Bill Act, terminated the Section 25D credit for expenditures made after December 31, 2025. The IRS FAQ is specific about timing: an expenditure is treated as made when the original installation of the item is completed, so a system finished in January 2026 is out even if the contract and deposit were in 2025. Taxpayers who did complete installation in 2025 can still carry forward any unused credit into later years.
The same law ended the Section 25C credit for efficiency improvements like heat pumps and insulation for property placed in service after 2025. Anyone still advertising “keep the 30% tax credit” to homeowners in 2026 is either out of date or describing a lease.
What did not end: the business credit
The Section 48E clean electricity investment credit for businesses survived with a deadline. Solar projects must have begun construction by July 4, 2026 (that window has closed) or be placed in service by December 31, 2027 to qualify, under the rules in IRS Notice 2025-42. That matters to homeowners in two ways:
- Commercial solar for shops, warehouses, agriculture and multi-unit properties can still qualify. See our commercial solar page.
- Third-party-owned residential systems. With a lease or power purchase agreement, the provider owns the system, so the provider, not you, claims the 48E credit. A well-structured contract passes part of that value through as a lower monthly payment. Whether the pass-through is fair is something you check by comparing total contract cost against a loan, not by taking the salesperson’s word for it.
The CPUC’s consumer protection guide adds a warning worth repeating: a homeowner cannot capture business credits by forming an LLC for their own house, and anyone who suggests it should not get your business.
What still lowers the cost in California
1. The property-tax exclusion (deadline: January 1, 2027)
California excludes qualifying active solar energy systems from being assessed as new construction, so adding solar does not raise your property taxes. The exclusion sunsets January 1, 2027. SB 710, signed in October 2025, did not extend that date; it guarantees that systems qualifying before the sunset keep the exclusion until the property changes ownership. For a homeowner, the practical meaning is that a system completed and qualifying before January 1, 2027 is protected for as long as you own the home. Systems completed after that date may be assessed unless the Legislature acts again.
2. SGIP battery rebates, for those who qualify
The Self-Generation Incentive Program pays per kilowatt-hour of battery capacity. The CPUC lists the Equity rate at $850/kWh and the Equity Resiliency rate at $1,000/kWh, aimed at income-qualified households, medical baseline customers, and homes in high fire-threat districts or with repeated Public Safety Power Shutoffs. The general-market residential step in SCE territory ($150/kWh) showed as closed on the program administrator’s metrics page at our last review, and the income-qualified Residential Solar and Storage Equity budget ($1,100/kWh) was on a waitlist. Budgets change; we check current status for every battery project.
3. Net Billing design
This is not an incentive, but it is the biggest lever left. Under SCE’s Solar Billing Plan, exported energy earns avoided-cost credits (SCE’s example: about $0.05–0.06/kWh midday versus $0.21–0.23/kWh on summer evenings), while energy you consume yourself offsets the full retail rate. A system sized to your actual usage, oriented for afternoon production and paired with a battery keeps far more of its value than an oversized array exporting at noon. Our NEM 3.0 guide goes deeper.
4. The rates you are avoiding
SCE’s average residential rate was about 34.4 cents/kWh as of June 2026, a slight dip from the end of 2025 after the CPUC-approved 2025 General Rate Case raised typical bills 9.1% that year. The same decision authorized further base-revenue increases for 2026 through 2028, so the long-run direction is still up. Every kilowatt-hour your system supplies at home is one you do not buy at those prices.
5. Sensible financing
SunCoast offers loans with fixed monthly payments and $0-down programs through partners including Dividend and ELN (Energy Loan Network) and credit unions, as well as military and veteran discounts. A loan keeps ownership (and any future incentives) with you; a lease or PPA trades ownership for a monthly rate. Each has real trade-offs, laid out on the financing page.
What this means for a Palmdale homeowner
- If you are buying, the decision now rests on your bill, your usage pattern and a Net Billing-aware design, not on a tax refund. Our worth-it guide walks through the fit.
- If a battery is part of the plan, ask whether you qualify for an SGIP equity tier before assuming you do not. High fire-threat and PSPS-affected addresses across the foothills are more common than people expect.
- If you want the system completed before the property-tax exclusion sunsets, allow for the full six-to-twelve-week timeline. Our installation timeline post explains why.
- If a lease or PPA is on the table, get the total contract cost, the escalator and the transfer terms in writing, and compare against a loan for the same system.
We serve Palmdale, Lancaster and the rest of the Antelope Valley, and we will tell you plainly which of these applies to your home. The dated summary of every incentive, with sources, lives on our incentives page.
Sources
- IRS: FAQs on Sections 25C, 25D and others under Public Law 119-21
- Congressional Research Service: Expiration and carryforward rules for the Residential Clean Energy Credit
- IRS Notice 2025-42: Beginning of construction for Sections 45Y and 48E
- The Tax Adviser: Safe-harbor rules for solar and wind Sec. 48E facilities
- California Legislature: SB 710 text (exclusion sunset January 1, 2027; retained until change of ownership)
- Senator Blakespear: SB 710 signed by the Governor (October 2025)
- CPUC: Participating in SGIP (Equity $850/kWh, Equity Resiliency $1,000/kWh)
- SGIP program metrics: SCE residential budget status
- SCE: How Solar Billing Plans work
- SCE: Rate advisory
- CPUC: SCE 2025 General Rate Case decision fact sheet
- CPUC: California Solar Consumer Protection Guide (LLC warning)
