The 30% federal solar tax credit — formally the residential clean energy credit under Section 25D of the tax code — is no longer available for new installations. Systems installed from January 1, 2026 onward do not qualify. If you’re getting solar quotes now and a salesperson mentions the 30% credit, that’s inaccurate.
Here’s what happened, what’s still claimable if you installed in 2025, and what NC homeowners can actually work with today.
What the credit was
The Section 25D residential clean energy credit allowed homeowners to deduct 30% of the cost of a qualifying solar installation from their federal income tax bill. For a $25,000 system, that was a $7,500 reduction in what you owed the IRS — not a deduction from income, a direct reduction in tax owed.
The credit covered:
- Solar panels and associated equipment
- Installation labor
- Inverters, wiring, and mounting hardware
- Battery storage systems (if charged primarily by solar)
It was a dollar-for-dollar tax credit with a carryforward provision. If your credit exceeded your tax liability in a given year, you could carry the remainder forward to the next tax year.
What changed
The Inflation Reduction Act of 2022 extended the credit at 30% through 2032. That was the expectation most solar installers and buyers were operating under through 2024 and into 2025.
The One Big Beautiful Bill (Public Law 119-21), signed July 4, 2025, cut the credit short. It substituted December 31, 2025 for the prior 2032 sunset date. Per the IRS, the credit applies to qualifying property installed through December 31, 2025. Systems installed in 2026 do not qualify.
The change came faster than most of the industry anticipated. If you were told the 30% credit was locked in through the decade, that was accurate information when the IRA passed — it’s not accurate now.
If you installed in 2025
You can still claim the credit. What matters is the install date, not when you file.
If your solar system was completed and operational by December 31, 2025:
- Claim the credit on your 2025 federal tax return using Form 5695 (Residential Energy Credits)
- The credit is 30% of your qualified costs — equipment, labor, and installation
- If the credit exceeds your 2025 tax liability, the unused portion carries forward to your 2026 return
Don’t assume the credit is gone for you because the program expired for new installs. Installations completed in 2025 still qualify.
If you’re unsure whether your system was operational before the deadline, the relevant date is when the system was commissioned and producing power — not the contract date, not the deposit date, not the permit date. Paying in full during 2025 doesn’t help if installation wasn’t complete by December 31.
What’s available for new installs in 2026
The federal income tax credit is gone. That doesn’t mean the financial case for solar in NC collapsed — it means the incentive stack looks different.
Duke Energy PowerPair
The largest available incentive for NC homeowners is Duke Energy’s PowerPair program. It provides one-time installation incentives for customers who install solar and battery storage together for the first time.
- Solar: $0.36 per watt-AC, up to 10 kW ($3,600 maximum)
- Battery: $400 per kWh, up to 13.5 kWh ($5,400 maximum)
- Combined maximum: $9,000
PowerPair applies to both Duke Energy Progress (Raleigh, Research Triangle) and Duke Energy Carolinas (Charlotte) customers. Progress territory is currently on a waitlist — Carolinas still has open capacity as of April 2026. The program runs on a first-come, first-served basis against a total capacity cap.
The requirement most people miss: it covers solar and battery together. Solar alone, or an EV charger without a battery, doesn’t qualify. See the full PowerPair guide for how to apply and what to watch out for.
NC sales tax exemption
Solar equipment is exempt from NC sales tax under G.S. 105-164.13. On a $25,000 system, that’s roughly $1,750 in savings at the current combined state and local rate. It’s already reflected in what licensed installers charge — you don’t file for it separately.
NC property tax exemption
Solar installations qualify for an 80% exclusion from your home’s assessed value for property tax purposes under G.S. 105-275(45). In practice, most NC counties treat this as a full exclusion for residential systems. Your annual property tax bill won’t increase because you added panels. For a system that adds $20,000 to your home’s market value, the tax savings compound over the years you own the home.
Net metering
New solar customers in NC choose between two export rate structures — the Net Metering Bridge or Residential Solar Choice — neither of which credits exports at the full retail rate. Power your panels generate and your home uses directly still offsets consumption at the full retail rate. The reduced credit applies to surplus exported to the grid.
For a full breakdown of how current net metering works, see the NC net metering guide.
How the numbers compare
Here’s a rough comparison of how incentives looked before and after the credit expired, using an 8 kW solar + 13.5 kWh battery installation as the example:
2025 install (Section 25D still available):
- Gross system cost: $38,000
- Federal 30% credit: -$11,400
- Duke Energy PowerPair: -$9,000
- Net cost: approximately $17,600
2026 install (Section 25D expired):
- Gross system cost: $38,000
- Federal 30% credit: $0
- Duke Energy PowerPair: -$9,000
- Net cost: approximately $29,000
The gap is real. Payback periods for systems installed in 2026 are longer than they would have been a year ago. That said, electricity rates in NC continue to rise, and the long-term savings on a well-sized system still hold up — the math just takes longer to work out.
What to ask an installer quoting you right now
Any reputable installer should already be working from the current incentive picture. If they mention the 30% federal credit without flagging its expiration, that’s a red flag.
Ask: What incentives are you factoring into this quote, and what are their current statuses?
Ask: Does your quote assume I need a battery, and have you included the PowerPair application in the project scope?
Ask: Are you a Duke Energy Trade Ally? (Required for PowerPair.)
The incentive landscape changed quickly. Installers who haven’t updated their pitch materials may still be selling based on a credit that no longer exists.
For a full breakdown of every current incentive available in NC, see the NC solar incentives guide.