The 30% federal solar tax credit (formally the residential clean energy credit under Section 25D) 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 claim a federal income tax credit for a share of the cost of qualifying residential clean energy property. It was a credit against tax owed, not a deduction from income.
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, but 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)
- Calculate the credit using the IRS rules for qualified costs
- 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. The incentive stack looks different.
Duke Energy PowerPair
Duke Energy’s PowerPair program is the main utility incentive to understand for NC solar-plus-battery projects, but it is no longer safe to assume for new quotes. It provides one-time installation incentives only when Duke confirms eligibility and available capacity or an existing reservation.
- 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 is available only when program rules and capacity allow. As of June 2026, Duke Energy Progress capacity is exhausted and Duke Energy Carolinas is at or near its cap. Do not treat it as available unless Duke Energy or a Trade Ally confirms a reservation or remaining application path.
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 treatment
Solar equipment has specific treatment under NC sales tax law. Confirm how sales tax is handled in your installer quote rather than assuming a separate filing or rebate.
NC property tax exemption
NC law provides a property tax exclusion for a residential solar energy electric system under G.S. 105-275(45). Confirm how your county applies the exclusion before making assumptions about long-term property tax effects.
Net metering
New solar customers in NC choose between two export rate structures, 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 change affects the math
The loss of the federal residential credit makes 2026 solar quotes meaningfully different from 2025 quotes. Instead of assuming a federal credit, homeowners should ask installers to show the project economics with only currently verified utility programs, state tax treatment, and expected bill savings.
Be especially cautious with proposals that show a federal solar credit for a 2026 installation or that assume PowerPair without confirming Duke Energy application status.
Some companies may also quote a solar lease or power-purchase structure instead of a customer-owned system. If they describe tax savings as being built into the monthly price, read the contract carefully and compare the total payments, escalators, and transfer terms. See Solar Lease Pass-Through for the distinction between a provider’s tax treatment and a homeowner-claimed credit.
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 picture 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.