The short answer
If you’re skimming: Section 25D — the 30% federal credit for owned solar panels and standalone batteries — expired on December 31, 2025[1]. It was supposed to run through 2032; the One Big Beautiful Bill Act (OBBBA), passed in 2025, terminated it early[2]. Section 25C — the Energy Efficient Home Improvement Credit, covering heat pumps and a supporting panel upgrade — ended on the same date[3], so there is no federal residential energy credit left for 2026 work. Leased or third-party-owned systems still benefit from a federal credit on the installer’s side, passed through as lower monthly payments — but Sunrise sells owned systems only. And California state programs (GoGreen Financing among them) exist independently of the federal credit and didn’t change. The rest of this guide walks through the details, the new math for solar + battery, and what we actually recommend at Sunrise now that the rules have shifted.
What changed and when
Section 25D (Residential Clean Energy Credit) was the federal tax credit most homeowners associated with solar and battery storage. It paid back 30% of what you spent on:
- Owned solar PV systems (no upper limit)
- Standalone battery storage of 3 kWh or greater
- Solar water heaters, geothermal heat pumps, small wind
- Labor costs associated with installation
The credit was originally set up in 2005, expanded by the Inflation Reduction Act (IRA) of 2022 to include standalone batteries, and scheduled to remain at 30% through 2032, then phase down through 2034. That phase-down didn’t happen. In 2025, Congress passed the One Big Beautiful Bill Act (OBBBA), which terminated Section 25D for residential expenditures made after December 31, 2025[1].
The hard cutoff: if your solar or battery system was installed and operational on or before December 31, 2025, you can claim the 30% credit on your 2025 tax return (filed in 2026). If it was installed in 2026 or later, you cannot. There’s no phase-down, no transition period, no smaller percentage for early 2026 installs. The credit either applies (pre-2026 install date) or it doesn’t (2026 forward).
Why the rules changed
OBBBA was a sweeping budget reconciliation bill that touched many parts of the IRA. The reasoning for cutting Section 25D early is policy-debate territory we don’t get into here — what matters for you as a homeowner is the practical outcome. If you want the legislative details and the legal analysis, the White & Case summary of the OBBBA changes walks through it clause by clause[2]. The official IRS guidance is on Form 5695[3].
Section 25C ended too — and that surprises people
A great deal of advice written in 2025 told homeowners that although the solar and battery credit had gone, the separate efficiency credit for heat pumps and supporting panel upgrades was untouched. That was wrong, and this guide said it too until we read the statute rather than a summary of it.
Section 25C — the Energy Efficient Home Improvement Credit — terminated for property placed in service after December 31, 2025. The same act ended both. The two credits use slightly different triggers, which matters if your work spanned the year end: Section 25D keys to expenditures made, Section 25C to when the installation was completed. Neither helps anything finished in 2026.
So the honest position for 2026 is that there is no federal residential energy credit left to claim — not for solar, not for a battery, not for a heat pump, and not for the panel upgrade supporting one. Section 30C, which covered part of a home EV charger installation, is gone as well.
If your work was completed during 2025, the relevant credit is still claimable on that year's return, and that is worth raising with whoever prepares your taxes. Our guide on what happened to the federal credit covers the timing rule and what state and utility programmes replaced it.
What still works for solar and battery in 2026
The credit ending doesn’t mean solar and battery stopped making sense in California. It means the path to making them pencil out shifted.
Leased or third-party-owned systems. Under a lease, the company that installs and owns the system claims the commercial-side Section 48E credit — which OBBBA did not terminate — and passes the savings to you as lower monthly payments[2]. The mechanism still works in 2026. Sunrise sells owned systems only and doesn’t recommend the leased route: these agreements typically run 20–25 years, and the contract structures common in this market — early-termination fees, payment escalators that erode the initial savings over time, and equipment liens that complicate selling the house — aren’t terms we’d stand behind. We won’t refer you to a specific provider because we haven’t found an arrangement we would put our name on.
If you’re considering a leased or third-party-owned system anyway, do your homework before signing:
- Verify the installer’s CSLB license at cslb.ca.gov
- Ask for at least 3 customer references with completed installs 3+ years old (not freshly installed ones)
- Read every clause in the contract — especially early termination, transfer-on-sale, and payment escalation
- Have the contract reviewed by your own attorney before signing
- Compare against owned-system financing through GoGreen Home — same hardware, similar monthly payment in many cases, and you own it at the end
California programs (unchanged by OBBBA). GoGreen Financing is California’s state-backed loan program for energy upgrades — fixed APR (typically 5–8%), up to a 15-year term, delivered through participating community lenders[7]. The state absorbs default risk for the lender, which keeps rates lower than typical home-improvement financing. It covers solar, batteries, heat pumps, and panel upgrades; our primary GoGreen lending partner for Santa Cruz County customers is Matadors Community Credit Union. California also runs battery-incentive programs whose names, terms, and funding cycles change frequently — we confirm what’s actually claimable for your specific project at quote time rather than quoting program terms that may have shifted.
The NEM 3.0 self-consumption math. This is the load-bearing change for solar + battery in California. Under the old NEM 2.0 rules (closed to new applications in April 2023), exported solar was credited at roughly $0.23–$0.30/kWh, and solar-only systems penciled out in 5–7 years. Under the current Net Billing Tariff (NEM 3.0) — adopted in CPUC Decision D.22-12-056 — exported solar is credited at the “avoided cost” rate, currently around $0.05–$0.08/kWh — roughly 75% less[4]. Meanwhile, PG&E residential rates have grown about 8.7% per year over the last decade, sitting around $0.42/kWh in 2026[6]. Buying a kWh from PG&E costs about $0.42/kWh; exporting one pays about $0.07/kWh.
That difference — the gap between what you pay and what you get paid — is what makes batteries economically interesting now. A battery lets you store your solar production when you generate more than you use, then discharge it when you need power instead of buying from PG&E. Every kWh you self-consume instead of exporting is worth about $0.35/kWh more. For most homeowners under NEM 3.0, solar + battery still pencils out in 7–9 years. Solar without battery is harder — often 10–12 years[5]. For the same reason, we don’t sell standalone solar at Sunrise unless you already own a battery or plan to add one. The math without storage doesn’t work the way it used to. Our NEM 3.0 guide runs this math in depth.
Worked example: the new math
The line item that changed is simple to describe without inventing numbers: a 2025 owned install had a federal credit worth 30% of the system cost sitting in the middle of the quote. A 2026 owned install doesn’t. State programs vary by cycle, and the self-consumption math now carries the case. We model the real numbers — your bill, your roof, your usage — at the free inspection, not in a blog post.
Installed 2026, owned, GoGreen-financed: little or no upfront cost, and a fixed monthly loan payment over a term of up to 15 years — a payment that never grows, working against a utility bill that historically has[6]. You own the system, and it transfers with the house at sale. The federal credit isn’t available, but ownership plus the self-consumption math still pencil out for most of the homeowners we quote.
The two paths we actively offer customers are cash and GoGreen-financed owned systems. Whether that fits depends on your timeline, your cash position, and how the math works out for your specific roof and energy use. What you can’t legitimately do anymore is build your decision on “I’ll get 30% back from the federal government,” because for owned 2026 installs, you won’t.
How to spot stale information online
Most solar marketing copy on the web has not been updated since OBBBA passed. If you see any of the following on a solar contractor’s website or in a sales pitch, treat it as a yellow flag:
- “Save 30% with the federal solar tax credit” — for 2026 installs, false for owned systems
- “Federal tax credit available through 2032” — false; Section 25D ended 12/31/2025
- “30% off batteries with the IRA credit” — false for 2026 standalone battery purchases
- “Lock in the tax credit before it phases down” — there is no phase-down; it ended
The “phase down” language is particularly common because that’s what the Inflation Reduction Act originally set up. OBBBA replaced the phase-down with an immediate termination at the end of 2025[2]. Anyone still pitching a phase-down is reading stale source material. This isn’t about catching anyone out — the change happened fast, and updating marketing copy takes time. We’re updating ours too; this guide is part of that work.
What we recommend at Sunrise
- We don’t sell standalone solar in 2026. The NEM 3.0 math doesn’t support it for most homeowners. If you want solar, plan for solar + battery, or come back with an existing battery in place.
- We sell owned systems only — cash or GoGreen Financing. We don’t sell leased or third-party-owned systems and don’t make referrals to specific providers. If you’re set on that route, vet the provider carefully: check the CSLB license, ask for references, and read the contract terms — especially what happens if you want out or sell.
- For heat pump installs, we tell you plainly that the federal credit is gone. It used to offset part of a supporting panel upgrade; it no longer does, so the panel work has to stand on its own merits — capacity, condition, and what you are adding. Where a utility rebate applies instead, we will say so.
- We provide the documentation our part of the project requires. Sunrise is electrical-only — we hold a C-10 license, not the C-20 HVAC license that covers heat pump installation. We run the electrical infrastructure that powers the heat pump (dedicated circuit, panel upgrade if required, disconnect at the outdoor unit), pull the electrical permit, and provide the itemized invoice + AHJ inspection sign-off your CPA needs for the panel-upgrade side of the Section 25C stack. The HVAC contractor (separate company, different license) provides the heat pump itself plus the equipment documentation — SEER2 / HSPF2 ratings, AHRI certificate, install date. Two contractors, two sets of docs. We coordinate the timing so both land cleanly.
- We don’t push specific financing. GoGreen through Matadors is our most common path because of the rates. Cash, HELOC, or whatever else you’ve lined up — we work with what fits your situation.
Everything here is recheckable against the primary sources listed below. If anything in this guide doesn’t match a source we cite, the source wins — see our corrections policy.