Updated October 2026 by Wolf River Electric. This is general information, not tax advice. Check your situation with a tax preparer.
Ready for the next step? Learn about solar incentives by state from Wolf River Electric, or get a free quote.
Did the 30% Credit End?
Yes, for homeowners who buy. The Residential Clean Energy Credit (Section 25D) is not allowed for expenditures made after December 31, 2025. The IRS treats an expenditure as made when installation is completed, not when you pay. If you paid in 2025 but the installation was finished in 2026, there is no credit.
The commercial credit under Section 48E did not end. Leasing companies, businesses and farms can still claim it, with deadlines covered below.
Installed in 2025? How to Claim It
- Confirm the install date. You claim the credit for the tax year the system was installed, not the year you bought it.
- File Form 5695 with your 2025 return. The solar credit is in Part I, Residential Clean Energy Credit.
- Count equipment and labor. Qualified costs include the equipment plus labor for site preparation, assembly, installation and the wiring that connects it to your home. A battery of at least 3 kWh installed in 2025 also counts.
- Subtract utility subsidies. Reduce your cost by any utility subsidy you did not report as income.
- Carry forward what you can’t use. The credit can’t exceed your tax for the year. Any unused amount carries forward to 2026.
- Keep your records. You don’t file receipts or installation records, but keep them in case the IRS asks.
- Already filed without it? You can generally amend with Form 1040-X within 3 years after you filed the original return, or within 2 years after you paid the tax, if later.
What Homeowners Can Still Get in 2026
A lease or prepaid lease is now the main way homeowners benefit from the federal credit. The leasing company owns the system, claims the 30% commercial credit under Section 48E and can pass the savings to you. Wolf River Electric customers on a prepaid lease typically see about 30% off the list price. State and utility programs, covered below, add to that. See ways to pay for solar.
Business and Farm Deadlines Under 48E
- Began construction by July 4, 2026: the project has up to four years to be placed in service under the continuity safe harbor.
- Did not begin construction by July 4, 2026: the solar must be placed in service by December 31, 2027. That covers any project starting now.
- Foreign-entity rules: projects that begin construction after December 31, 2025 must meet foreign-entity (FEOC) sourcing rules for equipment.
- Project size: smaller projects, generally under 1 MW, get the full 30%. Larger projects must meet prevailing wage and apprenticeship rules to get 30%.
- Battery storage: not tied to the 2027 solar deadline.
Design, permits and utility approval take time, so a business or farm aiming for the end of 2027 should start planning now. Farms can also look at agrivoltaics.
Batteries in 2026
Homeowners who buy: no federal credit. The homeowner credit covered batteries of 3 kWh or more through 2025 and ended with the rest of Section 25D.
Leases and businesses: Section 48E covers battery storage, including standalone battery projects, and storage is not tied to the 2027 solar deadline. Foreign-entity rules apply to projects that begin construction after 2025.
State help: Minnesota and Illinois offer battery incentives, listed below. See home battery storage.
Buy vs Prepaid Lease
| Question | Buy (cash or loan) | Prepaid lease |
|---|---|---|
| Federal credit | None for systems installed after 2025 | Leasing company claims the 30% commercial credit |
| Typical price with Wolf River Electric | List price | About 30% off list price |
| Wisconsin Focus on Energy rebate | Eligible, up to $2,400 | Not eligible |
| Who owns the system | You | The leasing company |
Buying makes sense if you want to own the system outright and can use a state rebate meant for buyers. A prepaid lease usually gives the lowest net cost in 2026, because the 30% credit still applies to it.
State Incentives in 2026
Minnesota
Net metering for systems under 40 kW, credited at the average retail energy rate. Xcel Energy’s Solar*Rewards pays $0.05 per kWh for 10 years on 2026 enrollments, with size capped at 120% of yearly use and limited funding. Battery incentives: Xcel pays $175 per kWh ($370 income-qualified), up to $5,000; other utilities, through the state program, pay $250 per kWh, up to $7,000, for batteries paired with solar and 50 kWh or less. No sales tax on equipment, and the added value is exempt from property tax. See Minnesota solar incentives.
Wisconsin
Focus on Energy pays $600 per kW, up to $2,400, to homeowners who buy (not leases). Apply within 60 days of the system running and by January 31, 2027. Equipment is exempt from sales tax, and the added value is exempt from property tax. Buyback rules vary by utility. See Wisconsin solar incentives.
Iowa
The state solar tax credit ended after 2021. MidAmerican and Alliant customers choose net billing (kWh credits) or inflow-outflow billing (dollar credits at the outflow rate). Equipment is exempt from sales tax, and the added value is exempt from property tax for 5 years if you file with your assessor. See is solar worth it in Iowa.
Illinois
Illinois Shines makes one upfront payment for the renewable energy credits your system is expected to produce over 15 years, through an approved vendor. ComEd and Ameren pay a distributed generation rebate of $300 per kW of solar or $300 per kWh of storage, with rate plan conditions for batteries. For ComEd, Ameren and MidAmerican customers, systems connected since January 1, 2025 get supply-only net metering. Illinois Solar for All serves households at or below 80% of area median income. See Illinois solar incentives.
North Dakota
No state solar tax credit or statewide rebate. The value solar adds is exempt from property tax for 5 years; ask your local assessor. Montana-Dakota Utilities, Xcel Energy and Otter Tail Power offer net billing for systems of 100 kW or less, with extra power usually bought at avoided cost. Co-ops set their own rules. See North Dakota solar cost.
South Dakota
No statewide net metering and no state solar tax credit. Extra power earns avoided-cost rates, which utilities file with the PUC for systems under 100 kW. For systems under 5 MW, 70% of assessed value or $50,000, whichever is greater, is exempt from property tax, handled by the county Director of Equalization with no application. See South Dakota solar cost.
All six states are compared in our 2026 Midwest solar incentives guide.
Solar Tax Credit FAQ
Is there still a 30% solar tax credit?
Not for homeowners who buy. It ended for expenditures made after December 31, 2025, and an expenditure counts as made when installation is completed.
I installed solar in 2025. Can I still claim it?
Yes. Claim it on Form 5695 with your 2025 return. If you already filed without it, ask your tax preparer about Form 1040-X.
I paid in 2025, but installation finished in 2026. Do I get the credit?
No. The install completion date controls, not the payment date.
What if my credit is bigger than my tax bill?
The unused amount carries forward to your 2026 return.
Can a business or farm still get 30%?
Yes, if the solar is placed in service by December 31, 2027, or if construction began by July 4, 2026.
Can a lease help?
Yes. The leasing company claims the 48E credit and can lower your price. Our prepaid lease customers typically see about 30% off.
Do batteries still qualify?
Not for homeowners who buy. Under 48E, leased systems and standalone battery projects for businesses can still qualify.
Next Step
Wolf River Electric is a NABCEP-certified company, licensed in every state we serve, with more than 1,000 five-star reviews on Google and BBB. Every system includes a 25-year warranty on panels and labor through manufacturer programs such as REC ProTrust, plus our own 10-year workmanship warranty. We can price your project both ways, as a purchase and as a prepaid lease, so you can compare. Get a free quote.
Sources: IRS (Residential Clean Energy Credit; FAQs on P.L. 119-21; 2025 Instructions for Form 5695; Form 1040-X FAQs); P.L. 119-21; Real Estate Roundtable summary of P.L. 119-21 (January 2026); Minnesota Department of Commerce; Xcel Energy; Focus on Energy; Wis. Stat. 70.111(18); Iowa Code 476.49; EnergySage Illinois incentives guide (September 2026); ConsumerAffairs North Dakota incentives (August 2026); South Dakota PUC; South Dakota Department of Revenue.
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