Last reviewed: October 2026.
Net metering policy news and the federal tax change are the two big solar policy stories of 2026. The solar policy news 2026 picture has three parts: the end of the federal residential solar credit, after Public Law 119-21 (signed July 4, 2025) cut off the Section 25D credit for systems installed after December 31, 2025 and set new deadlines for the commercial credits that third-party-owned systems rely on; state-level net metering reform, led by California’s net billing tariff (NEM 3.0, for interconnection applications on or after April 15, 2023, per the CPUC NEM Revisit page); and tariffs on imported solar panels. The sections below separate settled law from open debates and list what installers and homeowners should plan for over the next 12 to 24 months.
The federal credit: ended early for homeowners
The residential solar credit under Section 25D (often called the residential ITC) provided a 30 percent credit against federal tax liability. Under the Inflation Reduction Act of 2022 it was scheduled to stay at 30 percent through 2032, then step down to 26 percent in 2033 and 22 percent in 2034. Public Law 119-21, signed July 4, 2025, replaced that schedule: section 70506 ends the credit for any expenditure made after December 31, 2025. The IRS treats an expenditure as made when the installation is completed, so a system finished in 2026 gets no Section 25D credit even if it was paid for in 2025 (IRS FS-2025-05, also summarized on the IRS residential clean energy credit page).
The 10 percent domestic content bonus never applied to the homeowner credit under Section 25D. It belongs to the commercial clean electricity credits under Sections 48E and 45Y, which is where any federal value for a third-party-owned residential system has to come from: for leased or PPA rooftop PV, the system owner may still claim the Section 48E credit, subject to the deadlines below and the foreign-entity rules. Public Law 119-21 also added a lease bar in sections 48E(i) and 45Y(h), but as enacted it names residential solar water heating and small wind property (Section 25D(d)(1) and (d)(4)), not rooftop PV (Section 25D(d)(2)). A technical correction is possible, so confirm with a tax advisor. The domestic content rules require US-produced steel and iron plus a minimum share of US-sourced manufactured products, and Public Law 119-21 section 70513 raised that share for 48E to 45 percent for construction beginning on or after June 16, 2025 and before 2026, and to 50 percent for construction beginning in 2026 (text in Public Law 119-21). For solar facilities that begin construction after July 4, 2026, the 48E and 45Y credits require the facility to be placed in service by December 31, 2027 (sections 70512 and 70513), and new foreign-entity restrictions apply. The homeowner-side detail is in our walk-through at solar roof tax credit 2026.
The homeowner credit question was settled in 2025: Public Law 119-21 ended the credit years ahead of the old 2032 schedule. For 2026 planning, price an owned system without any federal credit and treat any lease or PPA price that depends on the provider’s commercial credit as subject to the December 31, 2027 placed-in-service deadline for solar facilities that begin construction after July 4, 2026. Check current IRS guidance and a tax professional before relying on any credit.
California NEM 3.0: the playbook other states are studying
California moved from NEM 2.0 to the Net Billing Tariff (commonly called NEM 3.0) for customers who submit an interconnection application on or after April 15, 2023, under CPUC decision D.22-12-056 (CPUC NEM Revisit page). Under the tariff, exports are credited at an avoided-cost value that varies by hour rather than at the retail rate, which is why installers now quote solar with storage: a battery moves midday production into the evening hours when the export credit is lower than the retail price you avoid. The August 2026 average residential price in California was 29.75 cents per kWh (EIA Electric Power Monthly, Table 5.6.A), which is the retail value a battery-shifted kWh offsets.
Battery models quoted most often in California include the Tesla Powerwall 3 and the Enphase IQ Battery 5P. Because the federal 25D credit, which covered batteries, ended for expenditures made after December 31, 2025, get an itemized price for the solar and the battery separately, and ask whether the California Self-Generation Incentive Program has open funding for your utility (the CPUC SGIP page lists current budget status). Our deeper coverage of the mechanics is in net metering explained 2026.
Utility rate cases, not federal law, drive the next net metering changes. Watch the dockets of your state commission and your utility for proposals to move to avoided-cost export credits, and check the DSIRE database for the current net metering rule in your state. Installers should model every quote at the export rate in the current tariff and at a lower sensitivity case.
Section 201/301 tariffs and the panel supply chain
Two sets of trade measures matter for solar panels: Section 201 safeguard tariffs on imported crystalline silicon cells and modules, and Section 301 tariffs on Chinese-origin products, plus antidumping and countervailing duty orders on cells and modules from Southeast Asia. Duty rates and expiry dates change through USTR and Commerce actions, so check the current rate schedule at ustr.gov rather than relying on a number in an article.
Domestic panel manufacturing has grown, with US plants such as Hanwha Qcells in Cartersville, Georgia and First Solar in Ohio publicly announcing or expanding capacity. We have not verified current output figures, so treat any share-of-demand number you see as unconfirmed until it is tied to a dated source.
For homeowners, tariffs affect panel availability and per-watt pricing, but the figure that matters is the itemized per-watt price on your own quote, which you can compare across three bids. The domestic content bonus under Section 48E can reward US-made equipment on commercial and third-party-owned systems, but it never applied to systems homeowners own. The detailed cost breakdown is in solar installation cost 2026.
State SREC markets: where the dollars still flow
Solar Renewable Energy Credits (SRECs) are a state-level incentive in which a system earns one certificate for each megawatt-hour (1,000 kWh) of solar production. The certificate is sold into a state-administered compliance market where electric utilities buy SRECs to meet renewable portfolio standard requirements. The value varies by state, by year and by market clearing, and several states with active solar programs have moved from tradable SRECs to fixed-price or block incentives.
New Jersey replaced its SREC program with the Successor Solar Incentive (SuSI) program in 2021, which pays administratively set incentives for smaller systems and uses a competitive process for larger ones. Rates are set by the New Jersey Board of Public Utilities and change by program year, so get the current rate from the NJ BPU before using any per-SREC figure. As a formula, a system producing 8.5 megawatt-hours a year earns 8.5 credits, and each $10 of credit value adds $85 a year.
Massachusetts SMART (Solar Massachusetts Renewable Target) is tariff-based compensation rather than a tradable credit: it pays a set rate per kilowatt-hour of production under a long-term contract, with the rate depending on utility territory and project size. The structural difference from SRECs is that SMART pays a known rate per kWh, while SRECs pay a market-clearing price per megawatt-hour that moves with utility compliance demand.
Several SREC markets, including Maryland and Pennsylvania, have been reported as oversupplied, which pushes prices down, and Illinois runs its Adjustable Block Program (Illinois Shines) with contracted incentives. Check each state’s current registry or program page for prices, because SREC values are market-set and can change within a year.
Inflation Reduction Act direct pay and transferability
The Inflation Reduction Act introduced two provisions in 2023 and 2024 that have begun to materially affect solar economics for non-traditional taxpayers. Direct pay allows tax-exempt entities (municipalities, schools, nonprofits, tribal governments) to receive the ITC as a direct cash payment rather than a tax credit. Transferability allows for-profit project owners to sell their ITC to a third-party buyer in exchange for cash, providing a way for project owners with insufficient federal tax liability to monetize the credit without a complex tax equity structure. Both mechanisms ride on the commercial credits, so for solar they follow the Public Law 119-21 deadlines described above.
For residential homeowners, neither direct pay nor transferability ever applied to the Section 25D credit, which had to be claimed against the homeowner’s own federal tax liability, with carryforward of unused credit, and which ended for installations completed after 2025. The relevance to residential is indirect, through lease and PPA providers that rely on the commercial credits and their deadlines.
Time-of-use rate restructuring
Beyond net metering policy, many utility rate structures have moved toward time-of-use (TOU) pricing, where the per-kilowatt-hour rate varies by time of day (the 4 p.m. to 9 p.m. window is the peak used in our net metering example). Peak hours (often late afternoon to evening) carry higher rates than off-peak hours, and the ratio is set in your utility tariff. For solar-only homeowners, the economics depend on how much production aligns with peak hours, which is generally poor because solar production peaks at midday while utility peak demand is in the late afternoon and evening. For solar-plus-storage homeowners, the TOU structure favors charging the battery on off-peak electricity (when grid power is cheap) and discharging during peak hours (when grid power is expensive).
Utility rate structures differ by state, and some utilities require time-of-use rates for solar customers while others offer them as an option. Pull your utility’s TOU schedule and model hourly production against consumption before sizing the system; in the August 2026 EIA data the average residential price runs from 12.72 cents in Nevada to 47.18 in Hawaii, so the value of a shifted kWh differs by state.
Property tax exemptions and assessment
State property tax treatment of solar systems varies, and many states exempt the added home value from solar from property tax assessment. The exemption matters because an assessment on the added value would reduce the savings. Check your state revenue department or county assessor for the exemption rules that apply to your address, and get the assessor’s answer in writing before you sign the installation contract.
If your state does not exempt solar, ask the county assessor how a system is valued before you sign. Some installers will provide a memo from their tax counsel on the property tax question as part of the contract documentation.
Interconnection queue reform
FERC Order 2023 (issued in 2023) overhauled transmission-level generator interconnection, replacing first-come, first-served queues with cluster studies. Rooftop residential systems connect at the distribution level under state rules, so the timeline comes from your utility’s interconnection tariff. Ask the installer for the expected interconnection timeline in writing and for the date the application will be filed, since in California that application date decides whether the net billing tariff applies.
For typical residential rooftop solar systems below 25 kW, the interconnection process is generally consolidated into a fast-track review within 30 to 60 days. For larger systems, ground-mount installations, and systems with battery storage, the interconnection process can extend to 90 to 180 days in some utilities. Installers should disclose the expected interconnection timeline in writing and provide updates if the timeline extends.
Permitting reform and SolarAPP+
SolarAPP+, a permitting platform developed by the federal government with the solar industry, gives code-compliant residential solar and storage applications an instant permit; its site lists more than 350 participating jurisdictions (SolarAPP+). Check the jurisdiction list for your city or county before assuming a permit timeline.
For homeowners, the practical implication is that permit waiting time can drop where SolarAPP+ is enabled. Ask your installer whether your jurisdiction is on the SolarAPP+ list (350+ jurisdictions) and what the permit-to-operation timeline is for your utility.
If X, then Y: reading 2026 solar policy by situation
| If you | Then |
|---|---|
| Buy a system and finish installation in 2026 | No Section 25D credit (expenditures after December 31, 2025); price and payback on gross cost. |
| Lease or sign a PPA for rooftop PV | The owner may claim the 48E credit only if the facility meets the July 4, 2026 begin-construction or December 31, 2027 placed-in-service deadlines; ask what happens to your rate if it misses them. |
| Live in California and apply for interconnection on or after April 15, 2023 | You are on the net billing tariff; ask for quotes with and without storage. |
| Live in a state with an SREC or block incentive | Get the current rate from the state program page and ask the installer to put it in the contract. |
| Are quoted a payback that depends on net metering | Ask which export rate it assumes and re-run at a lower one. |
The 2026 policy outlook
The base case for the next 12 to 24 months: no federal credit for homeowner-owned systems installed in 2026 or later, and a December 31, 2027 placed-in-service deadline for commercial solar credits on facilities that begin construction after July 4, 2026. California’s net billing tariff continues to push buyers toward solar plus storage. Other states may follow with their own net metering reviews; watch your commission’s dockets. Panel tariffs and US manufacturing announcements keep changing, so check dated sources. SREC and block-incentive programs are set state by state.
Risks worth tracking: further Treasury and IRS guidance on beginning-of-construction and foreign-entity rules that could narrow which third-party-owned systems still earn a commercial credit, and utility rate cases that reduce the net metering credit in markets that currently offer full retail.
What homeowners should plan for
If you are considering solar in 2026, there is no federal credit for a system you own, so price it on the gross cost and run the payback on your own electricity rate and net metering terms. Size the system to your actual consumption pattern rather than to maximum export credit, because some states are moving toward avoided-cost compensation. Consider storage if your utility has moved to TOU rates or NEM 3.0-style export crediting. Verify the contractor’s understanding of your local utility’s interconnection process and timeline. Read the financing contract carefully for escalator language if you are pursuing a PPA or lease, and ask whether the price assumes the provider’s commercial credit and what happens if the system misses the 2027 deadline. Our broader installer comparison is in solar install companies comparison and the installer vetting framework is in solar installer near you. The 25-year warranty implications are in solar roof warranty 2026.
The contractor-side reading
For contractors, the policy mix points two ways: quote homeowner-owned systems on gross price with no federal credit, and quote lease or PPA offers with the 2027 placed-in-service deadline in the contract. Our broader coverage is in the 2026 Roofing Contractor Industry Report, which addresses contractor consolidation patterns.
The bottom line
Solar policy news in 2026 is a break at the federal level (the homeowner credit ended for installs completed after 2025) and disruption at the state level (NEM 3.0 in California, rate-case reviews elsewhere, and state-set SREC and block incentives). Installed pricing depends on tariffs, equipment and local labor, so compare itemized bids. The decision frame for homeowners and contractors is to plan against the current policy environment, hedge for plausible near-term changes, and prioritize installations and contracts that hold their value across policy regimes. With the 30 percent homeowner credit gone, gross price, electricity rates, net metering, and state incentives are the anchor. Everything else is the moving picture around them.
Frequently asked questions
Is the 30 percent federal solar tax credit still available in 2026?
Not for a homeowner-owned system. Public Law 119-21 ended the Section 25D Residential Clean Energy Credit for expenditures made after December 31, 2025, and the IRS treats an expenditure as made when installation is completed.
Does the federal change affect solar leases and PPAs?
Differently. For leased or PPA rooftop solar, the company that owns the system may still claim the commercial Section 48E credit if a solar facility that begins construction after July 4, 2026 is placed in service by December 31, 2027, subject to foreign-entity rules. The lease bar in sections 48E(i) and 45Y(h), as enacted, names solar water heating and small wind, not rooftop PV; a technical correction is possible, so confirm with a tax advisor. Any benefit would show up in the contract rate.
Did the federal law change net metering?
No. Net metering is set by state utility commissions and utilities, not by federal tax law. California NEM 3.0 and other state reforms continue on their own schedules.