Going Solar in 2025? Here’s Why You Can’t Afford to Wait Until 2026
For many homeowners, going solar is a ‘someday goal’. They understand the benefits of solar, including environmental improvements, money savings, and uninterrupted power during disruptions. But things like cost and just the busyness of life prevent them from making that call.
Well, now there is a reason why 2025 is the year for going solar, and why you can’t wait until 2026. The solar credit, which gives homeowners a tax credit equal to 30% of their system’s value, is going away. Therefore, you have until Dec. 31, 2025, to activate your system and save before it’s too late.
This article will explain what you need to do to take advantage of the credit and what’s happening in the industry.
What is the Solar Tax Credit?
Although tax credits have been ‘a thing’ since the late 1970s, they were revived in their modern form by George W. Bush under the Energy Policy Act of 2005. Under the Act, homeowners who installed solar were eligible for a 30% tax credit. In other words, their tax liability would be reduced by 30% of the system’s value, including most solar equipment, storage equipment, and the cost of installation.
Although the tax credit was set to phase out in 2007, it was reinstated by various presidents as follows:
· Barack Obama extended the credit with the Consolidated Appropriations Act of 2016.
· Donald Trump extended the credit in 2020.
· Joe Biden extended the credit under the Inflation Reduction Act.
Under Biden’s legislation, the credit would reduce to 26% in 2033 and 22% in 2034 before phasing out entirely. However, despite earlier approval of the bill, Trump has changed his tune and decided to eliminate it under the Big Beautiful Bill. He feels coal and gas are better suited to America’s energy needs.
As a result, homeowners must install solar by the end of the year to take advantage of the credit.
How to Get Started
Now that you know what’s at stake, you may be thinking, “I want to get started with solar as soon as possible! But what are the first steps?” This section will explain everything you need to know.
Am I Eligible for Solar?
First, you must make sure you are eligible for solar. Here are some requirements to consider:
· Ownership: You must own your panels. People who rent or have a PPA arrangement are not eligible.
· Property Type: The system must be located on a primary or secondary residence within the United States.
· System Type: The system must be new in that it has never been used before.
· Timeline: You must claim the credit for the year the system was activated. For example, if you installed the system in 2024 but it wasn’t activated until 2025, you would claim the credit for the 2025 tax year.
Find a Provider
Once you determine eligibility, the next step involves finding a provider. The provider you choose should:
· Have an Excellent Industry Reputation: Research to ensure the provider has positive customer reviews and a long history of providing excellent service to the community.
· Services: Providers may offer various services, including design, consultation, permitting, activation, tree trimming, roof repairs, etc. Work with an installer that provides the services you require.
· Cost: Although cost is a factor, it’s best to work with a company that offers the best value for your money.
· Equipment: The company should offer premium equipment for optimal solar production and longevity.
Solar America will help you find the right provider for your needs.
File for the Credit
The final step involves filing for the credit. A tax professional will guide you through the process, but those who self-file must follow these steps:
· Gather Documentation: Your taxes will require you to include information on how much your system costs, system type, etc. Therefore, you should have documents like invoices and receipts ready for reference when you complete them.
· File Form 5695: Form 5695, Residential Energy Credits, must be included in your taxes. Part 1 is used to calculate the credit.
· Add to Schedule 3 and Form 1040: Use the information on Form 5695 to complete Schedule 3, then add the credit to Form 1040, the main form of your income tax return.
Understanding the Timeline
Depending on when you’re reading this article, you may think you have plenty of time to go solar and still receive the tax credit. However, installation takes longer than you think.
The actual installation may only take 1-3 days, but other processes are involved, as follows:
· Initial Consultation: This phase involves meeting with the planner to ensure you are solar-ready and provide a quote. Arranging the meeting and receiving the quote may take 1-2 weeks.
· System Design and Engineering: Next, the contractor will create a design based on your solar needs, a process that can take 1-4 weeks.
· Permitting: The contractor must apply for a permit through the city. The permit will be approved in 2-8 weeks.
· Installation: This is typically a 1-3 day process.
· Final Inspection and Activation: The city planner will visit your home to inspect the installation and ensure it’s up to code. If it passes inspection, it must be activated through the utility company. The process can take 1-4 weeks.
Considering the many steps involved, it’s best to start planning your project now.
Other Reasons Why 2025 is a Good Year to Go Solar
The tax credit expiration means now is the best time to go solar. However, there are other reasons why 2025 is a good year to switch. Here are some to consider.
· The Increase in Weather Events: Weather events are bad and expected to worsen. Statistics show 74% of the latest weather events were caused or made worse by climate change. Storms cause power outages that disrupt businesses and threaten lives. Solar power prevents disruptions, ensuring your systems run smoothly.
· Lower Cost of installation: Statistics show the price of solar has hit an all-time low at just $2.52/W before incentives. However, prices could increase if demand goes down due to the tax credit expiration. This situation means even more savings for people who go solar in 2025.
· State and Local Incentives: The federal tax incentive may disappear, but homeowners can still benefit from state and local tax incentives, rebates, net metering, and tax exemptions.
· Rising Electricity Rates: Electricity rates are rising by an average of 2.85% countrywide, although some states will see bigger increases than others. Homeowners who invest in solar can protect themselves from rising rates.
· Increase in Home Value: Solar installations increase home value by up to $5,911 per kilowatt. Going solar means your home will likely sell for more money and sell faster. Fewer people will go solar without the credit, making your home stand out in a competitive market.
· Environmental Benefits: Going solar offers ecological benefits, including lower air pollution and water conservation, combating climate change, and reducing dependence on fossil fuels.
· Long-Term Savings: Solar results in long-term savings. Depending on the size of the installation and energy use, most people start seeing returns within 5-15 years.
Solar America Will Help You Get Started on Your Solar Journey
Considering the timeline, there’s no time to waste. Homeowners who want to save should start their solar journey today- and Solar America can help.
To get started, enter your information into our online form. Our system will return results with local providers in the area. You can determine which is best suited to your needs. The competitive format ensures the lowest prices.
Fill out our form today to beat the tax credit expiration.
FAQs
What is the solar energy outlook for 2025?
The solar energy outlook for 2025 is strong. The U.S. Energy Information Administration (EIA) predicts solar energy will be the leading source of new electricity generation by the end of the year. The organization believes 26 gigawatts of new solar capacity will be added.
What is the lifespan of a solar panel?
Most solar companies guarantee performance for 25 years. The panels may continue producing energy beyond that time, but most will lose efficiency.
How often do solar panels need to be cleaned?
Solar panels should be cleaned at least twice a year. However, if you live in an area with heavy dust, pollen, or bird activity, you may need to clean them more often.