Residential solar in 2026: what the end of the solar tax credit means for installers

The homeowner solar tax credit ended on December 31, 2025, and the market is feeling it. BloombergNEF expects about 4.1 GW of residential solar in 2026, down 15% from 2025 and the lowest level in five years (BloombergNEF via CPA Practice Advisor). SEIA and Wood Mackenzie's base case is steeper: a 19% contraction (SEIA).

A shrinking market does not shrink evenly. Some installers are losing deals they used to close on the first visit. Others are holding volume by changing what they sell and how fast they quote it. Here is what changed, where demand is still growing, and what the installers holding up are doing differently.

What happened to the solar tax credit in 2026?

The 30% residential clean energy credit (Section 25D) ended for homeowners on December 31, 2025 (Mayer Brown). A homeowner who buys a system with cash or a loan in 2026 gets no federal credit.

The commercial credit (Section 48E) still applies. Homeowners cannot claim it, but the company that owns the system can. That is why leases, PPAs and their prepaid versions now carry the federal incentive into residential deals (EnergySage).

The deadline also pulled demand forward. Installers rushed sales and permits into late 2025, making Q4 the strongest quarter since 2023, and the year still finished at 4.6 GWdc, down 2% from 2024 (SEIA). Many of 2026's easiest buyers had already bought.

How big is the 2026 drop?

Forecasts land between a 15% and 25% decline, depending on who you ask.

Bar chart of 2026 U.S. residential solar forecasts: Sunrun down 25%, Enphase down 22%, SolarEdge down 20%, SEIA and Wood Mackenzie down 19%, BloombergNEF down 15%, SunPower down 15%

Company figures are each company's outlook for U.S. residential additions, as reported by BloombergNEF via CPA Practice Advisor. The same report notes Freedom Forever filed for bankruptcy in April, citing the loss of the federal credit.

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Where is residential solar still growing?

Not every market is shrinking. BloombergNEF forecasts Florida at 710 MW in 2026, up 62% after a pro-solar state law passed in 2025, and California up 17% (BloombergNEF via CPA Practice Advisor).

Batteries are also gaining share of each deal. About 40% of new residential systems in the first quarter of 2026 included a battery, up from an average of 35% in 2025, even though total storage volume is expected to fall 26% this year (same source).

Why third-party ownership is taking over

With 25D gone, a lease, PPA or prepaid agreement is the main way the federal credit still reaches the homeowner's price. Third-party ownership was already climbing before the deadline: its share of residential volume rose from 40% to 52% during 2024, according to Wood Mackenzie (Mayer Brown). In a March 2026 installer survey, 55% of installers named TPO their most popular financing option, versus 17% for loans and 16% for cash (same source).

Bar chart: 55% of installers named leases and PPAs their most popular financing option in March 2026, versus 17% for loans and 16% for cash

Why prepaid TPO delivers the biggest savings

Prepaid third-party ownership is the newest way to pay for solar, and in 2026 it is often the cheapest. The homeowner pays once, upfront, in cash or with a solar loan. A financing company owns the system for the first years, claims the 48E credit and passes much of that value back through the price (Solar.com).

The discount is large. Prepaid lease prices are often 30% to 35% below a cash purchase of the same equipment (Solar.com). On a $30,000 system, that is roughly $9,000 to $10,500 the homeowner keeps.

Illustrative comparison for a $30,000 system in 2026: cash purchase $30,000 versus prepaid lease $19,500 to $21,000

Ownership comes later, not never. The owner must hold the system for at least five years under tax recapture rules, and homeowners can usually buy it from year five or six at fair market value, offset by any prepaid services still owed (EnergySage, Solar.com). Read the transfer terms carefully: many contracts transfer at fair market value, not $0 (EnergySage). Availability is still growing. Participate Energy, for example, sells through partner installers in 15 states (Solar.com), and safe-harbored equipment supports TPO credit eligibility through mid-2030 (SEIA).

What the installers holding up are doing differently

They lead with prepaid TPO, then show every way to pay. Prepaid first, with cash, loan and lease side by side, so the homeowner sees what the credit is worth through each option on the first visit.
They quote a battery by default. With 40% of systems already attaching storage, leaving it off the first proposal leaves money on the table.
They cut the cost of every proposal. In a market 15% to 19% smaller, each proposal that does not close costs more. Fast, accurate designs on the same visit beat a callback next week.
They get disclosures right. States are tightening rules for leases and PPAs. Colorado now requires a disclosure of four pages or fewer, a three-business-day cancellation right and recorded welcome calls for agreements signed on or after July 1, 2026. Oregon requires pre-contract production and first-year savings estimates as of June 5, 2026 (Mayer Brown). Accurate production numbers are now a compliance issue, not just a sales one.

Artemis was built for this kind of market. Prepaid TPO options from Maxwell Power, Participate Energy and Propel sit inside the proposal next to cash and loans, and battery sizing from interval data is built into every design.

FAQ

Is there a solar tax credit in 2026?

Not for homeowners who buy. The 25D credit ended on December 31, 2025. Systems owned by a third party, through a lease, PPA or prepaid agreement, can still use the commercial 48E credit.

Can homeowners still get 30% off solar?

Indirectly. The system owner claims the credit and passes part of its value through the price. Prepaid leases and PPAs are often discounted around 30%.

Will the residential solar market recover?

Not quickly. BloombergNEF does not expect a return to 2023's record levels within the next decade, though SEIA's base case still adds more than 60 GWdc of residential solar from 2026 to 2036.

Book a free demo to see cash, loan, TPO and prepaid options side by side in one Artemis proposal.