A new proposal from the U.S. House of Representatives has sent shockwaves through the solar industry — and it could have a direct impact on homeowners planning to install solar panels this year.
On May 12, the House Ways and Means Committee introduced a budget reconciliation bill that includes a proposal to eliminate the Section 25D Investment Tax Credit (ITC) — the federal incentive that currently covers 30% of the cost of residential solar systems for homeowners who purchase their systems outright.
If passed as written, this change would mark the end of one of the most important financial incentives for solar adoption in the U.S.
What Does This Mean for Homeowners?
If you’re thinking about going solar, here’s the critical detail:
To qualify for the 30% tax credit, your system must be fully installed and operational by December 31, 2025. A signed contract alone is not enough — the system must be placed in service before the end of the year.
This timeline creates a real sense of urgency. With permitting delays, utility approvals, and increasing demand, waiting too long could cost you thousands in missed tax credits.
We’ve seen this before. When California’s NEM 2.0 program ended, homeowners rushed to install solar before the policy changed — resulting in backlogs and long wait times. The same kind of surge is likely if this bill moves forward.
What Else Is in the Bill?
In addition to the elimination of the residential solar ITC, the bill also proposes:
- Accelerating the phaseout of the commercial ITC (Section 48E)
- 24% in 2029
- 18% in 2030
- 12% in 2031
- 0% from 2032 onward
- Eliminating the federal tax credit for electric vehicles (EVs)
- Phasing down incentives for alternative fuels and clean vehicle manufacturing
What Happens Next?
The bill is still in the early stages of the legislative process and will face significant debate in both the House and Senate. Some lawmakers have already expressed concerns about the scope and impact of the proposal.
Still, the threat is real — and the timeline is tight. If the bill passes, December 31, 2025 could be the final day for homeowners to claim the full 30% solar tax credit.
What Should You Do?
If you’re a homeowner considering solar, now is the time to act. The closer we get to the end of the year, the harder it may be to secure an install date that ensures you’ll qualify for the credit.
At Palomar Solar And Roofing, we’re already helping new customers fast-track their projects to stay ahead of potential policy changes. We’ll walk you through your options, project timelines, and how to lock in your tax credit while it’s still available.
Contact us today to schedule a free consultation and take advantage of the ITC before it’s too late.
Erik Zetmeir| Sr. Consultant
M: 760.576.6179
