Solar payback periods will extend 43% longer without the ITC

If you want to go solar, installing it now rather than later will save you around $9,000 and allow you to earn back your investment more than four years sooner than you would otherwise. Solar payback periods—the amount of time it takes to recoup the cost of installing a solar panel system—are about to become significantly less favorable to homeowners at the end of the year. 

Thanks to the GOP reconciliation bill signed into law by President Trump on Independence Day, waiting even a few months to install solar panels will significantly diminish your return on investment. The 30% solar tax credit, a key federal solar policy proven economically productive for both American homeowners and the U.S. economy overall, was terminated by Republican lawmakers in Washington, D.C. Under Biden-era law, Section 25D of the U.S. Tax Code offered a tax credit worth 30% of solar installation costs to homeowners who go solar through 2032, with a gradual phase-down set for 2033 and 2034.

But clean energy tax credits were a target in this year's reconciliation bill negotiations. After much debate, the residential solar tax credit was eliminated nearly a decade ahead of schedule. Homeowners can no longer claim it after December 31, 2025.

Without the solar tax credit, also known as the Investment Tax Credit (ITC), the average American will pay 30% more for a solar panel installation (before accounting for tariff-induced price increases). As a result, solar payback periods will increase by 43%. 

Solar payback period by state, with and without the ITC

Eliminating 25D at the end of the year isn’t just disadvantageous for homeowners interested in installing solar—it’ll cost everyone, solar owner or not. 

When fewer people generate their own power, electricity rates increase for everyone; Demand grows for utility-generated power, increasing our reliance on expensive foreign energy resources. 

A weaker solar market also puts more pressure on an already strained grid. Without the distributed support that rooftop solar provides, reliability falters—especially as extreme weather events occur more frequently and energy demand surges. Meanwhile, utility companies continue raising rates while doing the bare minimum to modernize infrastructure.

For homeowners, solar will become significantly more expensive without the 30% tax credit, making it harder to afford upfront costs and pushing clean energy further out of reach. That means fewer installations, more reliance on fossil fuels, and ultimately, higher emissions. 

The economic toll will be severe: Repealing the residential tax credit alone risks 75,000 American jobs, with hundreds of thousands more in jeopardy due to legislative changes to other clean energy programs.

In short, the ripple effects go far beyond individual rooftops and into American communities. A decline in solar adoption means:

• Clean energy becomes less affordable

• Emissions rise as fossil fuels fill the gap

• The grid becomes less reliable

• Electricity gets more expensive for everyone

With uncertain market conditions, it’s important to make informed decisions. EnergySage can help shield you from bad actors looking to take advantage of condensed timelines, compare quotes from trusted installers, understand your financing options, and find the right system for your home—before the incentives disappear.

Interested in learning more about locking in solar savings? Sign up for our upcoming webinar!