Senate narrowly passes GOP domestic policy bill—residential solar tax credit still in peril

After a record-breaking ‘vote-a-rama,’ American homeowners were once again excluded from negotiations to protect access to solar incentives.

Written by:

Casey McDevitt

Edited by: Emily Walker

Updated Jul 1, 2025

5 min read

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Congress is one step closer to axing the residential solar tax credit — EnergySage

Updated July 1 at 5:00 p.m. EST

The U.S. Senate passed the GOP megabill on Tuesday morning after Vice President Vance’s tie-breaking vote ended an all-night marathon voting session.

The final Senate version included some improvements for clean energy tax credits, but notably absent was an extension for the 30% residential solar tax credit (Section 25D of the U.S. Tax Code). It’s still set to expire at the end of this year.

In May, the House of Representatives aimed to effectively gut residential solar tax credits in its version of the reconciliation bill. Bipartisan support for clean energy tax credits in the Senate suggested that the elimination of 25D would be met with strong opposition; however, the Senate's amendments to the provision’s language were minimal, and the chamber ultimately failed to protect residential solar incentives.

Senators simply changed the qualifying language surrounding the credit’s termination to “for any expenditures made after the date” instead of “placed in service,” suggesting that home solar panel systems purchased (and likely installed) but not yet interconnected before the applicable date might still qualify for the 30% tax credit.

In one silver lining, the Senate reversed the House provision prohibiting companies from claiming the commercial solar tax credit (Section 48E of the U.S. Tax Code) for third-party-owned systems on residential properties.

The amended bill now returns to the House of Representatives for reconsideration, where a vote is expected as early as Wednesday. The President has been adamant about his Fourth of July deadline, seeking to sign the bill into law on the ceremonial day. However, key GOP ‘deficit hawk’ representatives are concerned about the cost of the Senate’s bill, and others have previously expressed support for clean energy tax credits, all of which could make it difficult to pass the bill as is.

Key takeaways

The 30% residential solar tax credit is at risk of being cut at the end of 2025.
The cut is part of Trump's tax and domestic policy bill, a sweeping budget reconciliation bill.
The cuts to the tax credit are not definitive: The bill changes still need to pass the House of Representatives.
You can use this form to tell your elected officials to preserve the residential solar tax credit—it takes less than a minute.

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A quick rundown of the residential ITC

As it exists today, the residential solar tax credit, commonly referred to as the Investment Tax Credit (ITC), allows solar owners to claim 30% of installation costs as a credit on federal tax bills. A gradual phase-down was set to start in 2033, after which the credit would ultimately expire at the end of 2034. If enacted, this bill would terminate the residential solar tax credit for expenses incurred after December 31, 2025—nearly a decade ahead of schedule and with no phase-down period.

The abrupt elimination would further disrupt the solar market, which is already facing economic headwinds due to Trump’s tariffs and an earlier pause on IRA funds.

The GOP hopes to have the bill on the President's desk by the Fourth of July. However, bipartisan support for some energy tax credits in the House of Representatives suggests that the current bill text may face opposition.

It’s unclear whether that support will extend to the residential solar tax credit specifically. But the ITC has a long bipartisan history. Originally signed into law by President George W. Bush in 2005, it was extended by President Obama in 2008 and again by President Trump in 2020. Most recently, President Biden renewed and expanded the tax credit under the Inflation Reduction Act (IRA) in 2022, alongside other critical clean energy initiatives currently under scrutiny for potential elimination.

Go solar now so you can take advantage of the solar tax credit

It’s not law yet: What comes next

While the Senate’s job is done, the bill still needs to pass back through the House of Representatives and be signed by the president before it becomes law.

The two chambers of Congress must reconcile

Although the House of Representatives already passed a version of the bill in May, the Senate’s amendments must gain approval from the House before a final package is sent to the President.

GOP leaders are rushing to meet the President’s self-imposed deadline. The House Rules Committee commenced a meeting Tuesday afternoon to prepare the bill for consideration on the floor, and a vote is expected as early as Wednesday.

Meanwhile, House Democrats plan to fight the domestic policy bill once again. Minority leader Hakeem Jeffries said they intend to use “all legislative tools and options” to slow the bill’s passage. But even without Democratic pressure, the Senate-passed bill faces House GOP opposition, primarily due to concerns surrounding increases to the national debt.

Despite the chamber’s initial harshness, there’s reason to believe that the House may reconsider its stance on clean energy tax credits. Last month, 13 House Republicans signed a letter urging the Senate to "substantively and strategically improve clean energy tax credit provisions included in the House-passed reconciliation bill." However, a reasonable phase-out of the residential solar tax credit was notably absent in their requests.

Ultimately, the House of Representatives and the Senate must reconcile their differences before sending the bill to Trump’s desk. If the House makes changes to the bill, the Senate must reconvene for reconsideration. However, most senators quickly left the Capitol following the chamber’s 27-hour session on Tuesday, meaning they wouldn’t vote on the bill again this week.

President Trump has the final say

If both chambers of Congress approve the bill, it’ll head to President Trump’s desk to be officially signed into law. Although presidents have the power to veto legislation, it’s unlikely Trump would reject this particular bill, given its alignment with his party’s priorities.

The fight isn't over: What you can do

The residential solar tax credit has already created thousands of jobs, increased domestic manufacturing, lowered upfront costs, and made energy more affordable for all ratepayers, not just solar adopters. Its termination would jeopardize these jobs and potentially increase electricity costs in the long term.

Proponents of this bill are pushing for swift approval. At EnergySage, we encourage you to take action now by contacting your Representative to share how eliminating the residential solar tax credit would impact you and your community.

Send a note to your elected officials—it takes less than a minute

Your story can make a difference. Whether you’re a solar owner who has benefited from the ITC or someone who’s been considering a solar panel system, letting your Representative know why this credit matters for American homeowners and local businesses can help protect the future of solar in the U.S.

Especially if you live in one of the key states listed below, consider reaching out directly to the following representatives: