If you looked into solar a couple of years ago and put it off, 2026 is a very different landscape than the one you remember. Tax credits have shifted, tariffs are reshaping prices, and the way most people are paying for solar has changed too. None of this means solar stopped making sense, but it does mean the old playbook is out of date. Here’s what’s actually happening and what it means if you’re considering going solar this year.
The Homeowner Tax Credit Is Gone, But There’s a Workaround
The biggest change is also the simplest to explain: the 30% federal residential solar tax credit, officially Section 25D, ended for systems placed in service after December 31, 2025. For over a decade, that credit was the backbone of residential solar economics, so its disappearance genuinely raises the upfront cost of buying a system outright in 2026.
There’s a meaningful workaround, though. The commercial credit, Section 48E, is still active through 2027, and it applies to systems owned by a business, not just utility projects. That’s exactly why leases and power purchase agreements (PPAs) have surged in popularity. When a third-party company owns the system on your roof, they can still claim that commercial credit and pass some of the savings on to you, even though you personally can no longer claim a credit on a system you own outright.
Tariffs Are Pushing Panel Prices Up, Not Down
For most of the last decade, solar prices trended one direction: down. That trend has reversed. Module prices that were sitting around $0.25 per watt in early 2025 climbed to roughly $0.28 per watt by early 2026, and the pressure isn’t easing up. The Department of Commerce has opened anti-dumping and countervailing duty investigations into panel imports from several Southeast Asian countries, with preliminary duties exceeding 100% for some of them. New tariffs under Section 232 and Section 301 add another layer, and a Minimum Import Pricing rule is set to take effect December 4, 2026.
That date matters if you’re shopping right now. Panels contracted and priced before the new pricing rule kicks in can lock in today’s rates, while costs after that point are expected to climb, for imported and domestically produced panels alike, since even U.S.-made modules often rely on imported components.
Leases and PPAs Are Becoming the Default, Not the Backup Plan
With the homeowner tax credit gone, third-party ownership models have moved from a fallback option to the mainstream choice for a lot of buyers in 2026. A standard PPA means you pay only for the electricity your system actually produces, so a cloudy month costs you less. A prepaid lease lets you pay upfront for 20 to 25 years of solar power, often around 70% of what an outright cash purchase would cost, since the provider retains ownership and the tax benefit during the early years of the agreement.
These models aren’t automatically the best deal for everyone. Fixed-rate agreements tend to be more predictable and often cheaper over the life of the contract than the escalating-rate versions many companies push in sales conversations, so it’s worth reading the fine print carefully and comparing the total 25-year cost, not just the headline monthly rate.
Domestic Manufacturing Is Racing to Catch Up
The upside in all of this is that U.S. panel manufacturing has expanded dramatically. Domestic module production more than tripled in a recent multi-year stretch, and new facilities keep coming online. Utility-scale solar is also on pace for a record year, with more than 40 gigawatts of new capacity planned for 2026, over half of all new utility-scale power capacity expected to come online this year.
That buildout matters for long-term pricing. As domestic capacity grows and manufacturers rely less on imported cells and components, prices for American-made systems have room to come down again, though that shift plays out over a year or two, not overnight. In the meantime, buyers are stuck navigating a market that’s pricier and more complicated than it was even twelve months ago.
What Changed: A Quick Snapshot
| Change | What It Means for You |
|---|---|
| Section 25D (homeowner credit) ended Dec 31, 2025 | No direct federal credit for buying a system outright in 2026 |
| Section 48E (commercial credit) active through 2027 | Leases and PPAs can still pass along tax savings |
| AD/CVD tariffs on Southeast Asian imports | Higher costs on many imported panels, some duties over 100% |
| Minimum Import Pricing effective Dec 4, 2026 | Locking in pricing before this date may save money |
| Domestic manufacturing tripling | Longer-term potential for lower U.S.-made panel prices |
| Record utility-scale buildout in 2026 | More overall solar capacity coming online nationwide |
Policy details are evolving through 2026 and can vary by state; confirm current rules with a tax professional or local installer before signing a contract.
What This Means If You’re Considering Solar Right Now
None of this means solar has stopped being a good financial move. Electricity rates have climbed sharply in recent years and are expected to keep rising, driven by grid upgrades, fuel costs, and surging demand from data centers and EV charging. That backdrop is exactly why solar still pencils out for a lot of households, even without the federal credit sweetening the deal.
The practical takeaway is to shop with your eyes open. If owning the system outright matters to you, get quotes now, before the December pricing changes take effect, and ask installers directly about panel sourcing and tariff exposure. If a lease or PPA fits your situation better, compare the total cost over the full contract term, not just the first-year savings, and favor fixed-rate structures unless you have a specific reason to take on more risk.
Frequently Asked Questions
1. Can homeowners get any federal solar incentive in 2026?
Not directly if you own the system outright. The 30% residential credit ended for systems placed in service after 2025. Homeowners can still access a version of the federal benefit indirectly through a lease or PPA, since those third-party arrangements can qualify for the commercial credit.
2. Should I wait for tariffs to settle before installing solar?
Not necessarily. Tariff policy has been unpredictable, and pending investigations may not resolve quickly. Many buyers are choosing to lock in current pricing before the December 2026 import pricing changes rather than waiting for a clearer picture that may take a while to materialize.
3. Are leases and PPAs a good deal compared to buying outright?
It depends on your finances and how long you plan to stay in your home. Leases and PPAs lower upfront cost and shift maintenance responsibility to the provider, but you generally save less over 25 years than an outright purchase would have delivered under the old tax credit. Compare the full contract terms carefully, especially escalation clauses.
4. Will domestic solar manufacturing bring prices back down soon?
Eventually, but not immediately. U.S. production capacity is expanding quickly, which should ease pricing pressure over time. In the short term, tariffs and the loss of the homeowner tax credit are outweighing those gains, so most analysts expect prices to stay elevated through at least the next year or two.