Starting in 2026, the 30% Federal Solar Investment Tax Credit (Section 25D) will no longer be available for residential solar projects. That’s a significant change for the U.S. solar industry and naturally raises an important question for homeowners and contractors alike:
What’s next for solar?
There’s no denying the federal tax credit played a major role in solar’s rapid growth. By lowering upfront costs, it made solar accessible to millions of homeowners and helped fuel adoption across the country.
But the tax credit didn’t just benefit individual projects — it helped the entire solar industry mature.
Over the past decade, manufacturers dramatically reduced the cost of panels, inverters, racking, and other components. At the same time, installers refined their processes, improved efficiency, and scaled operations. The result is a far more affordable product.
To put it in perspective, California homeowners once paid around $8 per watt for solar. Today, many systems are installed for $3.50 per watt or less.
In many ways, the federal tax credit accomplished exactly what it was meant to do: it helped drive costs down and bring solar into the mainstream.
So now that it’s ending — what happens next?
Solar is Proven, Reliable, and Here to Stay
With more than one million homes in California already powered by solar, residential solar is no longer new or experimental. It works. Homeowners are effectively running their own small power plants right on their rooftops.
For many Californians, going solar means:
- Lower monthly electricity bills
- Protection from rising PG&E rates
- More control over long-term energy costs
When solar is paired with battery storage, the benefits grow even more. Batteries provide backup power during outages and help homeowners stay resilient during public safety power shutoffs.
The bottom line is simple: the technology works, the economics still make sense, and the demand for clean, reliable energy isn’t going away.
At Allterra Solar, we remain fully committed to helping homeowners achieve long-term energy savings and reliability. While losing the federal tax credit will create short-term challenges, strong, well-run companies are prepared to adapt.
What Solar Contractors Need to Focus On Gong Forward
The residential solar market will change in 2026, but companies that focus on fundamentals will continue to succeed. Here are the three areas Allterra Solar is prioritizing:
Investing in Great People
Our success depends on skilled teams across sales, design, installation, operations, and finance. High-quality workmanship, efficient operations, and clear communication matter more than ever.
Doubling Down On Customer Service
Solar is a long-term investment. Reliable systems, strong communication, and responsive service will separate strong contractors from the rest. Our goal remains simple: happy, satisfied customers.
Watching Costs Without Cutting Corners
We believe in paying competitive wages and offering strong benefits. To do that responsibly, we’re focused on smarter supply-chain decisions, better logistics, and improved operational efficiency. The goal is efficiency — not shortcuts.
There are Incentives Still Available
Even though the federal residential tax credit is gone, California homeowners still have access to meaningful incentives, especially for batteries and EV charging:
- Local Battery Rebates (3CE): Rebates ranging from $3,000 to $13,000, depending on eligibility
- EV Charger Rebates (3CE): Up to $2,000 for residential charger installations
- State Battery Rebates (PG&E Programs): Including Permanent Battery Storage Rebates and the Self-Generation Incentive Program (SGIP), particularly for income-qualified households
These programs can still significantly reduce the cost of solar-plus-storage.
Looking Ahead to 2026 and Beyond
There’s no question the solar industry will feel the impact of the federal tax credit ending in 2026. Some companies will struggle, and others will exit the market.
However, once the initial adjustment period passes, we expect the industry to stabilize and gradually rebound. Rising utility rates, grid reliability concerns, and electrification trends continue to make solar a smart choice for homeowners.
Allterra Solar’s focus moving forward is clear:
- Take care of our clients
- Stay financially healthy through change
- Return to steady, sustainable growth in 2027 and beyond
The incentives may change, but the long-term value of solar energy remains strong.
Ready to Talk About Your Home?
If you’re considering solar or solar-plus-storage — or just want to understand how these changes affect your specific home, utility rates, and incentives — we’re here to help.
Schedule a no-pressure consultation with Allterra Solar to:
- See how solar pencils out for your home without the federal tax credit
- Understand which local and state incentives you still qualify for
- Get expert guidance from a trusted Central Coast installer
👉 Contact Allterra Solar today to start the conversation.
