A Big Policy Shift, But Not the End of Home Solar

If you’ve been trying to make sense of home solar incentives in 2026, you’re not alone. A major federal policy change landed quickly, caught much of the industry off guard, and left many homeowners wondering what still applies and what doesn’t.

The short version: solar is still very much alive, but the way it’s incentivized has changed.

Electricity rates continue to rise at historic levels, Time-of-Use (TOU) pricing is becoming standard across the country, and Virtual Power Plant (VPP) programs are expanding rapidly. Against that backdrop, solar and home batteries remain some of the most effective tools homeowners have to manage energy costs and gain resilience.

What changed is who benefits from federal tax incentives.

What Changed in 2026: The One Big Beautiful Bill (OBBB)

In late 2025, Congress passed legislation commonly referred to as the One Big Beautiful Bill (OBBB). Among many provisions, one had a major impact on residential solar:

The personal federal tax credit for homeowner-owned solar systems ended in 2026.

That means:

Cash-purchased solar systems no longer qualify for a personal federal tax credit
Loan-financed solar systems no longer qualify for a personal federal tax credit

This marked a clear shift away from incentivizing individual ownership of residential solar systems.

Where the Incentives Went: Commercially Owned Residential Solar

While the personal tax credit ended, federal solar incentives did not disappear. Instead, they were redirected toward commercially owned residential systems.

In practical terms, that means:

Solar leases and Power Purchase Agreements (PPAs) can still qualify for federal incentives
The system owner (the leasing company), not the homeowner, claims those incentives

This policy change is why leasing has become a much bigger part of the residential solar conversation in 2026.

How Solar Leases Work Under the New Incentive Structure

With a solar lease:

A third-party company owns the system
The system is installed on your home
The company captures available federal incentives
You pay for the power produced or a fixed monthly amount

For homeowners, leases can still offer:

Little or no upfront cost
Predictable energy pricing
Protection against rising utility rates
Optional battery storage

In many markets, leasing remains the most accessible path to solar under the new rules.

An Important Lease Detail Most Homeowners Should Understand

Many newer solar leasing companies do not plan to own these systems for the full 20–25 year lease term.

Once federal incentives and accelerated depreciation are fully realized, often around year five, the financial dynamics change. As a result, many lease agreements include:

Early buyout options
Step-down purchase pricing over time
Structures that resemble a lease-to-own pathway

Due to regulatory constraints, lease providers are often limited in how explicitly they can market or guarantee these outcomes. That makes it especially important for homeowners to:

Review buyout schedules carefully
Ask when purchase options become available
Understand long-term flexibility before signing

What About Home Battery Tax Credits in 2026?

Home battery storage continues to play a growing role in residential energy systems.

While personal solar tax credits ended, battery incentives can still exist, depending on:

Whether the battery is part of a leased system
Utility and state-level programs
Participation in demand response or VPP programs

Batteries are becoming increasingly valuable because they help homeowners:

Avoid expensive TOU peak pricing
Maintain power during outages
Support grid stability through VPPs
Reduce reliance on a less predictable electric grid

In many regions, batteries are now a core component of a modern home energy strategy.

Why Solar and Storage Still Make Sense in 2026

Even without a personal tax credit, the fundamentals supporting solar remain strong:

Utility rates continue to rise faster than inflation
TOU pricing penalizes evening and peak usage
Electrification increases household electricity demand
Grid reliability challenges are becoming more common

Solar and batteries are no longer just about incentives. They’re about long-term cost control, resilience, and flexibility.

There are also real costs to doing nothing: higher lifetime energy bills and increased exposure to utility pricing changes.

Common Questions Homeowners Are Asking Right Now

Many homeowners exploring solar in 2026 are asking:

Is solar still worth it without a tax credit?
Are solar leases a better option now?
Can I buy out my lease later?
Do home batteries make sense on their own?
How does TOU pricing affect solar savings?

These are smart questions, and the answers depend on your home, utility structure, and long-term goals.

Helpful Next Steps

To continue learning, these resources can help:

The incentives have changed, but the opportunity hasn’t disappeared.
Home solar and storage are simply entering a new phase.

How Home Solar and Storage Tax Credits Work in 2026