The 30% federal Residential Clean Energy Credit (Section 25D) expired on December 31, 2025, after President Trump signed the One Big Beautiful Bill Act (OBBBA) into law on July 4, 2025. Sonoma County homeowners who installed solar before that date can still claim the credit on their 2025 tax return using IRS Form 5695. Those installing in 2026 no longer qualify for the federal credit but have access to California’s SGIP battery rebate and other state-level incentives.
- The 30% federal solar tax credit (Section 25D) is gone for homeowners as of January 1, 2026
- If your system was installed by December 31, 2025, you can still claim it on your 2025 federal return via IRS Form 5695
- Unused 2025 credit carries forward indefinitely until fully claimed, no expiration on carryforward amounts.
- Solar leases and PPAs still benefit indirectly from commercial tax credits through installer pass-through savings.
- Sonoma County homeowners in PG&E High Fire Threat District Tier 2 or 3 zones may qualify for SGIP battery rebates up to $1,000/kWh
- California’s property tax exclusion for solar systems remains in effect through end of 2026.
If you installed solar panels on your Sonoma County home before December 31, 2025, you are eligible for a 30% federal tax credit worth thousands of dollars, but the window to act on it through your 2025 tax return is now. For homeowners planning a new installation in 2026, the federal credit is gone. This guide explains who can still claim it, how to file correctly, and what solar incentives remain available in Sonoma County right now.
Did the 30% Federal Solar Tax Credit Expire in 2026?
Yes. The Section 25D Residential Clean Energy Credit expired for expenditures made after December 31, 2025. The One Big Beautiful Bill Act, signed July 4, 2025, terminated this credit immediately without a phase-down period.
For a decade, Section 25D gave homeowners a 30% credit on the full installed cost of solar panels, battery storage, and related equipment, with no dollar cap. The Inflation Reduction Act had previously extended it through 2034. That extension was overturned by the OBBBA.
Key facts about the expiration:
- No phase-down: the credit went from 30% to 0% in a single step after December 31, 2025
- Applies to solar panels, solar water heaters, geothermal heat pumps, and battery storage
- The IRS has updated its official guidance, the credit is no longer available for 2026 installations
- IRS Form 5695 Instructions for 2025 confirm: “You can’t claim residential clean energy credits for expenditures made after December 31, 2025”
Who Can Still Claim the 30% ITC in 2026?
If your solar system was installed and placed in service by December 31, 2025, you can still claim the credit, even if you file your return in 2026.
Claiming is done on your 2025 federal tax return. The “expenditure made” rule refers to when your system was installed and operational, not when you paid or when you file.
Eligibility checklist for Sonoma County homeowners:
- System was installed and operational on or before December 31, 2025
- You own the system (purchased with cash or a loan, not a lease or PPA)
- The home is your primary or secondary U.S. residence
- You owe federal income taxes (the credit is non-refundable)
- System was brand new at time of installation (used equipment does not qualify)
What about carryforward credits? If your 2025 credit amount exceeds what you owe in taxes this year, the unused balance carries forward to 2026, 2027, and beyond. The carryforward provision under Section 25D(c) was not changed by the OBBBA.
How to File IRS Form 5695 for Your Solar Installation
File IRS Form 5695, Residential Energy Credits, with your 2025 federal tax return to claim the 30% solar credit.
This is the only form needed. Most tax software handles it with step-by-step prompts. If you installed solar in 2025 and have not yet filed your return (or filed an extension), complete these steps:
| Step | What to Do |
|---|---|
| 1 | Confirm installation was completed by December 31, 2025 |
| 2 | Locate your final invoice showing the total installed system cost |
| 3 | Complete IRS Form 5695, Part I (Residential Clean Energy Credit) |
| 4 | Enter total system cost on Line 1; your 30% credit calculates on Line 6b |
| 5 | Enter your final credit amount from Line 15 onto Schedule 3 (Form 1040), Line 5a |
| 6 | If credit exceeds tax owed, carry the remainder forward to next year’s return via Line 16 |
Eligible costs include solar panels, inverters, mounting hardware, labor for installation, and wiring. Do not include loan interest or general roof repair costs.
Figures may vary. Verify with a licensed tax professional before filing.
What Solar Incentives Are Still Available in Sonoma County in 2026?
Sonoma County homeowners installing solar or battery storage in 2026 have three meaningful programs available: SGIP, California’s property tax exclusion, and indirect savings through solar leases or PPAs.
The federal residential credit is gone, but California has not stepped back. Here is what remains active:
California SGIP (Self-Generation Incentive Program)
SGIP is now the most significant remaining solar incentive for California homeowners. It covers battery storage systems through PG&E, which serves Sonoma County.
| SGIP Tier | Rebate Amount | Who Qualifies |
|---|---|---|
| General Market | ~$150/kWh | All PG&E residential customers |
| Equity | $850/kWh | Households below 80% of area median income |
| Equity Resiliency | $1,000/kWh | Income-qualified + Tier 2/3 HFTD or 2+ PSPS events |
| RSSE (AB 209) | $1,100/kWh | Income-qualified; currently waitlisted |
Much of Sonoma County falls within PG&E’s Tier 2 or Tier 3 High Fire Threat District zones, which means many local homeowners qualify for the $1,000/kWh Equity Resiliency rebate. On a 13.5 kWh battery system, that equals $13,500 in rebates.
California Property Tax Exclusion
Solar installations in California are excluded from property tax reassessment under the Active Solar Energy System Exclusion. Adding solar will not increase your property taxes. This exclusion is set to expire after 2026, so installations completed this year still benefit.
Solar Lease and PPA Pass-Through Savings
Homeowners who do not purchase their system outright can still access indirect incentive savings. Installers using third-party ownership structures can claim commercial credits, and competitive deals typically pass a portion of those savings to customers through lower monthly payments.
Is Solar Still Worth It in Sonoma County Without the Federal Credit?
Yes, for most Sonoma County homeowners, solar still delivers strong long-term savings, especially when paired with battery storage under NEM 3.0.
California is now operating fully under NEM 3.0, which reduced export compensation to the grid by roughly 75% for new solar-only systems. This makes battery storage central to the financial case for solar.
Why solar still makes sense in 2026:
- PG&E rates in Sonoma County continue to rise; solar locks in your energy cost
- Battery paired with solar lets you self-consume your production instead of exporting at low rates
- SGIP offsets battery costs significantly for eligible homeowners
- Solar’s property tax exclusion means no added tax burden through at least 2026
- Payback periods without the federal credit are longer, but still favorable given rising utility rates
Frequently Asked Questions
Can I still claim the 30% solar tax credit if I installed in 2025 but have not filed my taxes yet?
Does Sonoma County have its own solar rebate program in 2026?
Can I carry forward unused solar tax credit from 2025 into 2026 or later?
Does the federal solar tax credit apply to solar leases or PPAs?
What is the SGIP rebate and how do I apply in Sonoma County?
SGIP is a California battery storage rebate administered through PG&E. Rebates range from approximately $150/kWh up to $1,000/kWh for homes in high fire threat zones. Your installer handles the application. Request a free quote from Suntegrity Solar to find out what tier your home qualifies for.
Conclusion
Sonoma County homeowners who installed solar by December 31, 2025 should file IRS Form 5695 with their 2025 tax return, there are thousands of dollars on the table. For new installations in 2026, the federal credit is gone, but SGIP battery rebates, California’s property tax exclusion, and strong long-term savings from battery-paired solar still make the investment worthwhile.
Get solar assessment from Suntegrity Solar to see exactly what today’s incentives mean for your home.

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