**Updated as of 5/22/25: While the Bill has passed the U.S. House of Representatives, it is expected to be modified while under consideration in the Senate. 

Latest Solar ITC News: House Committee Proposes Elimination of ITC for Homeowners

In a surprising and consequential move, the U.S. House of Representatives, through the Ways and Means Committee, has passed a new budget reconciliation bill that could drastically change the landscape of residential solar in America.

The bill, if signed into law, would eliminate the federal Investment Tax Credit (ITC) for homeowners—an aid to the solar movement since it was passed in 2005 under the Energy Policy Act that has helped millions of families go solar by offsetting 30% of the cost of installing solar panels and solar batteries. For decades, the ITC has helped consumers invest in clean energy, lower their utility bills, and contribute to a more sustainable future. Now, all of that is potentially at risk.

Why Is This Happening? – The Big Beautiful Bill

In the Tax Reconciliation Bill (The Big Beautiful Bill), multiple programs will be impacted including the ITC Solar Tax Credit. The Tax Reconciliation Bill is part of a broader effort to slash government spending while shifting resources toward select tax cuts. 

While some lawmakers see this as fiscal responsibility, others see it as a massive setback for clean energy policy and national security through energy independence. The bill is expected to face intense debate and changes in the Senate—particularly as key senators voice concern over provisions affecting healthcare, Medicaid, and climate-related incentives.

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Section 25D Tax Credit

According to the bill, section 25D ITC for residential solar would be completely eliminated by the end of this year. Homeowners would have to have their systems fully placed in service by December 31, 2025 to be eligible for the solar tax credit. In most cases, this means you must have Permission to Operate (PTO) from the utility by that date—though there’s some legal gray area around systems that are fully installed but still waiting for PTO. After that, the credit would disappear entirely for homeowners who purchase their systems outright.

What About Leases and PPAs?

For residential solar leases or PPAs, the bill states they will no longer qualify for the tax credit if “sold” after the bill is signed into law. The industry is still trying to confirm what “sold” technically means—it may be retroactive to the end of last year or take effect at the end of 2025. More clarity is expected from the Senate.

However, for homeowners who value ownership, long-term savings, and energy independence, this bill could mark a turning point—so it is important to stay updated on this news if you or anyone you know is planning to go solar.

Tax Credits for Commercial Solar Projects

The U.S. House of Representatives has recently passed this highly anticipated piece of legislation. Commercial or non-residential solar projects must begin construction within 60 days of the bill being signed—to remain eligible for the ITC. 

The Clean Electricity Production Tax Credit (PTC45Y) and the Clean Electricity Investment Tax Credit (ITC 48E) would be eliminated under the bill if construction of the applicable facility did not begin before 60 days after enactment. 

There is a safe harbor rule for projects with a BOC date before 60 days after enactment and have a PIS date before 2029.

Other Energy Tax Credits Are Also In Question

The proposed legislation doesn’t stop at solar. It also aims to eliminate several major tax credits that support electric vehicles, clean energy, and energy efficiency. If enacted, this bill would reverse years of progress toward the widespread adoption of renewable technologies.

The following credits are proposed to expire at the end of 2025:

Residential Clean Energy and Efficiency Tax Credits:

• Energy Efficient Home Improvement Credit (Section 25C) – Used for upgrades like insulation, windows, and efficient HVAC systems.
• New Energy Efficient Home Credit (Section 45L) – A credit for builders of high-efficiency new homes.

Clean Vehicle and Charging Incentives:

• Clean Vehicle Credit (Section 30D) – For new electric vehicles (EVs).
• Previously-Owned Clean Vehicles Credit (Section 25E) – For used EVs.
• Alternative Fuel Vehicle Refueling Property Credit (Section 30C) – For EV chargers and other alternative fueling stations.
• Qualified Commercial Clean Vehicles Credit (Section 45W) – For commercial fleet electrification.

These proposed cuts would hit consumers, contractors, and manufacturers alike—removing critical incentives that help drive affordability, innovation, and adoption in the clean energy and transportation sectors.

What Happens Next?

This bill still needs to pass the Senate, where major revisions are likely—particularly around healthcare, Medicaid, and other hot-button issues. That said, some of the worst provisions around clean energy could be reversed or softened during reconciliation negotiations.

President Trump has publicly stated that he wants the final version of the bill on his desk by July 4. That may or may not happen—but we need to treat it as a real possibility.

Once the Senate passes its version, lawmakers will enter intense negotiations to reconcile the differences with the House bill. That will be a critical window for the solar industry to make its voice heard.

What Can You Do?

The outcome of this bill may ultimately rest on swing Republicans in the House. If you are a solar business, installer, or clean energy advocate in California—or operate in any districts represented by Republican members of Congress—your voice is urgently needed.

Pick up the phone. Call their offices. Send an email. Let them know:

• The ITC is a critical tool for consumers who want to reduce energy costs
• Solar supports local jobs and small businesses in their districts
• Removing these credits would hurt both economic and environmental progress

You can take action by clicking here, and inserting your address to call their offices.

The Bottom Line

The residential ITC has been a pillar of solar adoption in America. Removing it would place the burden back on families who are trying to do the right thing for their homes, their wallets, and the planet.

For many homeowners, the savings, control, and peace of mind from going solar will still outweigh any upfront costs in the long run. But right now, the ITC provides a valuable financial boost, making it an especially opportune time to consider making the switch.

Solar is still your hedge against rising energy bills. It’s still your path to energy independence. With continued advancements in clean energy tech, the future is still bright for people to go solar—no matter what happens in Washington.