This solar tax credit rollover rule could save you from losing thousands of dollars

The clock is ticking louder than ever for homeowners considering solar. With the federal solar tax credit ending abruptly on December 31, 2025 due to President Trump’s megabill, there's one important question on many minds: What happens if you can't use your full tax credit this year?

The solar tax credit is one of the most valuable federal incentives available. It allows you to claim 30% of the total cost of your solar installation as a credit on your taxes, which means when it disappears the cost of going solar will increase by at least that 30%.

For a typical solar installation costing around $30,000, the tax credit delivers approximately $9,000 in savings. That's the difference between an approximately seven to eight-year payback period versus a longer payback period of at least 12 years in many states. Unfortunately, many homeowners don’t have large enough tax bills to claim that much money back in one year. That’s where the rollover rule comes into play.

The good news is you should be able to roll over your unused solar tax credit for as many years as needed—even after the tax credit officially ends. Your system should only need to be installed by the end-of-year deadline to qualify. If you miss that window, there will be no credit left to roll over. 

This article is for informational purposes only and should not be considered official tax advice. Please consult with a qualified tax professional about your specific situation.

One misconception about the solar tax credit is that you can’t take advantage of it if you can't use it all in one year. This can give some homeowners pause when thinking about going solar, especially retirees or others with lower tax bills who worry they'll "waste" part of the credit.

While the IRS could release updated guidance later this year, as of now, a tax expert told EnergySage that the federal tax code allows you to carry forward unused credits to future tax years until you've claimed every dollar. Right now, there's no time limit on this rollover provision—as long as your system is installed by Dec. 31, 2025.

What does this look like in practice? Let's use the numbers from our first example. Say you install a $30,000 solar panel system in 2025. It qualifies for a $9,000 tax credit, but you only owe $4,000 in federal taxes that year. You'd claim $4,000 of the credit in 2025, reducing your tax bill to zero. The remaining $5,000 would then roll over to 2026, and you’d continue rolling over unused portions year after year until you've claimed the full $9,000.

This rollover feature is especially valuable for those who don’t owe much in federal taxes annually like people on fixed incomes or retirement. Even high earners may need a few years to fully use their credit if they install a pricier system that might generate a $15,000 credit, for instance.

The only catch is that you need to actually owe federal taxes to use the credit. It's nonrefundable, meaning you can't get money back if your credit exceeds your tax bill. But there are no income limits or caps on the credit amount. There’s also no cap on the cost of the system, so whether your solar installation costs $100,000 or $25,000, you can still claim the full 30% credit.

While you can roll over credits from systems installed in 2025, no new credits will be generated after the deadline. This creates an interesting situation: You'll be claiming a credit that technically no longer exists.

Generally speaking, existing roll over rights remain intact even after the tax credit ends, according to a tax attorney consulted by EnergySage. The federal tax code's carry forward provision doesn't have an expiration date, so you should be able to keep rolling over those 2025 credits indefinitely.

It’s possible the tax form you currently use to claim the credit (Form 5695) could disappear after 2025, but it’s unlikely. Even if the standard form goes away, you should still be able to claim rollovers through other tax documentation methods. It may end up being more complicated without the form, though, so consider working with an accountant to make sure you’re maximizing your savings. 

Not all tax credits are created equal. The solar tax credit is different from some other tax credits that have strict expiration dates, so your roll over should be protected because it's based on a real system installed during the tax credit's active period.

Here's where some homeowners get tripped up: You only qualify for the tax credit—and the roll over benefits—if you actually own your solar system. That means buying it with cash or financing it with a loan.

If you lease solar panels or sign a power purchase agreement (PPA), the solar company owns the system and claims the credit, not you. While these third-party ownership options can still save you money on electricity, you miss out on the substantial tax benefits and roll over flexibility.

The distinction between what qualifies and what doesn’t is becoming crucial as the deadline approaches. Homeowners who might have considered leasing in the past should seriously evaluate purchasing options to capture the credit before it disappears. Even if you can't use the full credit immediately, the rollover provision means you'll eventually capture every dollar of savings.

The financing method doesn't matter for the credit itself—cash, solar loans, and home equity loans all qualify. The tax expert EnergySage consulted said that loan payments most likely don't need to be completed by this year’s deadline, just the system installation. As always, speak with a licensed tax professional to confirm what you can claim for your specific installation.

Solar installations typically take two to three months from signing the contract to connecting your system to the grid, so homeowners need to start moving immediately to meet the end-of-year deadline. Installer capacity is filling up fast as people rush to beat the cutoff—starting now gives you the best chance of completing your system in time.

Even if you can't use the full tax credit this year, the rollover provision means you'll eventually capture every dollar of savings. But that can only happen if your system is installed before this incentive disappears in December. 

The solar tax credit has been a cornerstone of American clean energy policy for two decades, helping millions of families reduce their energy costs while building a more sustainable future. With the ability to roll over unused credits indefinitely, there's never been a better safety net for homeowners who are ready to make the leap to solar.