The Federal Solar Tax Credit Long Island homeowners once relied on ended on December 31, 2025 — the residential 30% credit (Section 25D) is no longer available to homeowners who buy or finance their own system in 2026. However, Long Island businesses can still claim a 30% commercial solar tax credit (Section 48E) through 2027, and homeowners who go the lease or PPA (Power Purchase Agreement) route can still benefit indirectly through lower monthly payments, since the leasing company claims the credit on their behalf.
WHAT CHANGED: THE END OF THE RESIDENTIAL SOLAR TAX CREDIT
For over a decade, Long Island homeowners who purchased or financed their own solar system could claim 30% of the total project cost back as a federal tax credit under Section 25D – the Residential Clean Energy Credit. A $30,000 system meant a $9,000 credit straight off your tax bill.
That changed with the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, which repealed Section 25D nearly a decade ahead of its original 2034 phase-out schedule. As a result:
– Systems placed in service on or before December 31, 2025 still qualify for the full 30% credit on your 2025 tax return.
– Systems placed in service in 2026 or later – for homeowner-owned solar – receive no federal residential tax credit , regardless of when the contract was signed or deposit made.
If you already installed solar before the cutoff, you can still claim your credit using IRS Form 5695 .
Federal Solar Tax Credit Long Island for Homeowners: What's Still On the Table
Losing the direct 30% credit doesn’t mean Long Island homeowners are out of options in 2026:
- Lease or PPA (Third-Party-Owned Systems)
If you go solar through a lease or Power Purchase Agreement instead of buying outright, the company that owns the panels – not you – claims the Section 48E commercial credit. That savings is typically passed to you through a lower monthly rate. In 2026, this is the only path for homeowners to indirectly benefit from a federal solar tax credit.
- State and Utility Incentives .
New York State incentives, NYSERDA rebates, and PSEG Long Island net metering programs are unaffected by the federal repeal and can still meaningfully reduce your solar costs. Stacking these with a lease/PPA arrangement often gets homeowners close to the savings the old federal credit used to provide.
- Battery Storage Considerations.
A homeowner-owned battery added in 2026 no longer qualifies for a Section 25D credit either. However, a battery owned by a third-party lease provider may still fall under commercial credit rules – worth confirming with your installer.
COMMERCIAL SOLAR TAX CREDIT NEW YORK: STILL ACTIVE THROUGH 2027
Unlike the residential side of the Federal Solar Tax Credit Long Island program, the commercial credit (Section 48E) remains fully active for business-owned solar projects – including systems installed for retail, industrial, agricultural, or investment properties across Long Island.
Key facts on the commercial solar tax credit for small business owners in NY:
Credit value: Up to 30% of eligible project costs for qualifying commercial solar installations.
Deadline: Projects must begin construction by the applicable safe-harbor date or be placed in service by December 31, 2027, to lock in the widest eligibility window.
Stacks with depreciation: Commercial solar tax incentives in Long Island can be combined with MACRS (Modified Accelerated Cost Recovery System) bonus depreciation , allowing businesses to depreciate the solar asset’s cost on an accelerated schedule – often within the first year – on top of the tax credit itself.
Who qualifies: Business owners, commercial property owners, and certain nonprofits with tax liability (or that use direct-pay provisions, where applicable) can typically claim the credit.
This combination – a 30% tax credit plus accelerated depreciation – makes 2026 and 2027 a strong window for Long Island businesses considering solar, even as the residential credit landscape has tightened.
Federal Solar Tax Credit Long Island: Residential vs. Commercial Comparison
Residential (Owned) | Residential (Lease/PPA) | Commercial
Federal Credit in 2026 | 0% | Indirect, via lease company | 30%
Governing Section | 25D (repealed) | 48E (passed through) | 48E
Deadline | N/A — credit ended 12/31/2025 | Ongoing through 2027 | Placed in service by 12/31/2027
Additional Benefit | State/utility incentives only | Lower monthly payments | Stacks with MACRS depreciation
HOW TO CLAIM THE SOLAR TAX CREDIT (IF YOU STILL QUALIFY)
If your system was placed in service by 12/31/2025: File IRS Form 5695 with your 2025 tax return to claim the 30% residential credit.
If you’re a business owner: Consult your tax professional about claiming Section 48E alongside MACRS depreciation – commercial filings are more involved and benefit from proper documentation of when construction began versus when the system was placed in service.
If you’re leasing or using a PPA: You won’t file for the credit yourself, but confirm with your provider that the savings are reflected in your contract pricing.
FAQ
Is the federal solar tax credit completely gone for homeowners in 2026?
Can Long Island businesses still get 30% off a commercial solar installation?
Do I need to itemize my taxes to claim the solar tax credit?
Is the solar tax credit refundable?
What's the difference between the solar tax credit and state incentives?
Get Help Navigating the Federal Solar Tax Credit Long Island Rules in 2026
Whether you’re a Long Island homeowner exploring lease and PPA options, or a business owner looking to combine the 30% commercial tax credit with MACRS depreciation, the numbers work differently for everyone.
Get a free, no-obligation solar consultation from Solar O Power – we’ll walk you through what still qualifies, what doesn’t, and how to maximize your savings under the current 2026 rules.
This article is for informational purposes only and does not constitute tax or legal advice. Consult a licensed tax professional to confirm your eligibility.
