But without these tax credits, installing rooftop solar will be significantly more expensive — putting it out of reach for many, especially the lower-income residents who stand to benefit the most. It would take the average homeowner five or six years longer to break even on their solar system if incentives disappear, per Ohm Analytics.
The tax-credit repeal would be only the latest blow to residential solar in the U.S., which hit a high-water mark in 2023 when 6.8 gigawatts of panels were put on rooftops across the country.
That same year, California, the country’s largest residential solar market, slashed the amount of money households can earn from selling solar power back to the grid, eroding the economics of solar as a result. High interest rates over the last few years have also hampered installations because most buyers finance solar panels. In recent weeks, two major national rooftop-solar firms have gone bankrupt due to a combination of these factors and the new uncertainty over the tax credits.
It remains unclear what the final outcome for the tax credits will be. On Monday, the Senate Finance Committee released its version of the tax bill, which aligns with the House budget bill in eliminating tax credits for rooftop solar, among other home-energy upgrades.
If the tax credits are indeed repealed or significantly reduced, it would be a major setback not only for energy affordability and for the U.S. residential solar industry that employs around 100,000 people, but for efforts to reduce carbon emissions from the power system, too.
