Texas Solar in 2026: What Changed After the Residential ITC Expired

On July 4, 2025, the federal 30% residential solar Investment Tax Credit expired. For the first time in almost two decades, new Texas homeowners installing solar cannot claim a federal tax credit. Here's what that actually means — and why the solar math still works in 2026.

What exactly changed

The One Big Beautiful Bill Act (signed July 2025) accelerated the sunset of Section 25D — the residential ITC. As of July 4, 2025, new residential solar purchases no longer qualify for the 30% federal tax credit. Commercial solar (Section 48) retains the 30% ITC through at least 2032.

The $0-down lease and PPA path

Because leases and PPAs are owned by a third-party financing entity, that entity — not the homeowner — claims the commercial ITC. That tax benefit is passed through to the homeowner in the form of lower monthly payments and locked-in rates. In practice, Texas homeowners today can get solar with:

• $0 down
• Monthly payment lower than their current electric bill
• 2.9% annual escalator (or fixed-rate options)
• 25-year production guarantee
• Full transferability at home sale

Why it still makes sense

Texas retail electricity rates have risen 34% over the past five years, and ERCOT forecasts continued upward pressure. A lease or PPA locks you into a predictable rate that escalates slowly (or not at all), while your utility rate keeps climbing. Over 20 years, the typical Houston homeowner still saves $30,000-$50,000.

Commercial customers: nothing changed

If you're a Texas business, farm, nonprofit, or commercial property owner, the 30% ITC + MACRS depreciation stack remains fully intact through at least 2032. Typical payback: 5-7 years.