Solar Tax Credits and Incentives

Early in July, 2025 President Trump signed into law the budget reconciliation bill known as the “One Big Beautiful Bill.” The new law contains substantial changes to the Federal tax incentives available to people installing solar at their home, farm or business. The Treasury Department has been tasked with developing and providing the details of the new legislation as there are many unanswered questions about the implementation of the law. The below outline is what we know.

Residential Federal Tax Credit (Ended 12/31/2025):*

The current 30% Residential Federal Tax Credit (Section 25D) ended on December 31, 2025. See our Residential Manufacturer Rebate Program for a 20%-30% rebate.

Commercial / Agricultural Federal Tax Credit:*

The current 30% Commercial/Agricultural Federal Tax Credit (Section 48E) will end on December 31, 2027. A project will qualify for the 30% Federal Tax Credit if the project construction commences before July 4, 2026.* If construction does not commence before July 4, 2026, the project must be placed in service before December 31, 2027. For more specific details visit: 26 USC 48E: Clean electricity investment credit.
A 100% bonus depreciation has been restored and is now in effect for commercial projects. Businesses can immediately expense qualifying assets placed in service after January 19, 2025, eliminating the previously scheduled phase-down. *Consult with a tax professional on the completion of the proper federal solar energy tax forms.
(04/01/2026 – The Rural Energy for America Program will not be making further grant awards for the fiscal year. Visit the program website for full details.)

Non-Profits Federal Tax Credit (Direct Pay):*

Non-profits and state and local governments can use the Direct Pay (also known as Elective Pay) option for all or a portion of the solar tax credit. Non-profit organizations can receive direct payment from the IRS for a portion of the cost of installing a solar array. This direct pay option allows tax-exempt entities to effectively receive a cash refund for the Investment Tax Credit (ITC) they would otherwise be eligible for.* For more specific details visit: https://www.irs.gov/credits-deductions/elective-pay-and-transferability

Battery Energy Storage Systems (BESS) Federal Tax Credit:*

Battery Energy Storage Systems (BESS) are eligible for the 30% Federal Tax Credit for batteries with at least 3 kilowatt-hours (kWh) of capacity. For more specific details visit: 26 USC 25D: Residential clean energy credit or 26 USC 48E: Clean electricity investment credit.

For more information, visit Energy.Gov, Solar Energy Industries Association (SEIA), IRS Form 5695 Residential Energy Credits

Solar Incentives for Iowa:*

Take advantage of our limited-time Residential Manufacturer Rebate Program for a 20-30% rebate.
See Federal tax credit incentives above for residential, commercial and non-profit sectors.
Some utilities offer their own incentives. For example, the City of Ames, Iowa offers a Smart Energy Rebate to help offset the out-of-pocket costs of installing a qualified renewable energy generating system.
No Iowa sales tax is collected for the purchase of a solar array.
During the first five years, a solar array in Iowa will not increase your property tax liability.

Solar Incentives for Illinois:*

Take advantage of our limited-time Residential Manufacturer Rebate Program for a 20-30% rebate.
See Federal tax credit incentives above for residential, commercial and non-profit sectors.
Some utilities offer their own incentives. For example, ComEd offers a Distributed Generation (DG) Rebate program to help offset the out-of-pocket costs of installing a qualified renewable energy generating system. Ameren has a similar rebate program in place. The rebate program is available to Residential, Commercial, Industrial, and Community Solar projects. The rebate for residential and small commercial projects is $300 per kW of solar installed. If a battery is added to this system, the rebate for this project is $300 per kWh. Customers must be on hourly pricing to qualify. Call and speak with one of our local Solar Energy Consultants for information on your specific utility’s solar policy or rebate programs.
Solar Renewable Energy Credits (SRECS) Adjustable Block Program
*(Eligibility in the Adjustable Block Program requires working with an approved Solar vendor. Eagle Point Solar has completed the vetting process and our Solar Energy Consultants are certified by the Adjustable Block Program’s administration. Eagle Point Solar is able to facilitate your ABP payout and professionally install your array system.)
A solar array in Illinois will not increase your property tax liability.
Illinois Power Agency Renewable Resources.

Solar Incentives for Wisconsin:*

Take advantage of our limited-time Residential Manufacturer Rebate Program for a 20-30% rebate.
See Federal tax credit incentives above for residential, commercial and non-profit sectors.
Focus on Energy – Residential Incentive – For a system size less than or equal to 4 kW, the rebate is $600 per kW. For a system size greater than 4 kW, the rebate is $2,400 total.
Focus on Energy – Business Incentive – For a system size less than or equal to 4 kW, the rebate is $600 per kW. For a system size greater than 4 kW but less than or equal to 456 kW, the rebate is $2,400 plus $50 for every kW over 4 kW. For any system over 456 kW, the rebate is $25,000 total.
A solar array in Wisconsin will not increase your property tax liability. *NOTE: Work with a Focus on Energy Trade Ally to ensure the system installed qualifies for program incentives.

*Consult with your tax professional to learn more about how you can take advantage of tax credits and incentives. Not all clients are eligible for the Federal Investment Tax Credit (FITC).