The 30% federal Residential Clean Energy Credit (Section 25D) expired at midnight on December 31, 2025. If you are buying solar in 2026, assume no federal tax credit unless Congress restores it. That changes rooftop math more than balcony math.
Without the federal credit, payback depends entirely on your utility rate and self-consumption. Run the numbers for plug-in solar in your state.
Balcony solar payback calculator →What expired
Section 25D allowed homeowners to claim 30% of qualifying solar equipment costs as a federal tax credit against income tax owed. It covered:
- Rooftop PV systems
- Solar water heating
- Battery storage paired with solar (when charged 100% from solar)
- Installation labor for the above
The Inflation Reduction Act had scheduled a gradual step-down starting 2033. The One Big Beautiful Bill Act, signed July 4, 2025, terminated the credit for systems placed in service after December 31, 2025, roughly a decade early.
Systems installed and operational before January 1, 2026 can still claim the credit on that year’s return. Unused credit from prior years can carry forward per IRS rules.
Did plug-in balcony solar ever qualify?
Probably, but it was never clearly tested.
Section 25D had no minimum system size. A $700 plug-in kit with a UL-listed microinverter plausibly qualified as “qualified solar electric property.” The IRS never issued guidance specific to outlet-plugged balcony systems.
Renters who owned the equipment (not the landlord) could theoretically claim it if they had sufficient tax liability. Most renters do not itemize enough tax to use a large credit, so practical uptake was low even when the credit existed.
Bottom line for 2026: moot for new purchases. Do not subtract 30% from any plug-in solar payback calculation.
Impact on rooftop vs balcony economics
| System | Pre-2026 net cost (after 30%) | 2026 net cost | Payback shift |
|---|---|---|---|
| $22,000 rooftop (8 kW) | ~$15,400 | $22,000 | +3–4 years typical |
| $900 balcony kit (800W) | ~$630 | $900 | +0.8–1.2 years |
Rooftop solar’s effective price jumped 43% relative to the subsidized era ($22,000 vs $15,400). Balcony solar’s absolute price barely moved because it was always in the hundreds, not tens of thousands.
Paradoxically, this can help balcony solar’s relative appeal: the entry point for partial bill relief ($600–$2,000) looks more attractive when the alternative full-rooftop path lost its subsidy.
What still exists: state and utility incentives
Federal credit expiration does not affect state programs. Several still matter for solar generally; fewer apply cleanly to plug-in balcony systems:
| State/program | Benefit | Applies to plug-in? |
|---|---|---|
| NY solar credit | 25% up to $5,000 | Unclear for plug-in; verify with NYSERDA |
| MA income tax credit | 15% up to $1,000 | Rooftop-focused historically |
| NJ SuSI (SRECs) | ~$85/MWh for 15 years | Requires ≥1 kW grid-interconnected registration |
| PA PECO rebate | $500 | Residential solar; confirm eligibility |
| Sales/property tax exemptions | Varies | Often apply regardless of system size |
Full guide: plug-in solar state incentives.
Most SREC and production-based programs require utility interconnection and registration, which plug-in laws explicitly bypass. Direct bill reduction through self-consumption remains the most reliable financial benefit for balcony systems.
Commercial credit still exists (but not for you)
Section 48E (clean electricity investment credit) continues for commercial solar installations on a different schedule. That does not help residential renters or homeowners buying a balcony kit. Leased rooftop solar owned by a third-party company may still use commercial credits on the installer’s side, which is why lease vs buy comparisons shifted after 2025.
What to tell your installer or salesperson
If anyone quotes a 2026 rooftop price “after the 30% tax credit,” they are using outdated information. Walk away or ask them to repricing at full cost.
For balcony kits sold online, ignore any product page that still advertises “qualifies for federal tax credit” without a placed-in-service date before 2026.
Planning a purchase in 2026
- Rooftop: Get three quotes at full price. Model payback without credit. In California with NEM 3.0, storage is usually required for reasonable economics.
- Balcony: Use state rate data and assume zero tax credit. High-rate states (CA, CT, NY, NH, ME) still show 3–5 year payback.
- Both: Check state-level incentives before buying. A $500 utility rebate changes balcony payback more than it changes rooftop payback.
Compare balcony solar payback across all 50 states with current EIA rates. No tax credit assumed.
Run payback math →Related: Balcony Solar vs Rooftop Solar | How Much Will I Save With Solar? | Plug-In Solar State Incentives
Dana Whitmore
Energy Engineer & Billing Analyst · Optiwatt Energy Advisor
Dana has spent the past three years analyzing residential electricity billing data across PG&E, SCE, and SDG&E service territories. She's reviewed billing records for thousands of California households, and built the simulation engine that powers this site's rate-plan comparisons. She holds a degree in Electrical Engineering and lives in the Bay Area.