Homeowners to see higher solar costs after federal credits expire

Rhode Island homeowners will now have to pay more for rooftop solar energy following the December expiration of federal tax credits to defray the costs. 

Installers say the change effectively makes the same project cost more for a homeowner and can weaken the payback calculation once the 30 percent credit is gone.

The credit at issue is Internal Revenue Code Section 25D, the Residential Clean Energy Credit most homeowners could have used for customer-owned solar, according to the Internal Revenue Service.

Under IRS guidance implementing the July 4, 2025 law often called the One Big Beautiful Bill, the 25D credit will not be allowed for expenditures made after Dec. 31, 2025.

The IRS says the deadline is driven by completion: The project had to be completed by then, not having a contract is signed by the deadline.

Charlestown-based Sol Power Solar has warned that ending the credit is a major affordability hit for owner-occupied home solar, according to reporting by ecoRI News.

The company’s message, as described by ecoRI News, is that the residential market could shrink sharply without the federal subsidy.

With the federal credit ending, local companies are pointing more attention toward Rhode Island incentives, including the Renewable Energy Growth (REG) Program.

Newport Solar said proposed reductions to REG incentive rates would make projects less affordable and could slow adoption, according to its comments filed with the Rhode Island Office of Energy Resources, the Distributed Generation Board and the Public Utilities Commission.

The company argued in those filings that incentive levels are central to whether families can move forward with solar in the state.

State leaders have also tied the credit rollback to household energy costs in Rhode Island.

“By eliminating energy tax credits, the bill cripples our ability to expand our energy supply and risks driving up costs for families,” Gov. Dan McKee said in a July 1, 2025 statement from the Office of the Governor of Rhode Island.