House GOP advances bill including faster phase-out of solar tax credits

Changes to the “Big, Beautiful Bill” would effectively gut solar tax credits if passed by the Senate.

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Edited by: Emily Walker
Updated May 22, 2025
5 min read
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Congress is one step closer to axing the residential solar tax credit
EnergySage

Updated May 22 at 4:30 p.m. EST

The House passed the GOP’s sweeping tax, budget, and immigration bill—which includes a measure to eliminate the 30% residential solar tax credit (Section 25D of the U.S. Tax Code) by the end of this year—early Thursday morning. After initial arguments among key conservative members that the original bill draft didn't do enough to reduce the deficit, the House negotiated changes that significantly impact both residential and commercial solar. 

Changes to the bill’s language were released after 9 p.m. EST on Wednesday. While proposed cuts to Section 25D remain the same, the new bill text includes a provision to prohibit companies from claiming the commercial solar tax credit (Section 48E of the U.S. Tax Code) for third-party-owned systems on residential properties. The provision is potentially retroactive for all of 2025, which means any residential solar systems installed as part of a lease this year would not qualify for the tax credit, though this interpretation is under legal review. Residential systems purchased with cash or a loan and installed in 2025 would still be able to claim the tax credit under 25D.

It also includes a faster phase-out of Section 48E. To qualify, construction would need to start within 60 days of the bill's enactment, and systems would need to be placed in service before January 1, 2029—much sooner than the original bill's timeframe, which stipulated a gradual phase-out of the tax credit starting in 2029 and ending in 2032. The new deadlines would be extremely difficult for commercial projects to meet.

These changes came after disagreements among House Republicans briefly delayed the original bill’s passage to the House floor. The conflict began last Friday during a House Budget Committee meeting, when five Republicans joined Democrats in opposing the bill. Four of them specifically called for deeper cuts to programs like Medicaid and clean energy tax credits. On Sunday, those four Republican holdouts allowed the bill to advance to the House Rules Committee by voting “present,” claiming that weekend negotiations had resulted in satisfactory changes.

The bill still requires approval from the Senate before it goes to Trump's desk for final sign-off—some key GOP senators have previously expressed support for clean energy tax credits, which could make it difficult to pass the bill as is. According to reporting from the New York Times early this morning before the House vote, "Republicans in the Senate have said they want to make major changes to the bill if it passes in the House."

Key takeaways

  • The 30% residential solar tax credit is at risk of being cut at the end of 2025.

  • The cut is part of Trump's "Big, Beautiful Bill," a sweeping budget reconciliation bill.

  • The cuts to the tax credit are not definitive: The bill still needs to pass the Senate, and changes will likely be made in the next few months.

  • You can use this form to tell your elected officials to preserve the residential solar tax credit—it takes less than a minute.

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As it exists today, the residential solar tax credit, commonly referred to as the Investment Tax Credit (ITC), allows solar owners to claim 30% of installation costs as a credit on federal tax bills through 2032. A gradual phase-down is set to start in 2033, after which the credit would ultimately expire at the end of 2034. If enacted, this abrupt elimination would further disrupt the solar market, an industry already facing economic headwinds thanks to Trump’s tariffs and an earlier pause on IRA funds.

The new House bill would terminate the residential solar tax credit by December 31, 2025—nearly a decade ahead of schedule and with no phase-down period. 

The GOP hopes to have it on the President's desk by the Fourth of July. However, bipartisan support for some energy tax credits in the Senate suggests that the current bill text may face opposition.

It’s unclear whether that support will extend to the residential solar tax credit specifically. But, the ITC has a long bipartisan history. Originally signed into law by President George W. Bush in 2005, it was extended by President Obama in 2008 and again by President Trump in 2020. Most recently, President Biden renewed and expanded the tax credit under the Inflation Reduction Act (IRA) in 2022, alongside other critical clean energy initiatives currently under scrutiny for potential elimination.

While the House voted this morning to advance the bill, it still needs to pass the Senate and be signed by the president before it becomes law.

It’s the Senate’s turn to vote

The bill has moved to the Senate for further consideration. Senators can now propose changes, vote it down, or pass it in its current form.

Last month, four Republican Senators publicly opposed the repeal of energy tax credits, signaling that bipartisan support for solar tax credits could be a potential roadblock to 25D's elimination—making your voice heard is more important now than ever.

President Trump has the final say

If both chambers of Congress approve the bill, it’ll head to President Trump’s desk to be officially signed into law. Although presidents have the power to veto legislation, it’s unlikely Trump would reject this particular bill, given its alignment with his party’s priorities.

The residential solar tax credit has already created thousands of jobs, increased domestic manufacturing, lowered upfront costs, and made energy more affordable for all ratepayers, not just solar adopters. Its termination would jeopardize these jobs and potentially increase electricity costs in the long term. 

Proponents of this bill are pushing for swift approval. At EnergySage, we encourage you to take action now by contacting your senators to share how eliminating the residential solar tax credit would impact you and your community. 

Send a note to your elected officials—it takes less than a minute

Your story can make a difference. Whether you’re a solar owner who has benefited from the ITC or someone who’s been considering a solar panel system, letting your senators know why this credit matters for American homeowners and local businesses can help protect the future of solar in the U.S.

Especially if you live in one of the key states listed below, consider reaching out directly to the following senators:

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