Cutting the residential solar tax credit would force small businesses to “shut down”

"Probably go out of business."

That's what one solar installer wrote when asked what they would do if Congress eliminates the 30% residential solar tax credit (ITC). It's a sentiment echoing across the industry as thousands of small solar businesses face an existential threat from a proposal to end Section 25D of the U.S. Tax Code—the residential ITC—by 2025.

A recent EnergySage survey of over 150 solar installers reveals the potential devastation awaiting an industry mainly built on small, local businesses. The survey was conducted from late January through early March of this year after President Trump's inauguration, and captures the industry's growing concern about the future of residential solar tax incentives. While the full report is not yet published, these early findings paint a troubling picture of an industry bracing for massive disruption.

According to data from the Solar Energy Industries Association (SEIA), eliminating the residential solar tax credit could wipe out between 50,000 and 75,000 American jobs—dealing a severe blow to a sector that supports over 100,000 jobs nationwide.

Tune into our latest episode of Plugged In to hear directly from installers on how the tax credit cut would impact them personally.

An overwhelming 92.3% of solar installers reported that cutting the tax credit would harm or dramatically harm their businesses, with nearly two-thirds expecting "dramatic harm." When asked what their first change would be if the tax credit were eliminated, almost 6% said they would exit the industry. 

One installer wrote they would "shut down operations.” Others were similarly direct: "Sell my business," "change industry," "leave the industry to focus on more promising work."

For some long-time solar professionals, the potential change signals the end of their careers. Multiple respondents simply stated they would "retire" rather than attempt to navigate a post-tax-credit market. Another noted they would "focus on another business strategy, generators, and/or retire."

Installers indicated that policy uncertainty and other market headwinds, like high interest rates, are already creating financial stress. One respondent noted, "As we've already experienced a 70% revenue loss, and cut staff by 60%, [we’d] likely only focus on O&M, and liquidate assets." This suggests some businesses are already contracting in anticipation of potential changes.

A mass exodus would cause the market to consolidate. While most installers expect harm from tax credit elimination, a small minority (3.2%) actually anticipated some benefit—likely from reduced competition as smaller businesses shut down. One installer said they would have “a LOT LESS competition” if the tax credit were cut. But this isn’t good for homeowners: It could result in a future market dominated by fewer, larger companies, potentially reducing consumer choice and market innovation, which could result in increased prices.

The survey found that more than one in four installers would "do something else" entirely if the tax credit is eliminated, while others would focus on different financing options, scale back operations in specific markets, pursue only high-value customers, or cut overhead expenses.

For many businesses that plan to remain in residential solar, significant operational changes would be necessary. Unlike utility-scale solar projects, which tend to be developed by larger corporations with diversified business models, the residential solar industry is dominated by small businesses serving local communities. These companies typically operate on thinner margins and have fewer resources to weather policy changes.

"[We’d] focus more on [the] new construction market," wrote one installer about their contingency plan. Another mentioned they might "offer lower quality equipment that can be procured at a lower cost to reduce overall prices for the customer (i.e., this would be bad for U.S. manufacturing)," highlighting potential ripple effects throughout the U.S. supply chain.

Only 13.5% of the businesses surveyed believe they could continue operating without making significant changes—a stark indication of how crucial the tax credit remains to the industry's business model. Just 4.5% of respondents said the credit elimination would not impact their business at all.

The residential solar workforce has been growing significantly faster than the overall economy. According to data from the Interstate Renewable Energy Council (IREC), of the 280,000 total jobs in the solar industry, nearly two-thirds are in installation or project development—positions that typically pay above-average wages and don't require advanced degrees.

These jobs support communities across all 50 states, creating local employment opportunities that can't be outsourced. In many states, solar installation businesses have become important economic engines, providing stable jobs and energy savings for homeowners across the country. 

For an industry that has been instrumental in America's progress toward energy independence, the looming threat to the residential tax credit represents more than just business uncertainty—it could fundamentally alter the trajectory of clean energy growth in the United States, and do real damage to local economies in the process.

As Congress considers this proposal, the fate of thousands of small businesses and the clean energy jobs they've helped create hangs in the balance. To help preserve local jobs in your community, fill out this form to tell your members of Congress why the residential solar tax credit needs to be saved.