Can I roll over my unused solar tax credit?

The federal solar investment tax credit (ITC) for customer-owned residential systems expires December 31, 2025. With most installers at capacity through year-end, the credit is no longer accessible for most homeowners. But if you're among those who can install your system before that deadline, there's good news: You can still roll over any unused portions of your credit to future tax years until you've claimed every dollar.

For homeowners who install solar before the December 31, 2025 deadline, this rollover provision means you won't lose out on tax savings just because you couldn't use the full credit in one year. Whether you're a retiree with a modest tax bill or someone installing a large system generating a substantial credit, you'll eventually capture the full value—as long as your system is operational by December 31, 2025.

Disclaimer: This article is intended to provide an informational overview of the federal solar tax credit rollover for interested homeowners. It is not intended to serve as official financial guidance. Readers should consult with a licensed tax professional about their specific situation.

One misconception about the solar tax credit is that you can't take advantage of it if you can't use it all in one year. This can give some homeowners pause when thinking about going solar, especially retirees or others with lower tax bills who worry they'll "waste" part of the credit.

While the IRS could release updated guidance, as of now, a tax expert told EnergySage that the federal tax code allows you to carry forward unused credits to future tax years until you've claimed every dollar. Right now, there's no time limit on this rollover provision—as long as your system is installed by December 31, 2025.

What does this look like in practice? Say you install a $29,649 solar panel system in 2025—the average-priced system on EnergySage. It qualifies for an $8,895 tax credit, but you only owe $4,000 in federal taxes that year. You'd claim $4,000 of the credit in 2025, reducing your tax bill to zero. The remaining $4,895 would then roll over to 2026, and you'd continue rolling over unused portions year after year until you've claimed the full $8,895.

This rollover feature is especially valuable for those who don't owe much in federal taxes annually, like people on fixed incomes or retirement. Even high earners may need a few years to fully use their credit if they install a pricier system that might generate a $15,000 credit, for instance.

The only catch is that you need to actually owe federal taxes to use the credit. It's nonrefundable, meaning you can't get money back if your credit exceeds your tax bill. But there are no income limits or caps on the credit amount. There's also no cap on the cost of the system, so whether your solar installation costs $100,000 or $25,000, you can still claim the full 30% credit.

While you can roll over credits from systems installed in 2025, no new credits will be generated after the deadline. This creates an interesting situation: You'll be claiming a credit that technically no longer exists.

Generally speaking, existing rollover rights remain intact even after the tax credit expires, according to a tax attorney consulted by EnergySage. The federal tax code's carry forward provision doesn't have an expiration date, so you should be able to keep rolling over those 2025 credits indefinitely.

It's possible the tax form you currently use to claim the credit (Form 5695) could disappear after 2025, but it's unlikely. Even if the standard form goes away, you should still be able to claim rollovers through other tax documentation methods. It may end up being more complicated without the form, though, so consider working with an accountant to make sure you're maximizing your savings.

Keep in mind that the solar tax credit is different from some other tax credits that have strict expiration dates, so your rollover should be protected because it's based on a real system installed during the tax credit's active period.

Here's where some homeowners get tripped up: You only qualify for the tax credit—and the rollover benefits—if you actually own your solar panel system. That means buying it with cash or financing it with a loan.

If you lease solar panels or sign a power purchase agreement (PPA), the solar company owns the system and claims the credit, not you. While you miss out on the direct tax benefits and rollover flexibility, third-party ownership options are becoming more attractive, especially now that the residential tax credit is expiring. Third-party owned systems continue to qualify for commercial solar tax credits if they begin construction before July 2026 or are placed in service by 2028, and competitive providers typically pass those savings through to you as lower monthly rates—giving you indirect access to tax benefits.

The choice between purchasing and leasing comes down to your priorities: ownership and maximizing long-term savings versus capital flexibility and simplicity. Both paths can deliver meaningful electricity bill savings.

If you choose to finance your system with a solar loan or a home equity loan, loan payments are most likely not due by this year's deadline, according to the tax expert EnergySage consulted. As always, speak with a licensed tax professional to confirm what you can claim for your specific installation.

The solar tax credit has been a cornerstone of American clean energy policy for two decades, helping millions of families reduce their energy costs while building a more sustainable future. With the ability to roll over unused credits indefinitely, homeowners who installed systems before the December 31, 2025 deadline have a strong safety net—even those with modest tax bills can eventually claim the full credit value over multiple years.

Solar installations typically take two to three months from signing the contract to connecting your system to the grid. While some installers may still have capacity to complete installations before year-end, many are fully booked. For those who can still secure installation, the rollover provision ensures you won't lose value if you can't use the full credit immediately.

But it's important to remember that solar's value extends far beyond the tax credit. Most homeowners save between $37,000 and $148,000 over 25 years by going solar. You'll protect yourself against rising utility rates (which have increased 32% over the past decade) and increase your home value—benefits that remain long after the credit expires.