How the federal timeline actually changed
The original schedule, before July 2025
Under the Inflation Reduction Act, the residential credit sat at 30% for any system placed in service from 2022 through 2032, then it was set to step down to 26% in 2033 and 22% in 2034 before disappearing in 2035. That schedule gave homeowners nearly a decade of predictable planning room, which is why so many older articles still describe a gradual step-down.
What actually happened instead
The One Big Beautiful Bill Act, signed July 4, 2025, struck that entire schedule and replaced it with a flat cutoff. Section 25D now applies at 30% for any system placed in service through December 31, 2025, and at 0% for anything after. There's no 26% year, no 22% year, and no transition period. The step-down became a cliff.
The lease and PPA runway that's still open
Section 48E, the credit claimed by third-party owners under a lease or PPA, wasn't cut on the same timeline. It remains at 30% for systems placed in service through December 31, 2027. That's roughly two extra years of runway compared to the residential path, though the credit belongs to the leasing company rather than the homeowner. The rebate plus ITC combined calculator compares this path against ownership side by side. For the exact rules on what counts, the IRS instructions for Form 5695 are the source to read.
The separate commercial clock
Business-owned and commercial solar sits on its own version of Section 48E. Projects that began construction before July 4, 2026 generally keep a longer runway extending toward the end of 2030, while projects starting construction later face a faster wind-down closer to 2028. If solar is part of a business investment rather than a home purchase, the commercial and small business hub has tools built around depreciation and demand charges specifically.
What this means for your planning
If you're weighing whether to buy now versus lease, the honest comparison is 0% ownership credit against roughly two more years of a 30% lease-based credit passed through as pricing. Run both numbers through the federal ITC calculator before deciding, and check your state's program on the rebates and incentives hub, since most state credits were never tied to the federal schedule at all.
Your rebate total changes what a loan costs each month, and the combined loan and rebate timing tool shows that payment once you enter both figures. If you may qualify for low-income solar programs beyond what's covered here, the community solar for low-income households tool is worth checking too. The residential credit explains the terms behind this estimate in plain language.