Chart: Rooftop solar set to struggle under GOP tax credit repeal

President Donald Trump’s new budget law repeals a key federal tax incentive for residential solar — and rooftop solar installations are about to plunge as a result.

Americans are expected to install 33% less rooftop solar next year than they would if federal incentives were still in place, per an updated analysis from Ohm Analytics. That’s a better outcome than the research firm’s earlier, gloomier forecast, which was based on a version of the law that would have also scrapped a separate tax credit that applies to leased systems.

The repeal of the 25D tax credit, which knocks 30% off the price of home solar and storage, will make the technology significantly more expensive. The incentive was originally available until 2035 but now disappears at the end of this year.

Already, residential solar is far more expensive in the U.S. than elsewhere, and high interest rates as well as recent state-level policy developments are eating further into the economics of buying panels. Even before the repeal, rooftop solar installations were declining year over year because of these trends.

In 2025, though homeowners are expected to fast-track solar purchases before the tax credit expires, Ohm expects an 8% decline in installations compared with last year. In 2026, the total gigawatts installed will shrink by 26%, it forecasts.

Rooftop solar is an important piece of the energy transition. In California, photovoltaic panels on roofs produce almost as much power as the sprawling large-scale arrays found in fields and desert areas.

But it’s also a critical way for people to hedge against utility rates, which have climbed high in recent years and are expected to rise even further as data centers demand more energy and the Trump administration stymies cheap wind and solar power. Most households that install rooftop solar see their energy bills drop. Poorer households benefit most.

Still, there are things within the industry’s control, from reining in ​“soft costs” to developing more virtual power plants, that can help it weather the storm — and make rooftop solar more affordable to Americans even without long-standing tax credits in place.

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