Most homeowners researching solar still start from the same assumption: install a system, get 30% back from the federal government. That assumption stopped being true on January 1, 2026. The federal Residential Clean Energy Credit — Section 25D of the tax code, the one that gave homeowners a 30% credit for systems they bought outright — ended for any expenditure made after December 31, 2025. There was no phase-down. It simply stopped.
That leaves a real question for anyone in the Central Valley pricing out solar this year: what’s actually still on the table? The answer is more encouraging than the federal news suggests. Several state-level programs never depended on the federal credit in the first place, and they remain active in 2026. Here’s what still applies, and what changed.
The Federal Tax Credit Homeowners Used to Rely On Is Gone
To be specific about what changed: if you purchase a solar system with cash or a loan in 2026, you receive $0 from the IRS. The Section 25D credit is treated as claimed based on when the “expenditure was made,” and the IRS has confirmed that an expenditure counts as made when installation is completed — so a system finished in 2026 doesn’t qualify no matter when the contract was signed.
There is one narrow exception. If you lease your system or sign a Power Purchase Agreement (PPA), the company that owns the equipment can still claim a separate federal credit under Section 48E and may pass some of that value on to you through a lower monthly rate. That’s a different financial structure than owning your system outright, with different long-term economics, and it’s worth understanding on its own terms rather than assuming it works like the old 25D credit.
California’s Property Tax Exclusion Still Protects Solar From Reassessment
This is the incentive most homeowners have never heard of, and it has nothing to do with the federal credit. Under normal California property tax rules, adding something of significant value to your home — a room addition, a pool — triggers a reassessment and a higher tax bill. Revenue and Taxation Code Section 73 carves out an exception for solar: installing an active solar energy system doesn’t count as “newly constructed” for property tax purposes, so your assessed value — and your tax bill — stays the same.
This exclusion was originally set to sunset, but the California Legislature extended it again through Senate Bill 710, signed October 3, 2025. Under the current law, a system that qualifies for the exclusion before January 1, 2027 keeps that protection for as long as the current owner holds the property. In practical terms: a $25,000 system that might otherwise add real value to your assessed home value adds $0 to your property tax bill, every year, for as long as you own the home.
The Self-Generation Incentive Program (SGIP) Still Pays for Battery Storage
SGIP is a California Public Utilities Commission program that offers rebates for installing battery storage, and it’s still funded and accepting applications in 2026. It’s administered separately from the federal tax credit, so its rebate structure wasn’t affected when Section 25D ended.
Rebate amounts vary by income tier, utility territory, and whether your property sits in a high fire-risk area, and PG&E notes that eligible customers may see 15 to 100 percent of installation costs covered depending on the specific SGIP category. Because the program is administered entirely through your installer — homeowners can’t apply directly — it’s worth asking any contractor you’re considering whether they’re on the CPUC’s approved SGIP contractor list before you sign anything.
Net Billing Still Determines What Your Solar Credits Are Worth
If you’ve heard that solar credits aren’t worth what they used to be in California, that’s accurate, but it’s a separate change from the federal tax credit — this one came from the CPUC, not Congress. In December 2022, the CPUC approved a new Net Billing Tariff (NBT), commonly called NEM 3.0, which replaced the old Net Energy Metering structure for anyone who has applied for interconnection since April 2023.
Under the NBT, the credit you get for exporting excess solar power to the grid is based on the actual value of that power to the grid at the time you export it — which is usually much lower during sunny midday hours than the old flat retail-rate credit was. This is the single biggest reason battery storage has become a bigger part of most system designs than it used to be: a battery lets you use your own excess power during expensive evening hours instead of selling it back for a lower credit and buying it back later at a higher rate.
What This Actually Means for a 2026 System
Stack these together and the picture is different from what most people expect walking in. There’s no federal credit for a purchased system, but the property tax exclusion still protects your home’s tax assessment indefinitely, SGIP still offsets a meaningful share of battery costs for many households, and net billing still rewards a well-sized system with storage more than one without it. None of these require the federal credit to function, and none of them are going away on a fixed date the way Section 25D did.
If you’re trying to figure out what your specific numbers look like — Fresno and Clovis utility rates, your roof, your usage — that’s a conversation worth having with a licensed installer rather than a generic calculator. Pacific Solar is a CSLB-licensed (#812149) Central Valley solar contractor, and we’re happy to walk through what actually applies to your property before you sign anything.
Ready to see what these incentives actually add up to for your home? Contact Pacific Solar for a straightforward assessment of what applies to your property before you sign anything.
Frequently Asked Questions
Is the 30% federal solar tax credit still available in California? Not for a homeowner purchasing a system with cash or a loan — that credit ended December 31, 2025. It’s still claimed, indirectly, by the company that owns a leased or PPA system.
Do I need battery storage to qualify for SGIP? Yes. SGIP funds battery storage specifically, not solar panels on their own.
Is the property tax exclusion permanent? It’s extended for any system that qualifies before January 1, 2027, and that protection continues for as long as the current owner holds the property.
Why does my solar credit look smaller than a neighbor’s from a few years ago? Probably net billing. Anyone who’s interconnected since April 2023 falls under the newer tariff, which pays less for exported power than the older net metering structure did.