The Residential Clean Energy Credit, also known as the Section 25D tax credit, is a 30% federal tax credit available to homeowners who install rooftop solar. It is a dollar-for-dollar reduction in the income taxes an individual owes, making solar installations much more affordable. As part of the Inflation Reduction Act (IRA), the credit was set to phase out by 2035.
However, the reconciliation budget bill passed by the U.S. House of Representatives on May 22nd includes provisions that would end the tax credit. The Senate Finance Committee’s version of the bill also eliminated the rooftop solar tax credit for homeowners. This loss would not only make solar unaffordable for families, but would also deal a huge blow to solar installers and the industry as a whole.
The Senate plans to pass this budget by July 4th, so now is the time to tell your Senators and Representatives about the importance of these tax credits to the solar industry and homeowners!
Incentives in the IRA like the rooftop solar tax credit, the Investment Tax Credit (ITC)—available to businesses who invest in solar energy systems—and a separate subsidy for companies that lease residential systems, have led to a boom in the solar industry, creating more than 100,000 jobs nationwide, boosting domestic manufacturing, and with storage, providing backup power during ever-increasingly often natural disasters. In Texas alone, we now have 592 solar-related companies: 107 manufacturers, 222 installers/developers, and 263 other solar-related companies.
Solar creates enough energy in Texas to power nearly 5 million homes. To date, $50.1B has been invested in the Texas solar market, with $14.4B invested in 2024 alone. Projected growth is expected to double over the next five years. However, the loss of these tax credits presents a dire threat to the solar industry in Texas. If passed into law, Texas would be hit the hardest with an estimated loss of 34,100 jobs and nearly $50B in further investment by 2030.
Repealing the tax credits will reduce Texas’s GDP by $17.17 billion in 2030 and by $20.32 billion in 2035, as compared to keeping current policies intact, according to modeling done by Energy Innovation.
The result for consumers in Texas would be an immediate and severe increase in average annual household energy costs by more than $90 per year in 2030 and more than $370 per year in 2035 (including electricity and fuel expenses).
And solar is popular. The Conservative Texans for Energy Innovation completed a poll in March that indicated 61% of Texans are supportive of solar and what it can provide for the state. SEIA polling showed 80% of Texans support all of the clean energy incentives in the IRA (see graphic below).
