The federal tax credit for solar batteries ended for installations completed after December 31, 2025. If your battery was installed and operational on or before that date, you can still claim 30% of the cost on your 2025 return, or amend a prior return going back to 2023 if you missed it. For batteries installed in 2026 or later, no federal credit is currently available.
The Deadline Is the Installation Date, Not the Payment Date
The One Big Beautiful Bill, signed July 4, 2025, terminated the Residential Clean Energy Credit under 26 U.S.C. ยง 25D for any expenditure made after December 31, 2025.1Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under the One Big Beautiful Bill The statute now reads: “The credit allowed under this section shall not apply with respect to any expenditures made after December 31, 2025.”2Office of the Law Revision Counsel. 26 USC 25D – Residential Clean Energy Credit
Paying early does not lock in the credit. The IRS treats a battery expenditure as “made” when the original installation is completed, not when you sign the contract or write the check. An installation finished December 28, 2025 qualifies. An installation finished January 3, 2026 does not, even if you paid in full months earlier.1Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under the One Big Beautiful Bill
What Qualifies for the 30% Credit
For batteries installed by the December 31, 2025 deadline, the credit equals 30% of qualified costs with no annual or lifetime dollar cap. Qualified costs include the battery hardware, professional installation labor, and any wiring or piping needed to connect the system to your home.3Internal Revenue Service. Residential Clean Energy Credit A $15,000 system generates a $4,500 credit.
The battery itself must meet these requirements:
- Storage capacity of at least 3 kilowatt-hours.2Office of the Law Revision Counsel. 26 USC 25D – Residential Clean Energy Credit
- Installed in a dwelling unit located in the United States that you use as a residence.2Office of the Law Revision Counsel. 26 USC 25D – Residential Clean Energy Credit
- Owned by you. Leased batteries and systems under a power purchase agreement don’t qualify.
- Installation completed on or before December 31, 2025.
The battery does not have to be paired with solar panels. Standalone battery systems became eligible in their own right starting in 2023.3Internal Revenue Service. Residential Clean Energy Credit
The credit is nonrefundable. It can reduce your federal income tax to zero but won’t create a refund beyond that. Anything left over carries forward. If your tax liability is $3,000 and your credit is $4,500, you owe nothing and roll $1,500 into future years.3Internal Revenue Service. Residential Clean Energy Credit
If you installed the battery yourself, the equipment and materials count, but your own labor does not. Only labor paid to a professional for onsite preparation, assembly, and installation is a qualified expense.4Internal Revenue Service. Frequently Asked Questions – Residential Clean Energy Property Credit – Labor Costs
Business use in the home affects the credit. If business use of the battery is 20% or less, you can claim the full amount. Above 20%, only the personal-use share of the costs generates credit.5Internal Revenue Service. Frequently Asked Questions – Energy Efficient Home Improvement Credit – Qualifying Residence A battery used exclusively for business gets no Section 25D credit at all.
Rebates and State Incentives Change the Math
Some outside money reduces your qualified costs before you calculate 30%. Utility subsidies for buying or installing clean energy equipment must be subtracted, whether the utility paid you directly or paid your contractor on your behalf. Manufacturer or installer rebates tied to the purchase price also reduce your basis.3Internal Revenue Service. Residential Clean Energy Credit
State tax credits generally do not. Most state energy incentives are not treated as purchase-price rebates under federal tax law, even when the state calls them rebates. In practice, you can often stack a state incentive with the full federal 30% on the same installation.
Filing the Credit
Battery costs go on Part I of Form 5695, “Residential Clean Energy Credit.”6Internal Revenue Service. About Form 5695, Residential Energy Credits Include the battery unit, professional labor, wiring, and related connection work. The form calculates the 30% and compares it to your available tax liability. The final credit amount moves from Form 5695, line 15, to Schedule 3 of Form 1040, line 5a.7Internal Revenue Service. 2025 Schedule 3 (Form 1040) Tax software handles the routing automatically; on paper, verify the line numbers against the current year’s forms.
You don’t attach receipts to the return, but the IRS recommends keeping them.8Internal Revenue Service. How to Claim a Residential Clean Energy Tax Credit Hold onto the itemized invoice showing equipment and labor broken out, the manufacturer documentation confirming the 3 kilowatt-hour minimum, and any record establishing the exact installation completion date. That last one now controls whether the credit applies at all.
Amending a Prior Return If You Missed It
If you installed a qualifying battery in 2023, 2024, or 2025 and forgot to claim the credit, file Form 1040-X. You generally have three years from the date you filed the original return (including extensions) or two years from the date you paid the tax, whichever is later.9Internal Revenue Service. Instructions for Form 1040-X Attach a completed Form 5695 and explain the change in Part II of the 1040-X. On a $10,000 system, that’s $3,000 back.
Carryforward Credits Still Work
The termination of new credits doesn’t wipe out credits you already earned. If you claimed the battery credit on a 2024 or 2025 return and had unused credit because your tax liability was too low, that carryforward stays valid. You apply it against your 2026 taxes and continue rolling it forward until it’s used.3Internal Revenue Service. Residential Clean Energy Credit The mechanics don’t change: Form 5695, Schedule 3, Form 1040. The Form 5695 instructions include a worksheet for calculating the remaining available credit.10Internal Revenue Service. Instructions for Form 5695 (2025)
What About 2026 and Later
For batteries installed after December 31, 2025, there is no federal Section 25D credit. Nothing replaces it at the federal level right now, and no new incentive is pending.
State and utility programs are a separate track. Many states run tax credits, rebates, or performance-based incentives for battery storage that operate independently of federal law, and some utilities continue to offer rebates tied to demand-response or grid-reliability programs. Availability varies by location, so check with your state energy office and your utility. None matches the scale of the former 30% federal credit, but they can still reduce the upfront cost. If you’re deciding whether to install a battery now, the numbers need to work without assuming a federal credit will come back.