Solar Tax Credit Carryforward Calculator
The residential clean energy credit is nonrefundable. It can only cancel out federal income tax you actually owe, so a large system often produces more credit than a single year of tax can absorb. Section 25D(c) does not throw the remainder away: it moves to the next tax year, and the year after that, until it is gone.
This calculator shows that year by year. Enter what the system cost and roughly what you earn, and it estimates how much of the credit each tax year can absorb, how much rolls forward, and how long the balance takes to run out.
Your carryforward schedule
| Tax year | Estimated tax | Carried in | Credit applied | Carried out |
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What the 2025 law change did, and did not, do
The One Big Beautiful Bill Act, Public Law 119-21, was signed on July 4, 2025. It removed the Section 25D residential clean energy credit for any expenditure made after December 31, 2025. There was no phase-down. Earlier law had the rate stepping from 30 percent down to 26 and then 22 percent in the 2030s, and those steps were struck out along with the later end date.
Only one date decides whether a system qualifies: the date the original installation was completed. Section 25D(e)(8)(A) treats an expenditure as made at that moment, and the IRS confirmed in guidance published in August 2025 that a system finished after December 31, 2025 falls outside the credit. A deposit paid in 2025, a contract signed in 2025, and work that began in 2025 make no difference on their own.
What the law did not touch is the carryforward. The Congressional Research Service looked at this question after the change and found that Public Law 119-21 left the carryforward rules alone, so a balance earned from a qualifying 2025 installation survives the end of the credit for new installations and can keep rolling forward until it is fully used. That is the part this tool is built around, because it is the part that is easiest to get wrong and hardest to find a clear answer to.
Questions people actually ask
Did the federal solar tax credit really end?
For systems a homeowner buys outright, yes. The One Big Beautiful Bill Act, Public Law 119-21, signed on July 4, 2025, removed the Residential Clean Energy Credit for any expenditure made after December 31, 2025. There was no phase-down. Earlier law had scheduled the rate to step from 30 percent to 26 percent and then 22 percent in the 2030s, and those steps were struck out along with the later end date.
My installation started in 2025 but finished in 2026. Do I still qualify?
No. Section 25D(e)(8)(A) treats an expenditure as made when the original installation is completed, and the IRS confirmed in guidance published in August 2025 that a system finished after December 31, 2025 falls outside the credit. A deposit paid in 2025, a contract signed in 2025, and work that began in 2025 do not change that test. The completion date is the only date that matters.
I installed in 2025 but could not use the whole credit. Is the rest lost?
No. Section 25D(c) carries any unused amount to the following tax year and adds it to that year credit. The Congressional Research Service examined this question after the law changed and found that Public Law 119-21 did not alter the carryforward rules, so a balance earned from a qualifying 2025 installation survives the end of the credit for new installations.
How many years can an unused balance keep carrying forward?
No deadline is stated anywhere. Neither the statute nor IRS guidance sets a limit, and the Congressional Research Service describes carryforwards as usable indefinitely until the entire credit amount has been used. How long it actually takes depends on how much federal income tax you owe in each later year, because the credit is nonrefundable.
How is a carryforward actually claimed on a later return?
On Form 5695, the same form used for the original claim. The unused balance shown on the prior year line 16 is entered on the following year line 12, and that cycle repeats until the balance reaches zero. Only the Residential Clean Energy Credit carries forward this way. The Energy Efficient Home Improvement Credit under section 25C does not.
Why does the table show nothing used in some years?
The credit is nonrefundable, which means it can only offset federal income tax you actually owe. In a year where estimated tax liability is zero, none of the credit can be applied and the whole balance moves to the next year. Other nonrefundable credits draw on that same ceiling, so they reduce the room left for this one.
An installer offered to date the paperwork in December for work finishing later. Does that work?
The completion date governs, not the date on the paperwork. Section 25D(e)(8)(A) fixes the expenditure to the moment the original installation is finished, so stating a different date on a federal return misstates the fact the credit turns on. An underpayment that results can carry an accuracy-related penalty of 20 percent under section 6662, an excessive credit claim can carry a further 20 percent penalty under section 6676, and section 6663 provides a separate penalty for fraud.
Can a lease or a power purchase agreement still deliver a federal benefit?
Indirectly, and not to you. Under third-party ownership the financing company owns the system and claims the Clean Electricity Investment Credit under section 48E, then reflects that value in the lease payment or the power purchase rate it offers. Those arrangements run on their own statutory timetable, with construction-start rules and a placed-in-service deadline that falls at the end of 2027. This calculator does not model them, because the credit belongs to the owner of the system rather than to the household.