Is there still a home battery tax credit in 2026?
Section 25D (the 30 percent residential purchase credit) terminated Dec 31 2025. Here is what that means for a 2026 buyer, what survived, and how California SGIP fills part of the gap.
The short answer
A 2026 cash buyer of a home battery gets zero federal tax credit.
The Section 25D residential energy property credit, which gave homeowners 30 percent back on battery and solar installations, terminated on December 31, 2025. Congress ended it early: 2025 legislation repealed the credit well before its scheduled 2032 sunset under the Inflation Reduction Act.
This page explains exactly what expired, what survived, and what options remain for a 2026 buyer.
What Section 25D was (and is no longer)
Section 25D of the Internal Revenue Code was the homeowner energy credit. It covered:
- Residential solar panels
- Home battery storage systems
- Other qualifying clean energy property
Under the IRA as enacted, the credit rate was 30 percent of installed cost through 2032, then stepped down. A homeowner who installed a $14,000 battery system could claim a $4,200 federal tax credit directly against their income tax liability.
Section 25D was terminated effective December 31, 2025. (Source: IRS, IRC Section 25D as amended.) A 2026 installation and purchase gets no credit under this section.
The one carryforward exception
If you installed a qualifying system before January 1, 2026, and you had unused Section 25D credit from that year or prior years, you may be able to carry that credit forward to your 2026 or future tax returns.
The credit is nonrefundable, meaning it can only offset tax owed, not generate a refund. If your 2025 tax liability was zero, you carry the unused portion forward to 2026 and beyond (up to the year limits in effect when the credit was earned).
This is the only remaining federal purchase credit scenario for a 2026 buyer. If your installation was after Dec 31 2025, there is no federal credit to carry forward.
Consult a qualified tax professional to confirm whether your pre-2026 installation qualifies and what your carryforward balance is.
What survived: Section 48E (for lease and PPA buyers only)
Section 48E is a federal investment tax credit for commercial and third-party-owned clean energy systems. It covers battery storage, solar, and other qualifying property when the system is owned by a business or third-party entity.
Key facts about Section 48E for home battery buyers:
- You cannot claim it. As a homeowner purchasing a system outright, 48E is not available to you.
- Your leasing company can claim it. If you sign a battery lease or PPA (power purchase agreement), the company that owns the equipment can claim the 48E credit on their tax return.
- Some of that value may flow through to you. Leasing companies and PPA providers often pass a portion of the 48E credit savings through as lower monthly payments or reduced upfront costs. This varies by provider and contract terms: it is not guaranteed, and you should ask explicitly.
- 48E does not expire with Section 25D. It remains in effect as of 2026. (Source: IRS, IRC Section 48E.)
Bottom line for a 2026 California buyer considering a lease: the lease route has a federal credit pathway that the outright-purchase route does not. Whether leasing makes financial sense overall depends on your bill size, rate plan, term length, and the specific contract terms. Run those numbers before signing.
California SGIP: the most important state incentive
California's Self-Generation Incentive Program (SGIP), administered by the CPUC, is the most significant incentive available to a 2026 California cash buyer:
- General Market tier: $150 to $200 per usable kWh of capacity. For a 13.5 kWh mainstream system, that is roughly $2,025 to $2,700 in rebates. (Source: CPUC SGIP portal; verified June 2026.)
- Equity Resiliency tier: Up to roughly $1,000 per kWh for households in high fire-threat districts or on medical baseline rates. This can cover a substantial share of system cost for qualifying customers. (Source: CPUC; verified June 2026.)
- Funding is limited. SGIP runs in funding rounds. Availability is not guaranteed year-round. Check the CPUC SGIP portal before assuming you can claim it.
SGIP is real money but smaller than what the 30 percent purchase credit was worth. For a typical $14,000 system, the 30 percent credit was worth $4,200; SGIP General Market is worth roughly $2,000 to $2,700.
How NEM 3.0 changes the calculus in California
California's Net Energy Metering 3.0 rules (effective for new solar interconnections from April 2023) sharply reduced the export rate that new solar customers receive for surplus power sent to the grid.
Under NEM 2, exporting solar was often near-retail value. Under NEM 3.0, export rates reflect avoided-cost pricing, which is a fraction of retail.
What this means for battery buyers:
- Storing your own solar surplus and using it yourself earns full retail value ($0.34/kWh blended, or $0.55+ at TOU peak).
- Exporting that same surplus earns far less under NEM 3.0 avoided-cost rates.
- A paired battery captures the retail value of solar that would otherwise export at a loss.
Under NEM 3.0, a battery is no longer a nice-to-have for a California solar household: it is close to required to make new solar economics work. This is documented and modeled by the CPUC. (Source: CPUC Decision 22-12-056, December 2022.)
The honest summary
If you are buying a home battery in California in 2026:
- There is no federal purchase credit for an outright purchase (Section 25D is gone).
- A lease or PPA may reflect some Section 48E savings, but ask for the specifics.
- SGIP is the main incentive: real money, but fund availability is not guaranteed.
- NEM 3.0 means self-storage beats exporting for new solar customers, strengthening the economic case independent of any credit.
- A pre-2026 installation may have 25D carryforward credit: a tax professional can verify.
Run your specific numbers in our calculator before deciding.