Will the Senate Save the Solar Tax Credit? Here’s What You Need to Know

The solar industry is watching Washington closely as a new draft House budget bill proposes a major change to the future of the Investment Tax Credit (ITC) for solar energy. If passed as is, this bill would set the ITC on a glide path to extinction by 2032. But all eyes are now on the Senate: Will they intervene to protect the credit that has fueled America’s clean energy boom?

Let’s break down where things stand, what the House is proposing, and whether the Senate is likely to make a move.

The House Budget Bill: A Quick Recap

On May 12, 2025, the House Ways & Means Committee released its draft budget reconciliation bill. It includes a phasedown schedule for the ITC (Section 48E) and the Production Tax Credit (PTC, Section 45Y):

• 2028: 30% credit (full value)
• 2029: 24% credit (80% of full value)
• 2030: 18% credit (60%)
• 2031: 12% credit (40%)
• 2032: 0% credit (eliminated)

The bill also proposes eliminating Section 25D—the residential solar tax credit for homeowners who purchase systems with cash or loans—after 2025. This change would hit companies like Enphase (ENPH) and SolarEdge (SEDG) hardest, while third-party ownership models like Sunrun (RUN) remain largely unaffected.

One of the more technical but impactful changes is that eligibility for the ITC/PTC would now be based on when the system is placed in service, not when it begins construction. This creates a much firmer deadline and could pose challenges, especially for utility-scale projects with long development timelines.

Will the Senate Intervene?

Right now, the Senate’s position on the ITC changes is still unclear. However, there are signs that the story isn’t over:

• Bipartisan Interest in Clean Energy: Several Republican senators have voiced support for clean energy tax credits, especially those that benefit their states’ economies and manufacturing bases. This suggests some room for negotiation.
• Budget Reconciliation Mechanics: Because both chambers are using the budget reconciliation process, the Senate can propose its own version of the bill. This opens the door for amendments, delays, or a full reversal of the House’s ITC phase-out.
• Internal GOP Divisions: The Republican Party isn’t monolithic on this issue. While fiscal hawks want deep cuts, others are more moderate and see the strategic value of energy tax credits. These internal negotiations could play a big role in what the Senate ultimately proposes.
• Timing Matters: If the final bill maintains the “placed in service” language and ends the ITC by 2032, the industry faces a hard stop unless Congress acts again in the future. The Senate could help soften that landing or extend the credit’s life.

What Should Solar Companies and Homeowners Do Now?

1. Move Quickly: Projects placed in service before the end of 2028 still qualify for the full 30% ITC. Companies should streamline development timelines to meet this window.
2. Educate Clients: Homeowners need to understand that 2025 might be the last year to claim the full 30% tax credit under Section 25D if paying cash or using loans.
3. Watch the Senate: The bill is still in its early stages. Stakeholders should stay informed and engage with trade associations advocating for a more favorable outcome.

Final Thoughts

The House’s draft bill represents a turning point for solar incentives in the U.S. While the proposed ITC phase-out is more generous than expected, it still puts a ticking clock on the most important federal incentive for solar energy.

Whether the Senate steps in to save, modify, or accelerate these changes remains to be seen. For now, the solar industry is racing against the calendar—and hoping for a little help from Capitol Hill.

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