Maximizing Returns: 2026 Residential Solar Tax Incentives and the Rise of Prepaid TPO Leases
As of February 2026, the financial playbook for home solar has undergone a radical transformation. The legislative shift brought about by the “One Big Beautiful Bill” (OBBBA) in mid-2025 has effectively bifurcated the market. For homeowners, the era of the direct Section 25D tax credit has ended, replaced by a sophisticated “Third-Party Ownership” (TPO) ecosystem that utilizes the Section 48E Clean Electricity Investment Credit.
For the modern homeowner or real estate investor, the challenge is no longer just selecting panels; it is selecting a financial structure that captures federal incentives that are now exclusively available to commercial entities.
1. The 2026 Policy Divide: Section 25D vs. Section 48E
To understand the 2026 market, one must distinguish between the two primary sections of the tax code that govern solar energy.
The Sunset of Section 25D (Direct Ownership)
Historically, homeowners who purchased their systems with cash or a loan used Section 25D to claim a 30% credit. Under the OBBB Act, Section 25D expired on December 31, 2025. Any system purchased and owned directly by a homeowner in 2026 is ineligible for federal tax credits.
The Survival of Section 48E (TPO)
In contrast, Section 48E—the commercial investment credit—remains active through December 31, 2027. This credit is claimed by businesses that own and operate solar facilities. By using a TPO model, such as a lease or PPA, a solar financing company “owns” the panels on your roof, claims the credit, and passes the value back to you via lower costs.… READ MORE ...