Homeowners Face a Deadline as Federal Solar Incentives Near Expiration
Michigan homeowners considering solar power are running out of time to claim one of the most valuable incentives in clean energy. The Federal Solar Investment Tax Credit (ITC), which currently allows homeowners to deduct 30 percent of installation costs, is scheduled to begin phasing out after December 31, 2025.
The credit, first introduced in 2006, has been a major driver of residential solar adoption nationwide. For Michigan, where average solar installations cost between $18,000 and $26,000, the 30 percent credit can translate to $5,000 to $8,000 in savings. Unless Congress renews or extends it, homeowners who wait until 2026 could see those savings drop to just 26 percent or less.
Why the Tax Credit Matters for Michigan
Michigan’s solar adoption has grown steadily in recent years, but it still lags behind many states with stronger year-round sunlight. The ITC has helped level that playing field, giving Michigan homeowners a clear financial incentive to go solar despite shorter daylight seasons.
The Michigan Public Service Commission reports that residential solar capacity increased by 42 percent from 2020 to 2024, driven largely by federal and state tax programs. Analysts warn that if the ITC expires, new installations could slow by as much as 35 percent in 2026.
That slowdown would not only affect homeowners but also impact Michigan’s growing solar workforce. The state currently employs more than 5,800 workers in solar installation, sales, and maintenance.
How Homeowners Can Still Benefit
To qualify for the 30 percent ITC, homeowners must have their systems installed and operational before December 31, 2025. That means contracts, permits, and inspections all need to be completed before the cutoff date.
Solar experts recommend starting the process early, especially given potential delays in permitting or equipment supply chains. Some Michigan homeowners who began the process too late in previous years missed eligibility by weeks.
In addition to the federal credit, Michigan residents may qualify for state-level property tax exemptions, net metering benefits, and local utility rebates. Combining these programs can reduce payback periods to as little as seven to nine years.
The Future of the ITC: Extension or Expiration?
There is ongoing discussion in Congress about extending the credit, but no official proposal has been passed. Industry groups such as the Solar Energy Industries Association (SEIA) are lobbying for at least a temporary extension to maintain momentum in clean energy investment.
If the credit does expire, analysts predict the market will shift toward community solar projects and solar leasing options, which require lower upfront costs for consumers.
Michigan’s Long-Term Solar Outlook
Even if federal incentives are reduced, Michigan’s solar industry has built enough momentum to continue growing. Lower equipment costs, improved battery storage, and rising electricity rates are still making solar an increasingly practical option for homeowners.
However, the next 14 months represent a critical window. Homeowners who act before the deadline can lock in the full 30 percent savings and take advantage of historically low installation costs.
According to the SEIA, “Every year the tax credit is available, thousands of American households make the decision to go solar. Once it declines, many wait—and those missed months can mean higher costs later.”
For Michigan homeowners thinking about solar, the message is clear: the clock is ticking.
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