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Disclaimer: Eagle Mountain Solar is not a tax advisor. Always consult a licensed tax professional before making financial decisions related to solar incentives or eligibility for the federal tax credit.
The Solar Tax Credit Explained
The federal solar Investment Tax Credit (ITC) has been one of the biggest incentives for homeowners to go solar over the past two decades. As of 2026, it still allows you to claim 30% of your total system cost as a credit on your federal taxes.
That means:
- A $30,000 solar system = $9,000 credit
- A $20,000 solar system = $6,000 credit
But here’s the catch: not everyone qualifies, and whether you own or lease your system makes a big difference.
So… Can You Claim the Tax Credit if You Lease Solar?
No — not directly.
If you choose to lease your solar panels or sign a power purchase agreement (PPA), you do not own the system, and therefore you can’t claim the tax credit.
Instead, the solar leasing company (or PPA provider) owns the system and claims the tax credit themselves. In return, they typically factor the credit into your lower monthly payment or upfront cost.
This is part of what makes leasing a smart option for:
- Retirees or fixed-income homeowners
- Households with low or no tax liability
- People who don’t want to worry about maintenance or ownership
Who Can Claim the Federal Solar Tax Credit?
You must meet all of the following criteria:
- You purchased (not leased) the system with cash or a loan
- The system is installed on your primary or secondary U.S. residence
- You have federal tax liability in the year the system is installed
- The system is new (not previously installed or used)
If you meet all those conditions, you can claim 30% of the cost on your IRS Form 5695 when you file your taxes.
What If You Can’t Use the Full Tax Credit?
The good news is the solar tax credit is non-refundable but carry-forwardable.
So if you can only use part of it this year (say, $5,000 of a $9,000 credit), you can roll the remaining balance into next year—and keep doing so for as long as the credit remains in effect.
But that brings us to an important point…
The 30% Tax Credit Might Not Last Forever
The 30% ITC is currently scheduled to remain in place through 2032, but several political and budget proposals in late 2025 and early 2026 have suggested cutting, phasing out, or modifying the credit earlier.
If Congress votes to reduce the credit or eliminate it as part of budget reform, homeowners waiting to go solar may miss out entirely—or only qualify for a reduced incentive.
This is especially relevant for leases or PPAs, because the companies offering them are factoring the 30% credit into your pricing. If it goes away, lease payments could rise—or lease options could shrink altogether.
So Is Leasing Still Worth It?
In many cases, yes—especially if you:
- Can’t or don’t want to claim the tax credit
- Prefer a low fixed payment with $0 upfront
- Want a system that includes full maintenance and monitoring
- Don’t mind not owning the panels outright
Leasing typically offers:
- Lower monthly payments than your current utility bill
- Lower credit score minimum than financing
- A hassle-free experience backed by performance guarantees
And even if you’re not the one getting the tax credit, the leasing company is—which means you’re still indirectly benefiting from the discount.
Lease vs. Buy: The Quick Comparison
| Feature | Lease/PPA | Purchase (Loan/Cash) |
|---|---|---|
| Own the system? | No | Yes |
| Get the tax credit? | No (leasing company does) | Yes (if you qualify) |
| Upfront cost | Usually $0 | $0 if financing |
| Monthly payment | Typically lower | Typically higher at first |
| Adds home value? | Sometimes | Yes, in most cases |
| Includes maintenance? | Yes | Sometimes (varies by plan) |
| Credit score requirements | Moderate | Higher for best loan terms |
Final Thoughts: Act Before Incentives Change
Whether you plan to lease or buy your solar system, timing matters.
- If you’re buying, the 30% federal tax credit is still on the table—for now.
- If you’re leasing, your monthly rate likely reflects that same 30% benefit.
- If the tax credit disappears, both purchase and lease options may become more expensive.
Waiting may cost you not just in higher electric bills, but also in missed savings opportunities.
How Eagle Mountain Solar Helps You Choose
At Eagle Mountain Solar, we help you compare all your options:
- Lease vs. finance vs. cash purchase
- Tax credit eligibility based on your situation
- Upfront and monthly costs
- Long-term value and homeownership goals
We’re not tied to just one installer or one option. We work to find what’s right for you, and if solar doesn’t make sense—we’ll tell you that, too.
👉 Want expert guidance on whether leasing or buying makes the most sense?
Let’s take a look at your usage, roof, and goals to put together a plan that works.
Schedule a free solar consultation today »