On May 13, 2025, the U.S. House of Representatives Ways and Means Committee released a budget reconciliation bill with major implications for the solar industry. At the center of the proposal is the elimination of the Section 25D Investment Tax Credit (ITC) for residential solar installations. For decades, this credit has been the cornerstone of residential solar adoption in the United States, allowing homeowners to recoup 30% of the total system installation cost.

The proposed bill states that residential systems must be placed in service by December 31, 2025, in order to qualify. After this date, homeowners would lose access to this crucial financial incentive.

In addition, the bill seeks to accelerate the phaseout of the commercial solar tax credit (Section 48E), reducing it to zero by 2032. This impacts businesses and third-party owned residential systems such as leases and PPAs.

Why the Federal Solar Tax Credit Matters

At SunEarth, we have been a trusted manufacturer of solar thermal water heating systems since 1978. Our mission is to make renewable energy more accessible, reliable, and effective for homeowners, contractors, and commercial partners.

The ITC is not just a line item on a tax return. It supports:

• Homeowners, by making solar energy systems more affordable

• Contractors and small businesses, by driving demand and creating jobs

• The clean energy economy, by accelerating the shift away from fossil fuels

Eliminating the solar tax credit threatens all of these gains. Without it, the upfront cost of solar thermal systems could increase significantly, slowing adoption at a time when energy efficiency and sustainability are more important than ever.

How You Can Help Protect Solar Energy Policy

If your solar business operates in California, you can take action. The fate of this bill may come down to a few key votes from California’s Republican Representatives. The California Solar & Storage Association (CALSSA) urges anyone who does business in those districts to contact their Congressional offices today.

Use this map to find your Representative and their contact information:
Republican Congressional Boundaries - Google My Maps

Be sure to call before 5 PM Eastern Time to ensure your voice is heard.

SunEarth's Commitment to Clean Energy and Advocacy

SunEarth is committed to expanding solar thermal adoption through education, high-performance technology, and public policy support. The Investment Tax Credit has been a powerful tool in helping homeowners transition to solar water heating systems and reduce their energy bills.

We will continue to advocate for long-term, stable clean energy incentives that benefit homeowners, businesses, and the planet. We also encourage our partners and customers to stay engaged and informed as this legislation moves forward.