Big Changes Ahead? Understanding the "Big Beautiful Bill" and Your Solar Investment

There's a buzz of uncertainty in the solar world right now, often referred to as the "solar coaster". This time, the twists and turns are coming from Washington, D.C.. A legislative move called the "One Big Beautiful Bill Act," recently passed by the U.S. House of Representatives, is causing significant concern within the solar industry and for anyone considering going solar.

What Exactly is the "Big Beautiful Bill"?

The "One Big Beautiful Bill Act" was passed by the House in late May 2025. According to the sources, this bill is intended to pay for President Donald Trump's campaign promises, which include making his 2017 tax cuts permanent, cutting other taxes, and increasing spending on border security and defense. Fiscal hawks in the Republican party estimate it would add $2.4 trillion to the deficit.

While it includes non-energy related provisions like repealing taxes on tips and overtime (with an income threshold and expiration at the end of 2028), removing the federal excise tax on gun silencers, repealing the tax on indoor tanning services, creating "Trump savings accounts", and raising the State and Local Tax (SALT) deduction cap, a key component is its impact on clean energy.

The bill aims to severely gut the Inflation Reduction Act (IRA) and bring solar-related tax credits to an abrupt end. It would reduce or eliminate green energy tax credits and other incentives that were hallmarks of President Joe Biden's IRA.

Who Does This Bill Impact and How?

If enacted in its current form, the "Big Beautiful Bill" would significantly alter the solar investment landscape.

1. Homeowners Considering Solar:

   • The Residential Clean Energy Credit (Section 25D), which currently offers a 30% federal tax credit for systems like solar panels, is targeted for repeal.
   • One source indicates this credit would end December 31, 2025. To claim the credit, your solar system must be placed into service by the end of 2025. Unlike commercial projects, there isn't a "start of construction" clause for residential systems – it must be finished and operational.
   • Another source states that if the bill becomes law, these incentives would end at the end of this year (2025).
   • A legal analysis suggests the Section 25D credit is proposed to terminate in 2026.
   • Regardless of the precise end date in the final bill, the sources agree the credit is at risk and could disappear very soon. Losing this 30% tax credit has a major financial impact. For an average 15 kW residential system costing around $40,000, the 30% credit reduces the net cost to about $28,000. Without it, the net cost remains $40,000, the payback period increases from 11 years to 16 years, and the ROI drops from 10% to 7%.

2. Businesses and Farms Considering Solar:

   • The bill also impacts the Commercial Solar Tax Credit (Section 48E).
   • Under the proposed changes, all commercial projects must start construction within 60 days of the bill becoming law. This can only realistically be met by "safe harboring," which involves investing at least 5% of the project cost in hardware.
   • If a project is safe-harbored, the system must be installed by December 31, 2028, to qualify for the tax credit.
   • New, stringent Foreign Entity of Concern (FEOC) requirements would be introduced, requiring materials to not come from or be manufactured by companies with ownership in a foreign country of concern. Violating this would eliminate tax credit eligibility. These FEOC restrictions involve complex rules related to ownership and material assistance from prohibited foreign entities, introducing significant complexity.
   • The loss of the tax credit, which combined with depreciation often results in net costs significantly lower than the upfront cost, will eliminate the ability for many businesses to invest in solar. For a 100 kW commercial system eliminating the credit increases the net cost by about $60,000, the payback period moves from 9 years to 14 years, and the ROI drops from 13% to 8.3%.
   • While cutting the solar tax credits, the bill proposes reinstating 100% bonus depreciation for businesses, allowing them to depreciate the entire cost in the first year. However, even with depreciation, the net cost is higher without the tax credit.

3. Companies Offering Solar Leasing/PPAs:

   • A significant impact is the proposal to immediately end subsidies for solar leasing companies. These companies help make rooftop systems affordable for homeowners by owning the panels and claiming the tax credit, while homeowners pay a monthly fee or buy the electricity generated.
   • Eliminating this 30% tax credit for leasing companies risks stifling this sector and could lead to a massive drop in installations.

4. The Solar Industry as a Whole:

   • These changes represent a significant challenge. The 60-day construction start window for commercial projects is very difficult to meet. The FEOC requirements could severely disrupt the equipment supply chain. Losing tax credits reduces demand. The residential deadline could cause installer backlogs, making it hard for people to meet the deadline. The industry faces a dramatic shift from significant incentives to virtually none. This could result in as much as 40% less residential solar capacity being installed over the next five years. It also impacts U.S. manufacturers who supply equipment, some of whom have increased American-made sourcing thanks to existing IRA subsidies.

Beyond solar, the bill proposes accelerating the repeal or phaseout of credits for other technologies like wind, geothermal, EVs, EV charging stations, carbon capture, nuclear, clean hydrogen, and advanced manufacturing. It also proposes repealing the ability for eligible taxpayers to transfer certain tax credits for cash, which currently helps developers finance projects.

Why the Urgency and What You Can Do Right Now

The sources strongly emphasize that now is the time to act if you are considering solar. Incentives will likely never be better than they are currently.

1. Act Fast on a Solar Investment: Request a quote and start the process as soon as possible. Solar projects aren't developed overnight; they require time for design, permits, product procurement, and installation. Installers' backlogs are quickly filling up as people rush to secure incentives before they disappear. For homeowners, this means working to have your system placed in service potentially by the end of 2025. For businesses, understanding the 60-day safe harbor rule is crucial. Delaying could mean missing out on thousands in tax credits.

2. Contact Your Elected Officials: Use your voice! Contact your senators and representatives. Share your personal story about why solar energy and the current incentives are important to you. Encourage them to preserve the solar tax credits or phase them out responsibly. Urge them to protect these vital tools for energy independence, economic growth, and sustainability, as the future of solar depends on it.

How to Prepare for Potential Changes

While the future is uncertain, with the bill moving to the Senate where debates and negotiations are expected and revisions are likely, there are ways to prepare:

• Understand the Financial Impact: For a typical home paying $180 in electricity bills, the payback period increases by 5 years, and ROI drops by over 3% points. This helps you understand the potential cost increase if the credit is eliminated.
• Factor in Timelines: Be realistic about the time it takes to complete a solar project. The risk of installer backlogs could make meeting deadlines challenging. Starting the process early is the best way to mitigate this risk.
• Stay Informed: Keep an eye on the bill's progress in the Senate. The timeline for a decision is uncertain but could be by July 4th or the August debt ceiling deadline.
• For Commercial Projects: If the bill passes, understand the detailed requirements for safe harboring within the 60-day window and the Dec 31, 2028, installation deadline. Also, be prepared to navigate the complex new FEOC requirements related to supply chain and ownership.

In conclusion, whether you are a homeowner, business owner, or farmer, the time to seriously consider investing in solar is right now. With incentives as good as they are currently and real uncertainty looming, securing your savings by acting quickly is the smartest move.