On July 4, 2025, the One, Big, Beautiful Bill Act was signed into law, affecting federal taxes, credit, and deductions starting in 2026.
Two of the credits impacted were the Residential Clean Energy Credit (which offers homeowners a 30% tax credit for installing clean energy systems such as solar panels, battery storage, and geothermal heat pumps) and the Energy Efficient Home Improvement Credit (which previously granted homeowners up to $2,000 off heat pumps, water heaters, biomass stoves or biomass boilers on their tax bill, so long as the appliance had a high-efficiency rating).
Originally, the first of these credits was set to run for any qualified energy-efficient improvements made between 2022 and 2032. Now, according to Forbes, “credit will not be allowed for any expenditures made after December 31, 2025. The IRS has confirmed that if installation is completed after December 31, 2025, you cannot claim the credit – that’s true even if full payment has already been made.”
That’s right: as of January 1, 2026, new clean energy property installations will no longer receive either credit, even if contracts are signed prior to New Year’s Day. To obtain credit, installation must be completed during 2025.
What Does This Mean for Contractors and How Can You Prepare?
If you’re one of the many contractors offering clean-energy solutions to residential homeowners, here are three things you need to consider before both the Residential Clean Energy Credit and Energy Efficient Home Improvement Credit end:
1. You should expect a spike in both repair and installation calls for these services before the end of the year
It’s possible you’ve already seen an uptick in solar, wind, and geothermal installations since the announcement was made back in July, but as we get closer to the deadline, more people are going to try to guarantee their credit because, according to the Silver Tax Group, there’s no limit to how much money you can claim (i.e. a $30,000 solar system installation by New Year’s Eve allows you to claim the full $9,000 tax credit – but $0 as of January 1, 2026).
While solar panel installations can take a long time to complete, you may see smaller, one or two-day jobs come through with more frequency, such as water system replacements. If you haven’t, start calling previous customers who are around the 20-year mark for geothermal and explain the situation. With a tight deadline approaching, the time to act is now, and if you need help getting started, consider calling us to discuss our all-in-one financing platform, which can help you lock in customers faster.
2. Sales will take a hit
HVAC sales are already down in 2025, but you can expect to see a sharp drop in solar and geothermal demand once the new year starts, as well. Anuj Khanna, our founder and CEO, notes that the last time this happened in 2017, “sales dropped 50%.”
In an interview with Maria Taylor of the ACHR NEWS, Ryan Dougherty of the Geothermal Exchange Organization (GEO) reiterated this number’s relevance, saying:
“We have kind of a painful memory of what happened in 2017 when the credits went away – sales in the industry went down by around 50%. A lot of companies left the industry… by the end of [2025], the repeal of 25D is going to affect businesses. I think it will affect consumer sentiment and buying habits or tendencies.”
Since you can expect to see a drop in sales volume, now’s a great time to focus on recurring revenue. Sure, you can start the new year off with a few marketing campaigns, but you may be wasting money. If sales are down, you want to focus on customer retention, and our Premier Program® is just the thing you need to turn one-time buyers into lifelong customers without ever needing to lift another finger.
3. There are still state and utility incentives available
Tell homeowners to do their research, as these incentives vary from state to state and depend on whether there are robust solar incentive programs in place. And while the full tax credit amount only applies to projects beginning construction in 2025, the NGWA notes that “the bill maintains commercial geothermal tax credits (Section 48 Investment Tax Credit) through 2034, offering some relief and planning certainty for large-scale projects.”
It’s also important to know that solar lease tax credits for commercial solar projects will remain available for the full amount through 2032. These are governed by the Investment Tax Credit (ITC); however, the availability of this credit will be more limited. There will be strict rules in place to claim it, as well as shorter claim windows and compliance risks.
In his interview with ACHR NEWS, Dougherty made a point to note that:
“Congress saw fit to leave us completely untouched on the commercial side — we’re not even in the ‘One Big, Beautiful Bill’ really at all. We have a live path to 2035, and there’s a two-year step-down… we’ve got about a decade ahead of us to leverage these incentives, and my hope is that we can bring those credits on the commercial side to bear on the residential side.”
Dougherty also said that commercial geo systems being able to be leased by third parties – including to homeowners – is “cold comfort, and in some respects, maybe a silver lining to losing 25D, but I really think it sets the groundwork. It sets the table for the next stage of the evolution of the geothermal industry.”
In short, homeowners will need to pivot away from relying on tax credits quickly. Working with a company that specializes in third-party leasing to contractors, like ours, can help you stay ahead of the curve.
Connect With Us to Navigate This Upcoming Change
With so many changes on the horizon for contractors who focus on energy-efficient installations, this might be a stressful time.
Contact our team to learn more about how we can help move your business forward in 2026 despite these new developments. From our all-in-one financing platform to our Premier Program and more, we can help you make 2026 a year of change that works in your favor.
