For a decade you sold solar with a simple promise: 30% of the system comes back as a tax credit. In 2026 that promise is gone.
The One Big Beautiful Bill Act (OBBBA) repealed the residential clean energy credit under Section 25D, which provided a 30% credit (stepping to 26% and 22% in later years under prior law) for a homeowner's solar, storage, and related installation costs. The business credit for commercial and utility-scale projects under Section 48 was adjusted on a different timeline, but the homeowner credit that fed residential demand was eliminated.
For a small solar installer — typically a crew of 8–30, dependent on referral and door-to-door, paid on milestones — the repeal rewrites pricing, backlog, and collections at once.
What Actually Changed
Section 25D is gone for new residential installations after the repeal's effective date. A homeowner who buys a solar system for personal use on their residence can no longer claim the 30% credit on Form 5695. The system still produces power, and net metering or net billing in most states still credits excess generation, but the upfront tax subsidy is zero.
Commercial and larger systems are on a different track. Section 48 and the related bonus and domestic-content adders were modified but not eliminated in the same way. That distinction matters if you sell both residential and small commercial — the commercial customer may still have a credit path, the residential neighbor does not.
State incentives remain but are smaller and fragmented. Some states and utilities offer their own rebates, performance payments, or property tax exclusions. They are real, but none replace a 30% federal credit dollar-for-dollar.
The Pipeline Problem: Sold-but-Not-Installed
The hardest accounting and cash question is not about future sales — it is about the backlog you sold in late 2025 and early 2026 when the credit was still the pitch.
Three categories need different treatment:
1. Installed and permission-to-operate (PTO) granted before the repeal's cutoff: The homeowner may still qualify under transition relief if the statute includes a binding contract or placed-in-service grandfather. OBBBA's transition rules are narrow — a signed contract alone is not binding unless it is enforceable under state law and has significant non-refundable deposits. Don't promise. Give the customer the statute's language and a letter to take to their tax advisor.
2. Contracted but not yet installed: You have a deposit, perhaps 10–30%, and a start date in the next 60 days. The deposit is not revenue — it is deferred revenue (a liability) until the system is installed and PTO is achieved. If the customer cancels because the credit disappeared, the refund terms in your contract control. Some installers offer a non-refundable design fee; others promise a full refund. The liability on your balance sheet must reflect the contract's cancellation clause, not your hope that the customer stays.
3. Quoted but not signed: These are not backlog; they are leads. Reprice any quote that assumed the credit, and update your proposal template before the next door knock.
Pricing Without the Credit
A residential proposal that used to say "$28,000 system minus $8,400 tax credit = $19,600 net cost" now says "$28,000 system = $28,000 cost." The payback period lengthens from 7–9 years to 10–14 depending on utility rate and production.
You have four levers, and your books should show the effect of each:
- System cost reduction: Lower soft costs (design, permitting, customer acquisition), not hardware quality. Track customer acquisition cost (CAC) per install and cycle time from contract to PTO. A week shaved from permitting is a carrying cost saved.
- Financing repositioning: Without the credit, the monthly payment vs. monthly savings math is tighter. Partner financing that relied on the customer applying the credit to the loan balance in month 13 must be restructured — the "credit stepdown" is gone.
- Battery pairing: Storage can improve self-consumption and reduce export at low net billing rates, but it adds cost. Model storage as incremental cost per incremental avoided purchase, not as a marketing feature.
- Segmentation: Small commercial (Section 48) may still be viable where pure residential is not. Track backlog and margin separately by segment — commingling hides whether the residential business is now a loss leader.
Do not quietly discount to preserve the old net cost. A $3,000 discount to simulate the credit comes directly out of your margin and will show up as a lower gross profit per install that you can't sustain.
What Your 2026 Ledger Needs to Show
- Deferred revenue by job: Every deposit, milestone, and change order date-stamped, with PTO as the usual trigger for full revenue recognition. That lets you see cancellation exposure at a glance.
- Backlog at risk: A report of contracted-but-not-installed jobs with deposit size, expected margin, and cancellation clause. That is the number your lender will ask about.
- Gross margin per install: Revenue minus direct labor, subcontracted electrical, materials (panels, inverter, racking, storage), permits, and freight. Allocate design and project management consistently. If margin per install has dropped 4–6 points since the repeal, you need to know before you hire the next crew.
- Refund reserve: If your contracts allow refunds and cancellation activity rises, book a refund reserve based on expected cancellation rate, not on gut feel.
Handling the Customer Conversation
The cleanest disclosure is also the shortest:
"The federal residential solar credit under Section 25D was repealed by the One Big Beautiful Bill Act. Residential installations contracted after [effective date] are not eligible for the 30% credit. Commercial systems may still be eligible under Section 48. Please confirm with your tax advisor. Our proposal and contract reflect the current law."
Give that in writing, have the customer initial it, and keep it with the contract. Verbal assurances about transition relief are where disputes and state attorney general complaints start.
Keep Your Finances Organized From Day One
Demand shocks test backlog, margin, and cash at the same time. The installers who adapt are the ones who can see backlog at risk, margin per install, and deferred revenue by job without a week of spreadsheet work.
Beancount.io keeps that view in plain text and version control — every deposit is a liability until PTO, every change order is a transaction, and every margin report ties to the ledger you can show a lender. Get started for free and make the repeal a pricing decision, not a collections crisis.