The 30% Federal Credit Expired
The Residential Clean Energy Credit (Section 25D) covered 30% of the cost of a qualifying home battery — but only for systems placed in service on or before December 31, 2025. Legislation signed on July 4, 2025 ended the credit early; it had originally been scheduled to run through 2032. That earlier schedule is what many older guides — including a previous version of this page — still describe.
Buying a Battery in 2026
If you purchase a battery with cash or a loan and it's placed in service in 2026 or later, there is no federal tax credit — whether the battery is installed with solar, added to existing solar, or standalone. The with-solar/standalone distinction that mattered under the old rules no longer changes the federal answer for homeowner-owned systems.
✗ No 30% federal credit for homeowner-purchased systems placed in service after Dec 31, 2025
If Your Battery Was Installed in 2025
The credit isn't gone retroactively. If your system was installed and placed in service by December 31, 2025, you can still claim 30% of qualified costs when you file your 2025 federal return, using IRS Form 5695. The placed-in-service date — not the purchase or contract date — is what determines eligibility, and qualifying batteries needed a capacity of at least 3 kilowatt-hours.
What Still Qualifies Federally
Leased and Third-Party-Owned Systems
A separate commercial credit (Section 48E) remains available for battery systems owned by a business — which includes batteries installed at your home under a lease or power purchase agreement. The credit goes to the company that owns the system, not to you directly, but it can show up as lower lease pricing. This structure is currently scheduled to remain available for storage into the 2030s.
✓ Third-party ownership is now the main federal pathway — compare lease terms carefully
State and Utility Programs Are Now the Main Game
With the federal credit gone for purchased systems, the incentives that remain are state and utility programs — and they vary enormously:
- State rebate programs such as California's SGIP offer battery rebates to qualifying customers, with their own eligibility rules and funding cycles
- Utility battery programs (including Massachusetts' ConnectedSolutions and various Vermont utility offerings) pay you for letting the utility dispatch your battery during peak demand
- Virtual power plant (VPP) enrollment — a growing number of utilities pay ongoing credits for enrolled batteries
These programs open, pause, and change frequently, and dollar amounts depend on your specific utility and eligibility — verify current status directly with the program before signing anything. For heat pump incentives, our rebate status tracker tracks program availability by state.
What This Means Practically
For most homeowners considering battery storage in 2026:
- Expect to pay full price federally — typically $10,000–$16,000 installed — not the net-of-credit figures many older guides still quote
- Your state and utility now determine most of the economics: time-of-use rates, VPP payments, and state rebates matter more than ever
- If a lease or PPA is offered in your area, the third-party credit may make its pricing surprisingly competitive with buying — read the terms closely
- If you installed in 2025, claim your credit on your 2025 return — it doesn't carry into 2026 purchases
The Bottom Line
The era of federally subsidized homeowner-purchased batteries ended with 2025. Batteries can still make sense — but the case now rests on your utility rates, your solar setup, and what your state offers, not on a federal credit. For the full decision framework, see our guide to whether home batteries are worth it in 2026.
Before making a decision, get actual quotes from installers and consult a tax professional about your specific situation.
Last verified: July 26, 2026. Federal credit status confirmed against ENERGY STAR and IRS Form 5695 guidance.
Disclaimer: This information is for educational purposes only and should not be considered tax advice. Federal tax law is complex and subject to interpretation. Consult a qualified tax professional for guidance on your specific situation.