Big Changes to the Solar Tax Credit: What the “One Big Beautiful Bill” Means for You
If you've been thinking about going solar or you're in the solar industry, you’ve probably heard about the sweeping legislation signed on July 4, 2025—the One Big Beautiful Bill (OBBB). This law significantly alters federal clean energy tax credits, including how and when homeowners and commercial entities can qualify for solar incentives.
Here’s a breakdown of what’s changing and how it might affect you.
What changed?
For Homeowners (Section 25D):
The 30% federal tax credit for residential solar remains in place, but only through December 31, 2025.
To qualify, the system must be fully installed and paid for by the end of this year.
There is no longer a “start-of-construction” exception—contracts alone aren’t enough.
For Commercial and Leased Projects (Section 48E / 45Y):
These credits have shifted to a “technology-neutral” format, available to any clean energy source that meets emissions and labor standards.
Two ways to qualify:
Start construction by July 4, 2026, or
Place the project in service by December 31, 2027
New sourcing requirements apply, disqualifying systems that include components from “foreign entities of concern” (FEOCs)—primarily affecting China-sourced equipment.
What’s new from the White House?
On July 8, 2025, President Trump signed an Executive Order directing the U.S. Treasury to tighten enforcement of the new tax credit timelines. Specifically, the order:
Calls for revised “start of construction” rules within 45 days of the law’s enactment.
Aims to prevent developers from using stockpiled equipment or minimal site activity to claim construction has begun.
Targets safe harbor practices—especially the “5 percent test” and “physical work test”—used by commercial developers to lock in tax credits.
This move is politically significant. While the bill itself set fixed expiration dates, the Treasury has discretion over how eligibility is defined, especially for commercial and leased residential systems. The order does not affect customer-owned residential systems (Section 25D), which still must be completed and paid for by December 31, 2025.
If you’re planning a commercial or leased project, you’ll need to watch for Treasury’s new guidance by August 18, 2025. It’s possible that:
The 5 percent test (based on spending a minimum on project equipment) could be eliminated.
The physical work test could be tightened, requiring more substantial and continuous construction activity.
The Administration may skip public comment and issue final rules immediately, though doing so could open the door to legal challenges.
How does this affect me?
If you're a homeowner:
You still have access to the full 30% tax credit, but only if your system is installed and fully paid by December 31, 2025.
This is your last guaranteed window to claim the credit.
If you're a developer or business:
You need to begin real construction by July 2026—or risk losing eligibility.
You’ll need to follow closely how “construction” is redefined by the Treasury.
Supply chain scrutiny is now stricter. Equipment from certain foreign manufacturers could disqualify your project.
Final thoughts
The One Big Beautiful Bill puts solar and clean energy tax credits on a tighter schedule, and the executive order adds another layer of urgency and uncertainty—especially for large-scale or leased projects. For homeowners, the message is clear: 2025 is the final year to claim the 30% tax credit. For commercial stakeholders, this is a critical time to evaluate compliance strategies, timelines, and sourcing.
Need help determining where your project stands? Let’s talk—because these new rules are moving fast, and planning ahead is no longer optional.
510-559-7700 or email nsaglam@allyelectricandsolar.com to get started.
Can I Oversize a Battery Compared to Solar Under NEM or NBT in California?
Updated: June 24, 2025
Short answer: Yes—for now. But that could change after August 16, 2025.
What Is the 150% Storage Sizing Limit in NEM/NBT?
California’s Net Energy Metering (NEM) and Net Billing Tariff (NBT) programs have long included a rule that limits battery size to no more than 150% of the paired solar system’s nameplate capacity (kW). The original goal was to prevent oversized battery installs using token solar to access NEM benefits like:
Grid upgrade cost exemptions
Avoiding departing load charges
Is This Rule Being Enforced Right Now?
No. The 150% storage cap is on pause — and has been since 2020, when the CPUC suspended it to support wildfire resilience efforts.
The pause was extended in 2023 for two more years.
It currently applies to both NEM and NBT systems.
The rule technically still exists in the tariff but is not being enforced at the moment.
So yes — for now, you can oversize your battery relative to your solar system.
What Happens After August 16, 2025?
The storage sizing cap is scheduled to return on August 16, 2025 unless the CPUC takes further action.
Any interconnection applications submitted on or after that date will be required to conform to the 150% rule.
Projects submitted before August 16 that are free of deficiencies (except the building permit) will not be affected.
Can the Rule Still Be Changed?
Yes — and action is already underway.
The California Solar & Storage Association (CALSSA) filed a petition last year to remove the cap permanently. The CPUC denied it, stating the utilities might propose a better path forward. But after no utility follow-through, CALSSA filed a new compromise petition in June 2025.
If approved, it would:
Eliminate the 150% limit, and
Add limited oversight for unusually large storage projects.
What Should You Do?
If you're planning a solar + battery project with a large storage system, here’s what we recommend:
Submit your interconnection application before August 16, 2025
Ensure it is free of deficiencies other than the final building permit
Work with an experienced contractor who knows the rules
Why Work with Us?
At Ally Electric & Solar, we’re one of the most experienced solar + storage contractors in the Bay Area when it comes to NEM, SGIP, interconnection rules, and battery sizing strategy. We help homeowners and businesses:
Navigate policy changes
Maximize rebates and incentives
Stay fully compliant while planning for resilience
Have Questions? Let’s Talk.
If you're thinking about adding a battery or increasing your energy independence, we’re happy to walk you through your options. Now is the time to act—before the rules change again.
510-559-7700 or email nsaglam@allyelectricandsolar.com to get started.
Claim $30,000–$45,000 in 2025 SGIP-Funded Rebates for Solar + Enphase Energy or other batteries
California’s RSSE Program Opens June 2 — Join Our List Before May 20
If you’ve been waiting for the right time to go solar with battery backup, this is it. California’s brand-new Residential Solar and Storage Equity (RSSE) program offers $30,000–$45,000 in SGIP-funded rebates to qualifying homeowners who install solar + battery systems like the Enphase 10C .
💥 Pre-registration ends May 20
🗓️ Application window opens June 2
⚠️ Funding is first come, first served — and will go fast
✅ How Much Can You Get?
California’s RSSE rebates cover:
$3.10 per watt of solar installed
$1,100 per kWh of battery storage
Up to $3,500 for electrical panel or wiring upgrades
🔋 Example: Enphase Energy 10C or FranklinWH + 6 kW Solar System
Estimated SGIP RSSE Rebate breakdown:
$14,850 for the battery
$18,600 for the solar
$3,500 for upgrades (if needed)
Estimated SGIP RSSE Rebate Breakdwon: ~$36,950 – $40,950
30% Federal Investment Tax Credit (ITC)
This system may qualify for the 30% Federal ITC, depending on how the project is funded and owned. ITC treatment varies:
If the SGIP rebate is funded by state funds (typical for RSSE projects), the ITC can be calculated on the full project cost, but the SGIP rebate will be reduced by the amount of the ITC.
If the SGIP rebate is funded by ratepayer funds, the ITC is generally calculated on the net project cost after SGIP, and the SGIP rebate is not reduced.
solar and Enphase 10C Battery
🏡 Who’s Eligible?
To qualify for the RSSE rebate:
You must own and live in the home
You must meet income limits (e.g., $125,050 for a household of 4 in the Bay Area)
Household Size — Maximum Income
1 — $87,550
2 — $100,050
3 — $112,550
4 — $125,050We'll help verify your eligibility and documentation.
Your home must be located in a qualifying low-income or disadvantaged community (we can check this for you)
📞 Ready to Claim Your Rebate?
We’re a certified SGIP contractor with 24+ years of experience in solar, battery storage, and electrical upgrades throughout the Bay Area. We handle everything for you:
✔ Eligibility verification
✔ Pre-application and rebate submission
✔ System design, installation & interconnection
✔ Coordination with SGIP and local utility
📬 Contact Us Before May 20
📞 510-559-7700
📧 nsaglam@allyelectricandsolar.com
📍 Serving Richmond, Berkeley, Oakland, Walnut Creek, Marin, and more
📈 Don’t Wait — Funding Is Limited and Competitive
This rebate program has been in the works for over three years, and applications will be processed in the order they’re received. If you're even thinking about solar + battery, now is the time to act.