WASEIA jumped into federal lobbying this year to protect a section of the tax code called 25D, this is the piece that gives a tax credit to homeowners to buy solar and batteries. This is the only form of residential solar that has ever happened in Washington. 25D was fully removed in HR1, starting January 1st 2026 homeowners will receive no tax credit for buying solar, while other forms of solar tax credits are preserved through the end of 2027 and beyond.

Solar that was preserved during the budget cuts include utility scale solar, some commercial solar, and for residential solar only third-party-owned (TPO) solar was preserved. With the end of 25D the ability for a homeowner to buy solar for themselves and get a tax credit was removed. Starting in 2026, to get a large tax credit for a solar project a homeowner must sign up for a TPO product using either a lease or a purchase-power-agreement (PPA). Notice the removal of the word “ownership” or “buying” when talking about TPO solar, because you the homeowner will not own the system, you will host panels owned by a third party and you will get a contractually agreed upon financial compensation for hosting the panels on your roof for a set period of time. In 2025, TPO has captured more than half of the national residential solar market, and is projected to grow their market share more in 2026.

The main reason for there being zero TPO solar in Washington is utility pricing, typically the average utility price has to be around $0.18/kwh before the financials on a TPO contract are good enough for a TPO providing company to want to enter a market. Currently, the average price of the highest utility cost in Washington is just under $0.15/kWh. TPO was excluded from previous state based solar incentives, but those programs have concluded and there are no barriers to entry for TPO.

To qualify for getting tax credits for a system purchased in 2025 a homeowner must get their solar project installed and permitted before the end of year. Some local installers are already booking for 2026, but as of July there are still WASEIA installer members that have space for a 2025 install.
TPO solar will most likely enter the Washington market in 2026. WASEIA encourages homeowners to continue working with WASEIA members to go solar while using any and all types of financing. In 2026, homeowners can still buy solar and batteries with no sales tax, and they can still get a loan, the project will just not receive any tax credit.

The solar industry in Washington will continue despite these changes, and local policy is now the most important type of policy. WASEIA will continue to advocate for solar and homeowners at the state and federal level.