Federal Tax Credit Ended: What Maryland Homeowners Should Do in 2026

On July 4, 2025, Congress signed the One Big Beautiful Bill Act, which eliminated the 30% federal Residential Clean Energy Credit (Section 25D) for systems placed in service after December 31, 2025. For Maryland homeowners who buy solar with cash or a loan in 2026, that means no federal tax credit on a personal tax return.

That sounds bigger than it is. The federal credit was one of several incentives that made rooftop solar work. Maryland's state-level incentive stack is fully intact in 2026. The commercial credit that funds solar leases and PPAs is still alive. Pepco and BGE rates keep rising. Solar still pencils out for most Maryland homes with a suitable roof. The math just shifted, and the financing decision now matters more than it did in 2025.

What was eliminated

The Residential Clean Energy Credit (Section 25D) let homeowners who bought solar with cash or a loan claim 30% of the total system cost as a dollar-for-dollar federal tax credit. It covered panels, inverters, labor, batteries, and permitting. It is gone for any residential system placed in service after December 31, 2025.

Systems that achieved Permission to Operate (PTO) on or before December 31, 2025 still qualify for the full 30%. Any 2026 quote that still applies the federal residential credit to a cash or loan deal is using out-of-date math.

The commercial credit (Section 48E) still works

The commercial Investment Tax Credit (Section 48E) survived the OBBBA cuts. Systems owned by a business can still claim the full 30% credit. For projects that begin construction before July 5, 2026, the placed-in-service deadline is December 31, 2030. Projects that begin construction July 5, 2026 or later must be placed in service by December 31, 2027. The 30% rate itself is the same in both cases; only the completion window tightens.

For residential homeowners, this matters because solar leases and Power Purchase Agreements (PPAs) are commercially-owned arrangements. The leasing company claims the credit and passes the savings through as a lower monthly payment. The subsidy did not disappear. For lease customers, it routes through the financing company instead of your tax return.

If you are evaluating commercial solar for a Maryland business, see our Commercial Solar 2026 guide for the construction-start timing, depreciation math, and SREC stack that govern the decision.

Maryland incentives that still apply in 2026

Maryland's state incentive stack is what carries the financial case for residential solar in 2026. Each program operates independently of the now-defunct federal residential credit.

Maryland SRECs with the Brighter Tomorrow Act multiplier

Every megawatt-hour your system produces generates one Maryland Solar Renewable Energy Credit (SREC), which you can sell into the state SREC market. Systems energized between July 2024 and January 2028 receive a 1.5x multiplier under the Brighter Tomorrow Act for Certified SRECs. With base SRECs trading $40 to $60 in 2026, the post-multiplier value for eligible installs sits around $60 to $90 per certificate. For a typical 8 kW system, that is roughly $4,800 to $10,800 of cumulative SREC income over the 15-year program period.

RCES battery grant (up to $5,000)

The Maryland Residential and Commercial Energy Storage (RCES) Grant Program pays 30% of installed battery cost up to $5,000 per residence. It is structured as a grant rather than a tax credit, so it does not require federal tax liability or a tax-season filing. RCES replaced the older Maryland Energy Storage Income Tax Credit, which sunset at the end of 2024. The FY26 application window opened with a budget that runs through June 5, 2026 or until funds are exhausted, so check current availability before assuming the grant is open. See our Maryland RCES Grant 2026 guide for the full application process and battery sizing context.

Maryland sales tax exemption

Maryland's 6% sales tax does not apply to residential solar equipment. The exemption is applied automatically at the point of sale and typically saves about $2,000 on an average install.

Maryland property tax exemption

Solar systems do not increase your property tax assessment, even though they typically add measurable value to your home. The exemption is permanent and automatic, no application required.

Maryland Solar Access Program (MSAP)

For income-eligible Maryland homeowners, MSAP pays $750 per kilowatt up to $7,500 per residence. FY26 funding closed April 17, 2026 after total funding requests exceeded the $12 million budget. FY27 funding is expected to launch in summer 2026. Aduu Solar is on MEA's Participating Contractor list and handles the application end-to-end when the window reopens.

1:1 retail-rate net metering

Pepco and BGE credit excess solar generation at the full retail electricity rate. Credits roll over month to month. Maryland's 2025 Net Metering Flexibility Act allows residential customers to opt into indefinite credit rollover at full retail value rather than the default April true-up at the lower commodity rate. That is a meaningful upgrade most properly-sized systems should elect. See our Maryland net metering guide for the bill format and opt-in details.

Montgomery County Green Bank financing (MCGB)

Montgomery County homeowners get the strongest deal in the state on the financing side. The MCGB program offers 0% interest for the first 10 years on a 30-year term for homes in designated Equity Emphasis Areas, and 2.99% APR for the first 15 years for standard qualifying borrowers (household income under $163,900, autopay required). Loans are originated by Climate First Bank and can include battery storage and roof replacement bundled with solar.

Rising electricity rates are the quiet story

The case for solar in 2026 is less about the federal credit and more about what your electric bill will look like in 2031, 2036, and 2046. Residential electricity rates in the PJM grid (which covers Maryland) have risen roughly 3 to 5 percent per year over the last decade, with sharper jumps in 2023 and 2024 driven by capacity-market price spikes. Pepco's residential price-to-compare sits around 12.58 cents per kilowatt-hour through May 2026, and BGE's residential supply rate is closer to 16.64 cents per kilowatt-hour. Both utilities have indicated continued upward pressure.

A Maryland homeowner paying $180 a month for electricity today is realistically looking at $290 to $340 a month in 15 years if those trends continue. Solar locks in your electricity cost. That is the actual long-term value, and it does not depend on any federal tax credit.

What we tell Maryland homeowners in 2026

If your roof faces south, east, or west with limited shading and your annual electric bill is over $1,500, solar still pencils out for most Maryland households. The right financing path depends on your tax situation, your timeline in the home, and your appetite for upfront cost. We will walk through cash, loan, lease, and PPA quotes side by side and be honest about which one fits your situation.

For the full 2026 lease-vs-buy breakdown, see our Should You Lease or Buy Solar in Maryland in 2026 guide. For the broader post-credit DMV homeowner playbook, see Solar Without the Federal Tax Credit.

Adding a battery makes more sense in 2026 than in 2025. Outages have been more frequent, and the RCES grant has become a relatively more valuable incentive now that the federal residential credit is gone. Waiting for the federal credit to return is a real option, but not a free one. Electricity prices keep rising whether or not Congress acts.

Bottom line

The federal residential solar tax credit ending was a real change. It made solar more expensive for cash and loan buyers, it pushed a meaningful share of the market to leases and PPAs, and it stretched payback periods on a direct-purchase install. It did not break the math for Maryland. The state's net metering rules, SREC market with the Brighter Tomorrow multiplier, sales and property tax exemptions, RCES grant for batteries, MSAP for income-eligible households, and MCGB financing for Montgomery County all still favor going solar for most Maryland homeowners with a workable roof.