President Donald Trump’s One Big Beautiful Bill, signed July 4, eliminated a 30% federal tax credit for residential rooftop solar installations.

Experts are now debating if the elimination will significantly hurt the industry or if solar adoption developed such momentum that it will continue to grow on its own.

Trump’s bill won’t go into effect until Dec. 31, so some in California’s solar industry have suggested this might lead to a rush of customers over the next few months.

Solar industry representatives have criticized the move, saying it will lead to fewer people choosing solar and hurt smaller solar businesses.

Question: Will the elimination of the federal tax credit significantly hurt the solar industry?

Economists

Caroline Freund, University of California-San Diego School of Global Policy and Strategy

YES: The removal of tax credits will lower incentives to install solar, hurting the industry. Phaseouts hit residential solar first, which has been growing and creates lots of jobs. Perhaps the biggest danger of the recent policy reversals is that they reduce the investment response to future policy, since investors don’t know which policies will be sustained. While there are legitimate reasons to object to tax credits/subsidies, they are destined to fail if they are unpredictable.

Kelly Cunningham, San Diego Institute for Economic Research

NO: After decades of development and implementation, solar generation of electricity and electric vehicles has improved the past several years. While both technologies were in experimental and developmental stages carrying some risks for consumers to utilize them, they should now exist on their own merits. Subsidies benefit wealthier individuals that less affluent are unable to afford or can risk. Reducing taxes and rolling back regulations on these industries will allow them to continue maturing and thriving.

Alan Gin, University of San Diego

NO: It will slow the industry’s growth, as the payback period for solar installations will now be longer. But solar energy will continue to be attractive even without the credit because electricity rates are expected to increase. That is due to the cost of producing electricity increasing and demand also increasing. The solar industry has developed to the point where there is enough infrastructure in place for it to survive even without the tax credits.

James Hamilton, UC San Diego

YES: This will mean a huge increase in the after-tax cost of solar. This will significantly reduce demand leading to fewer new solar installations, greater costs to consumers and reduced profits for producers. An eventual phaseout of the tax credit had been expected. But the recent legislation means the credit will end more quickly and abruptly. There could nevertheless be a short-run boost to solar adoption as people try to get in before the credit expires.

Norm Miller, University of San Diego

YES: While the payback for most local households will go from six to 10 or more years and still be a worthwhile investment, the elimination of this tax credit is akin to a 42% net after tax price increase. Given the possibility that this tax credit will come back in three years, my guess is that it will cut demand in half while we wait for a change in the tax rules, and this ignores tariff costs increases and installation labor shortage impacts.

David Ely, San Diego State University

YES: After an initial spike as interested homeowners rush to act before the tax credit goes away, demand will drop in response to the higher effective cost of installing solar systems. The homeowners who are most enthusiastic about rooftop solar have already made the investment. Others with only a casual interest are probably more price sensitive and will now opt not to install rooftop solar. Solar installation businesses will suffer with the decline in customers.

Ray Major, economist

NO: The elimination of the 30% federal solar tax credit might slow growth temporarily, as the industry restructures, but it will not significantly hurt the solar in the long run. Demand for electricity coupled with astronomical prices like in California make solar investments pencil even if federal subsidies are eliminated. The solar market has matured to a point where it needs to be able to survive on its own and graduate from a subsidy based model to a market based one.

Executives

Phil Blair, Manpower

YES. The credit was a great justification to have solar installed. It can be very expensive and hard to justify without a credit. The lack of a solar credit also undercuts the government’s emphasis on solar and climate control so home owners lose interest in spending the money to install solar.

Gary London, London Moeder Advisors

NO: Solar rooftop installation costs should continue to come down, considering rising electricity rates. My cost of installation in 2024 was less than half the 2019 quote. While tax credits are very much appreciated by consumers, their elimination coupled with further scaling of production, are likely to incentivize the industry to reduce costs. However, Trump’s targeting of this and other climate change reduction programs is shortsighted and an insult to future generations.

Bob Rauch, R.A. Rauch & Associates

YES: The “One Big Beautiful Bill,” signed into law on July 4, accelerates the phaseout of key tax incentives, including the 30% residential solar tax credit. Residential demand will drop, especially among middle-income households who rely on credits to offset upfront costs. But the industry won’t vanish. This policy shift is forcing a recalibration of an industry that relied heavily on federal tax credits. It’s time for the solar industry to prove its value.

Chris Van Gorder, Scripps Health

YES: It’s impossible to say that removal of the 30% tax credit for residential rooftop solar installations won’t hurt the move to more home solar. And the elimination of tax deductions for electric vehicles and home charging stations will no doubt affect those sales. All this will of course hurt the solar industry in the long run. But changes to electric billing in California is already doing the same. This is just one more negative.

Jamie Moraga, Franklin Revere

YES: California already reduced rooftop solar incentives, causing demand to drop and some solar companies to close or go bankrupt. Without federal tax benefits, surviving solar companies will face even greater challenges. To remain viable, the solar industry will have to find ways to create value and lower costs to attract customers rather than relying on government incentives or rebates.

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