The “Big Beautiful Bill” (BBB) is a sweeping federal budget proposal that could significantly impact the residential solar industry. It passed the House on May 22 and is now under review by the Senate, with a final vote expected before July 4. The bill was updated just last night with key changes to the solar tax credit timelines.
Among other changes, the bill could sunset the Investment Tax Credit (ITC), limit commercial credits, and tighten key incentive timelines (The Tax Foundation). Although it’s not yet a law, revisions are pending, and it’s gaining momentum. Solar teams should remain vigilant and prepare for potential changes in the incentive framework.
Here’s what’s in the BBB, what it means for solar teams, and what might come next.
Major Changes to Federal Solar Incentives in 2025
The BBB bill passed the House on May 22 and is now under Senate review. On June 25, the Senate Finance Committee released updated bill language, softening some of the earlier cuts—but keeping key changes that would still reshape solar incentive timelines.
Here’s what’s currently in the draft:
Transferability Rules:
Credit transfer remains technically allowed, but tightened restrictions—especially for third-party ownership models—could limit its practical use for many commercial projects.
Residential ITC (25D):
The 30% tax credit would no longer expire abruptly. Instead, it would phase down over three years—dropping to 26% in 2026, 22% in 2027, and 18% in 2028. This provides more runway, but still accelerates the urgency for teams and homeowners to act now.
Commercial Credits (48E & 45Y):
Rather than an immediate disqualification for leased systems (TPOs), the credits would phase down:
- 60% credit value in 2026
- 20% in 2027
- Fully phased out by 2028
Start of Construction Clause:
Projects must begin construction within 60 days of bill enactment and be completed by December 31, 2028 to qualify for full credit. “Construction” is defined as physical groundbreaking or incurring at least 5% of project costs.
FEOC Rule:
Starting in 2026, new supply chain rules would disqualify systems using components tied to Foreign Entities of Concern (FEOCs), tightening sourcing requirements.
Manufacturing Credit (48X):
Remains intact through 2029, with a gradual phase-out starting in 2031.
What the 2025 Solar Incentive Changes Mean for Sales and Operations
The BBB hasn’t passed yet, but its trajectory signals a broader shift: solar incentives are becoming more conditional, and compliance will carry more weight than ever.
The latest Senate draft offers a more measured phase-down of the Residential ITC, giving teams some breathing room. It also walks back the immediate disqualification of leased systems, opting for a gradual phase-out instead.
Still, the pressure is on. Tight construction timelines and stricter qualification rules mean Q3 and Q4 could be make-or-break for teams trying to lock in remaining credits. This moment favors the teams who move fast—but only if they move with precision.
If your proposals still rely on static PDFs, outdated utility data, or manual workflows, you’re risking delays, missed qualifications, and confusion at the point of sale. The divide is growing between teams with integrated, policy-aware systems—and those left reacting.
Timeline for the BBB: What Solar Teams Should Know
As of June 25, the Senate Finance Committee introduced new draft language for the BBB. To stay on the fast-track reconciliation schedule, final bill text must be filed by noon ET on June 27. If that deadline is met, a full Senate vote could follow as soon as July 4.
Because the BBB is part of the federal budget reconciliation process, it can pass the Senate with a simple majority—but that path is narrow. Republicans must secure all 50 votes plus the Vice President, and several key swing votes remain undecided.
If the current version fails to gain full support, solar provisions may be revised—or removed entirely—to ensure the broader budget package advances.
Regardless of the outcome, solar teams should prepare for volatility. Any final version is likely to accelerate project timelines, tighten eligibility, and raise the stakes for proposal accuracy.
How to Prepare for the Changing Solar Incentives Landscape
Whether or not the BBB becomes law, the message is clear: solar tax credits and federal incentives are evolving. The teams that win will be those who:
- Prioritize verified, compliant solar proposals
- Communicate clearly with customers on financial impacts
- Operate with tools built for policy-aligned workflows
Stay Ready with the Right Tools
Policy shifts like this don’t just affect incentives—they stress-test your workflows. Our latest June Release Notes walk through the updates we’ve made to help teams stay aligned with evolving ITC rules, reduce quoting risk, and accelerate compliant proposal delivery. If you’re tightening operations ahead of Q3, now’s the time to make sure your platform is, too.