The federal residential solar tax credit — Section 25D — expired on December 31, 2025. For Connecticut homeowners, this has sparked a reasonable question: is solar still worth it? The answer is yes — but the strategy for getting the best deal has changed, and understanding why requires looking at what Connecticut still has that most states don't.
The Big Change: Federal Residential ITC Is Gone
For nearly a decade, the residential Investment Tax Credit (Section 25D) let homeowners claim 30% of their solar system cost on their federal tax return. A $30,000 system effectively cost $21,000. That credit expired for new residential installations after December 31, 2025.
This is real — but it's not the whole story. The commercial ITC (Sections 48 and 48E) still exists for business-owned solar, including systems owned by leasing companies. And Connecticut has its own incentive stack that no federal expiration can touch.
Solar costs have fallen dramatically:
Residential solar systems in Connecticut cost approximately $2.75–$3.49/watt before incentives in 2026 — down roughly 70% from a decade ago. The economics of solar have improved enormously even as the federal credit expired.
What Connecticut Still Has Going for It
1. Full Sales Tax Exemption (6.35%)
Connecticut exempts solar equipment from the state's 6.35% sales tax. On a $25,000 system, that's ~$1,587 you don't pay at the register — no application required, handled automatically at the point of sale.
2. 100% Property Tax Exemption
Connecticut law prohibits municipalities from raising your property tax assessment because of a solar installation. A Zillow study found that homes with solar sell for approximately 4% more than comparable non-solar homes — yet that increase in market value never shows up on your tax bill. In Connecticut's high-property-value market, that's a meaningful long-term benefit.
3. Full Retail-Rate Net Metering (RRES)
Connecticut's Residential Renewable Energy Solutions (RRES) program provides net metering at the full retail rate. Every excess kilowatt-hour your panels produce and send to the grid is credited to your account at ~30¢/kWh — the same rate you pay for grid electricity. This is one of the most generous net metering structures in the country and one of Connecticut's most powerful solar advantages.
4. Electricity Rates Among the Highest Nationally
Connecticut consistently ranks in the top five states for residential electricity costs at ~30¢/kWh. The national average is roughly half that. At 30¢, every kilowatt-hour your solar system produces is worth twice as much as it would be in an average U.S. market — and every future rate increase makes your solar investment more valuable.
5. Modern Panels: Better Technology, Lower Cost
Today's tier-one solar panels operate at 20–22% efficiency — significantly higher than panels from five or ten years ago — with 25-year performance warranties that guarantee minimum output. Better efficiency means more electricity from less roof space. Combined with the 70% drop in system costs over the past decade, the case for solar is stronger from a pure hardware standpoint than it's ever been.
The Prepaid Lease: Highest ROI in 2026
The most important thing CT homeowners need to understand in 2026 is that the federal ITC didn't disappear — it moved. The residential ITC (25D) is gone. But the commercial ITC (Sections 48 and 48E) still applies to solar systems owned by businesses and leasing companies. Those companies claim the credit and pass the value to you as a lower system price.
With a prepaid lease:
- You pay upfront — one payment, no monthly obligations
- The leasing company claims the commercial ITC and passes up to 30% in savings to you
- Equipment maintenance and production guarantees are typically included
- All CT state incentives (sales tax exemption, property tax exemption, RRES net metering) still apply
- Result: a system that often costs less than a 2024 cash purchase did — even with the 30% federal credit available at the time
Financing Options for CT Homeowners in 2026
Cash Purchase
Full ownership. No federal credit in 2026. All CT state incentives apply. Payback typically 6–9 years at 30¢/kWh rates. Best for homeowners who prioritize full ownership and simplicity.
Prepaid Lease
One upfront payment. Commercial ITC passthrough reduces effective cost ~30%. No monthly payments. Maintenance typically included. Best for homeowners who want the lowest net cost.
CT Green Bank Smart-E Loan
Fixed interest rates of 6.99–7.99% APR for qualifying energy improvements including solar. Available through participating CT lenders. Allows financing while retaining full ownership. Good option for homeowners who want ownership but prefer to spread the cost.
Standard Solar Loan
Available from banks, credit unions, and solar lenders. Rates and terms vary. Without the 25D credit to reduce principal in Year 1, loan math requires careful review — compare total interest paid against savings.
The Bottom Line
Solar is still worth it in Connecticut in 2026 — often very much so. The end of the residential ITC changed the strategy, not the fundamental value proposition. CT homeowners pay some of the highest electricity rates in the country, benefit from full retail-rate net metering, get automatic tax exemptions on purchase and property tax, and can access CT Green Bank financing or a prepaid lease that partially restores the federal benefit.
Modern panels are more efficient, more durable, and less expensive than they've ever been. And homes with solar sell for ~4% more, according to Zillow — with none of that value taxed away thanks to Connecticut's property tax exemption.
The key is knowing which option fits your situation. That's exactly what a SolarPro Lab solar advisor will help you figure out — at no cost, with no pressure.
Frequently Asked Questions
Did the federal solar tax credit expire for homeowners?
Yes. The residential federal solar tax credit (Section 25D) expired on December 31, 2025. Homeowners who purchase a solar system with cash in 2026 are no longer eligible for the 30% federal credit. However, leasing companies can still claim the commercial Investment Tax Credit (Sections 48/48E) and pass those savings to homeowners through a prepaid lease. Cash buyers still benefit from Connecticut's state-level incentives, which remain fully intact.
Is solar still worth it in Connecticut without the federal credit?
Yes, for most homeowners. Connecticut's electricity rates (~30¢/kWh) are among the five highest in the country. Solar systems cost $2.75–$3.49/watt before incentives — down roughly 70% from a decade ago. CT still offers a full 6.35% sales tax exemption, a 100% property tax exemption, and full retail-rate net metering under the RRES program. With a prepaid lease capturing the commercial ITC, payback periods remain competitive.
What is a prepaid solar lease and how does it work?
A prepaid solar lease is a structure where you pay for the solar system upfront — no monthly payments — but the equipment is technically owned by a leasing company. Because the leasing company owns the system, it claims the commercial Investment Tax Credit (Sections 48/48E) and passes that value to you as a reduced purchase price — effectively up to 30% off. You get all the electricity savings, a production guarantee, and maintenance terms, while the leasing company handles equipment ownership.
Does Connecticut have net metering?
Yes. Connecticut's RRES (Residential Renewable Energy Solutions) program provides net metering at the full retail rate (~30¢/kWh). Every excess kilowatt-hour your system sends to the grid is credited at the same rate you pay for grid electricity. This is one of the most favorable net metering structures in the country and significantly increases solar's value in CT.
What financing options are available for CT homeowners?
Connecticut homeowners have several options: (1) Cash purchase — full ownership, no federal credit in 2026, CT state exemptions apply; (2) Prepaid lease — commercial ITC passthrough reduces cost ~30%, no monthly payments; (3) CT Green Bank Smart-E Loan — fixed rates of 6.99–7.99% APR for energy improvements including solar, available through participating lenders statewide; (4) Standard solar loans from banks and credit unions.
Does solar increase home value in Connecticut?
Yes. A Zillow study found that homes with solar sell for approximately 4% more than comparable non-solar homes. In Connecticut, where solar systems add $15,000–$25,000 in market value, this is a meaningful benefit. Critically, CT's 100% property tax exemption means that added value doesn't increase your property tax bill.
How do I know if solar makes sense for my specific home?
The best way is a free solar assessment from a SolarPro Lab solar advisor. We'll analyze your energy use, roof orientation, shading, local utility rates, and available incentives to give you a custom savings estimate — no pressure and no obligation.
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