U.S. residential solar companies are bracing for a sharp decline in business following the expiration of a federal tax credit that fueled more than a decade of growth, prompting layoffs, restructurings, and some bankruptcies.
The 30% federal income tax credit for homeowners purchasing rooftop solar systems ended in 2025 under President Donald Trump’s tax overhaul. The expiration has hit the most labor-intensive segment of the solar industry, which was already challenged by high interest rates and reduced state-level incentives.
“We’re going to see, between now and July, a very meager market that is going to be struggling to sustain itself,” said Chris Castro, chief sustainability officer at Climate First Bank, which provides solar loans.
Company Impacts
Enphase (ENPH.O), a microinverter producer, announced last month it would cut 160 jobs (6% of its workforce) and reduce operating costs due to the policy change.
Freedom Forever, the nation’s second-largest residential installer behind Sunrun, exited 10 of its 30 state markets and laid off roughly 20% of its staff, according to policy director Ben Airth.
Some companies have gone bankrupt: Purelight Power, an Oregon-based installer, filed for Chapter 11 on December 30, affecting around 200 workers. TriSMART Solar in Texas ceased operations at the end of 2025.
Since taking office, Trump has cut multiple clean energy subsidies, arguing that solar and wind are more expensive and less efficient than fossil fuels.
The loss of the tax credit has forced analysts to revise projections:
Ohm Analytics now predicts residential solar installations will fall 20% in 2026, down from an earlier forecast of 8% growth.
Wood Mackenzie expects installations to drop to their lowest level since 2020, when COVID-19 disrupted the market, with recovery unlikely before the end of the decade.
Industry experts warn the slump could complicate efforts to meet rising electricity demand from new data centers. Emily Walker, director of content and insights at EnergySage, noted that rooftop solar remains the fastest way to support increasing power needs. The loss of the federal incentive has lengthened the payback period for rooftop systems from roughly seven years to ten, adding about $8,000 to costs for homeowners.
One segment is less affected: companies that own rooftop systems and sell electricity to homeowners under subscription-style contracts can still claim a separate federal credit. This model, known as third-party ownership (TPO), is gaining popularity.
Many installers previously serving cash or loan buyers are now partnering with financiers to offer TPO models.
Enphase and Freedom Forever have launched leasing programs allowing homeowners to take ownership after several years.
Others collaborate with IGS Energy and HDM Renewable Finance for similar structures.
However, some industry voices caution that leasing can create complications, particularly for homeowners selling their property. “I don’t see the value in a lease to a homeowner,” said Tom Mills, director of technical sales at Alpenglow Energy in Park City, Utah.