Will the Solar Tax Credit Change After the 2026 Midterms?

For school districts, cities, churches, and nonprofits with solar or geothermal projects: what current law says after the election, what Washington is discussing, and what to review before your next filing.

The 2026 midterm election does not, by itself, change your organization’s clean energy tax credit or its direct pay eligibility. Those turn on current law, IRS guidance, and the facts of your project. Changing the statutory credit rules requires legislation, and election results alone don’t amend them.

Associated Press race calls reported Wednesday morning point to a change in majority control of both chambers when the 120th Congress convenes on January 3, 2027. Some races, including Senate contests in Alaska and Mississippi, were still uncalled when this was published.

At a glance

• Current law: Wind and solar facilities that began construction after July 4, 2026 lose the credit if placed in service after 2027. Geothermal heat pump property qualifies if construction begins before 2035. Direct pay remains available.
• Still uncertain: Whether a year-end package or the next Congress revisits the 2025 phaseouts. The topic appears on published agendas, and no bill carrying it has moved past committee referral.
• Review now: Your construction-start evidence, placed-in-service date, IRS registration status, and filing deadline.

What current law says

Current rules for tax-exempt project owners, as of November 4, 2026

Credit	What applies now
Solar and wind, Sections 48E and 45Y	The 2025 tax law (P.L. 119-21) ended the credit for wind and solar facilities placed in service after 2027 when construction began after July 4, 2026, as the IRS Form 3468 instructions describe. Projects that began construction on or before July 4, 2026 are outside that termination rule.
Geothermal heat pumps, Section 48	Property qualifies if construction begins before January 1, 2035, with reduced rates for construction beginning in 2033 and 2034 (26 U.S.C. 48). The 2025 law left those dates in place.
Direct pay, Section 6417	The 2025 law amended Section 6417 without repealing it, and the IRS still lists Sections 48, 48E, and 45Y as eligible for elective pay.
Residential clean energy, Section 25D	Ended for expenditures after December 31, 2025. It is a credit for individual homeowners and doesn’t apply to tax-exempt owners.

For solar, the beginning of construction date usually decides which rule applies, and establishing it takes more than a signed contract. The IRS looks at the physical work performed or, for some projects, the costs incurred, along with continuous progress afterward. Our breakdown of the 2025 law covers how that date is established.

Not sure which side of July 4 your project falls on? Request a project scoping review. Tell us your organization type, the technology, when construction started, and your placed-in-service date, and we’ll identify the filing questions and records that need a closer look. Please hold contracts and tax records until we’ve set up a secure way to receive them.

What could change after the election

The 2025 phaseouts are being discussed. Holland & Knight’s October 9 year-end outlook lists “alternative energy tax credit phaseouts included in the 2025 reconciliation law” among topics that could join a post-election agenda. A topic on an agenda is a long way from enacted law. Government funding currently runs through December 11, 2026, the next natural deadline for a year-end package.

Bills introduced this Congress to extend or restore the credits include:

• H.R. 5862, the American Energy Independence and Affordability Act, which would restore energy provisions changed by the 2025 law.
• H.R. 7977, the Energy Bills Relief Act, which would repeal the 2025 law’s energy credit rollbacks.
• H.R. 8477, a bill to reverse certain energy-related modifications enacted by P.L. 119-21.
• S. 4175, which would extend the 45Y and 48E credits based on increases in the price of, and demand for, electricity.

Their sponsors include members of both parties. Each has been referred to committee with no further action recorded, and any bill still pending when this Congress ends on January 3 would have to be reintroduced. Introduction shows where a debate may start. It says little about what will pass.

Published forecasts differ. Carl Fleming, global co-head of McDermott Will & Schulte’s energy and project finance group, told Utility Dive on November 3 that “you’ll probably see an extension of the solar credit.” Ian Boccaccio, income tax practice leader at Ryan LLC, told Thomson Reuters Checkpoint the same day that he expects gridlock, with any pressure falling on the new restrictions and shorter credit lives.

History is useful for one narrow point. Congress has extended the solar credit several times, often in year-end packages, including in 2008, December 2015, and December 2020. When it has cut credits back, the effective date has usually turned on a project fact: a binding contract in 1986, a construction start in 2025. That is a reason to document your dates carefully. It isn’t a forecast of what the next Congress will do.

What we are watching

Treasury and IRS guidance applies existing law, and it remains subject to the statute and to review by the courts. Two items matter for 2026 and 2027 projects.

In Oregon Environmental Council v. IRS, the U.S. District Court for the District of Columbia vacated Notice 2025-42 on June 6, 2026. The notice had narrowed how wind and larger solar projects could establish beginning of construction. As of September 4, 2026, the government had not filed a notice of appeal. Treasury could still issue revised guidance, so we treat the earlier beginning of construction rules as the working baseline and recheck the status before relying on it in a client filing.

The IRS 2026-2027 Priority Guidance Plan, released September 29, 2026, lists guidance on the domestic content bonus under Sections 45Y and 48E and on the prohibited foreign entity and material assistance restrictions. Either could change what a project has to document before its return is filed.

What project owners should do now

1. Assemble construction-start evidence. Keep dated contracts, invoices, and records of the physical work itself, along with proof that work continued afterward. A contract or invoice alone usually won’t establish the date.
2. Pin down the placed-in-service date with the documents that support it, such as final inspection or permission to operate.
3. Register each property through IRS Energy Credits Online before the return is filed. Registration produces the number the return needs. It is not an IRS determination that the credit is allowed.
4. Calendar the filing deadline. With narrow exceptions, the election has to be made on a timely filed original return, including extensions. A June 30 year-end organization’s Form 990-T is due November 16, 2026, and Form 8868 extends it six months.
5. Keep bonus-credit and foreign-entity records current so the file is ready if pending guidance tightens what has to be shown.

Published November 4, 2026. This article will be revised if legislation or guidance changes the rules it describes.

This article is general information, not tax advice, and it reflects IRS guidance as of November 4, 2026. Deadlines and eligibility depend on your organization's tax year and entity type. Please confirm your own facts with a qualified tax professional before relying on anything here.