Over the past five years working in the energy storage industry, I’ve been asked the same question by countless American customers at the beginning of every year: “Can I still get a tax credit if I buy a battery this year?”
Since 2022, my answer has been simple: Yes—30%. Go ahead and buy with confidence. But things have indeed changed in 2026. As of January 1, 2026, homeowners who purchase a residential battery system with their own money are no longer eligible for the 30% federal tax credit.
But if you think that means buying a battery in 2026 is no longer worth it, you’re oversimplifying the situation.
This guide won’t beat around the bush or try to stir up unnecessary anxiety. Instead, it focuses on one question: How can you still save money when buying a battery in 2026? We’ll explain which systems are still eligible for incentives and what alternative options are available for those who no longer qualify for the tax credit.
Key Takeaways
- The federal 30% home battery tax credit (Section 25D) ended for new residential installations completed after December 31, 2025.
- Section 48E remains available for eligible commercial and third-party-owned battery systems, although new timing and supply-chain rules now apply.
- Many states and utility companies still offer rebates or performance-based incentives in 2026.
- Making home battery storage a worthwhile investment in many cases.
What Is the Home Battery Tax Credit in 2026?
To understand the battery tax incentives available in 2026, you first need to understand two sections of the U.S. tax code: Section 25D and Section 48E. They apply to different situations, and over the past year, they’ve taken completely different paths.
Section 25D: Residential Clean Energy Credit (No Longer Available)
Section 25D was the provision under the Inflation Reduction Act (IRA) designed specifically for homeowners. If you purchased solar panels or a residential battery system with your own money and installed them at your primary or secondary residence, you could claim a federal tax credit equal to 30% of the system’s cost when filing your taxes.
When the policy was introduced in 2022, it was the first time standalone residential battery storage was included in the credit. As long as the battery had a capacity of at least 3 kWh, it qualified for the same 30% tax credit as solar panels. It was a major milestone for the industry and was widely celebrated at the time. However, this credit is no longer available, as we’ll explain in more detail below.
Section 48E: Clean Electricity Investment Tax Credit (Still Available)
Section 48E works very differently from Section 25D. Instead of benefiting individual homeowners, it provides clean energy asset owners—primarily businesses—with an investment tax credit of up to 30% on eligible projects. Qualifying technologies include solar PV systems, battery energy storage systems, fuel cells, and other clean electricity projects.
Section 48E remains available, although eligibility timelines and compliance requirements now vary depending on the technology and project type.
What Changed to the Home Battery Tax Credit in 2026?
As we’ve already covered, there are two major tax incentives related to battery storage. Here’s how each of them has changed:
1. Section 25D Has Been Terminated
The One Big Beautiful Bill Act (OBBB), signed into law on July 4, 2025, brought the Section 25D Residential Clean Energy Credit to an earlier-than-expected end.
Before the OBBB was enacted, the 30% Residential Clean Energy Credit was scheduled to remain available through 2034. However, the new law terminated the credit early. Residential clean energy systems original installation completed after December 31, 2025, are no longer eligible for the Section 25D tax credit.
2. Section 48E Remains Available, but the Rules Have Changed
The OBBB did not repeal Section 48E, but it introduced new timing requirements for solar and wind projects.
Projects that begin construction before July 4, 2026, may continue to qualify under the existing rules. However, solar and wind projects that begin construction on or after July 4, 2026, generally must be placed in service by December 31, 2027, or they will lose eligibility for the Section 48E tax credit. This significantly shortens the development timeline for large-scale solar and wind projects.
For other clean energy technologies, including battery energy storage systems, the Section 48E phaseout follows a longer schedule. Projects that begin construction on or before December 31, 2033, can still qualify for the full credit. The credit then phases down gradually before being eliminated entirely for projects beginning construction in 2036 or later.
3. FEOC Restrictions Are Now in Effect, Making Supply Chains a Critical Requirement
The Foreign Entity of Concern (FEOC) rules are one of the major additions introduced by the OBBB in 2026.
To qualify for the Section 48E tax credit, eligible clean energy projects must now satisfy the Material Assistance Cost Ratio (MACR) requirement. This means that a minimum percentage of the project’s qualified materials and manufactured products must come from non-FEOC sources.
For projects beginning construction in 2026, at least 55% of qualifying material and manufacturing costs must come from non-FEOC suppliers. This threshold increases gradually over time, reaching at least 75% for projects beginning construction in 2030 and beyond.
| Ownership Type | Eligible for Federal Tax Credit in 2026? | Applicable Tax Credit | What It Means for Homeowners |
| Homeowner-Owned System | No (for newly installed systems in 2026) | Section 25D Residential Clean Energy Credit | Homeowners who purchase and own a new battery system can no longer claim the former 30% federal residential tax credit. |
| Third-Party-Owned System (Lease / PPA) | Yes (indirectly) | Section 48E Clean Electricity Investment Credit | The tax credit is claimed by the system owner (installer or financing company), and some of the value may be passed on to homeowners through lower lease payments or electricity rates. |
| Commercial Projects | Yes | Section 48E Clean Electricity Investment Credit | Commercial and utility-scale battery projects may continue to qualify. The base credit is 6%, which can increase to 30% if prevailing wage and apprenticeship requirements are met. |
What Home Battery Incentives Are Still Available?
State rebates
| State | Incentive Program | Incentive Type | 2026 Status | Best For |
| California | SGIP | Upfront rebate | Limited funding / Waitlists for some categories | Low-income households, wildfire-prone areas, medical baseline customers |
| Connecticut | Energy Storage Solutions | Upfront incentive + annual performance payments | Active | Eversource and UI customers |
| Massachusetts & Rhode Island | ConnectedSolutions | Annual performance payments | Active | National Grid and Eversource customers |
| Oregon | Energy Trust Solar + Storage | Upfront rebate | Active (annual funding available) | PGE and Pacific Power customers |
| North Carolina | Duke Energy PowerPair | Solar + battery rebate | Limited availability | Duke Energy customers |
| New York (Long Island) | Long Island Battery Program | Battery rebate | Active (subject to funding) | Long Island residents |
| Colorado | Renewable Battery Connect | Upfront rebate | Active | Xcel Energy customers |
| Minnesota | Utility Battery Incentive Programs | Utility rebates (varies by provider) | Varies by utility | Participating utility customers |
| Puerto Rico | LUMA Customer Battery Energy Sharing (CBES) | Performance incentive | Active | LUMA customers |
| Vermont | VEC Flexible Load Program | Upfront payment or monthly bill credits | Active | Vermont Electric Cooperative members |
Note: Incentive amounts, funding availability, and eligibility requirements may change throughout the year. Before purchasing a battery storage system, be sure to check the latest program details with your state energy office, local utility, or the agency administering the incentive program.
Manufacturer offers
It’s also worth keeping an eye on promotions offered directly by battery manufacturers. Seasonal sales, holiday discounts, and new product launch campaigns can all help reduce your overall purchase cost.
At Piforz, for example, we’re currently running a grand opening promotion with additional discounts on selected products. If you’re planning to purchase a battery system, this could be a good opportunity to lock in a lower price. For the latest offers and details, please visit our official website.
Is a Home Battery Still Worth Buying Without the Federal Tax Credit?
The answer is yes.
In the past, calculating whether a battery system was worth it was straightforward:
System Cost − 30% Federal Tax Credit = Your Actual Cost
Today, the calculation is more complex. You need to consider all of the factors below.
From the Purchase Side:
First, battery prices are falling.
In 2025, the global average price of lithium-ion battery packs dropped to $108 per kWh, while stationary energy storage battery packs fell to around $70 per kWh. Compared with the peak prices seen in 2022, battery cell costs alone have declined by roughly 35%.
Second, state rebates and utility incentives are still available.
As mentioned earlier, many state-level incentive programs and utility-sponsored rebates remain in place and can significantly reduce the upfront cost of a battery installation.
From the Usage Side:
One common strategy is to participate in utility demand response programs. During periods of high electricity demand, homeowners can discharge stored energy from their batteries back to the grid and receive compensation for providing grid services. However, this approach requires a grid-connected or hybrid inverter system capable of interacting with the utility grid.
For homeowners with solar panels, the value proposition is even more direct. Excess solar energy generated during the day can be stored in the battery and used at night, reducing reliance on electricity purchased during peak-rate hours. The resulting savings on utility bills are tangible and ongoing, without depending on any tax incentives.
Whether a battery system is worth installing ultimately depends on your electricity costs and your goals.
If you’re purchasing a battery primarily as emergency backup protection, the financial return may not be your highest priority, and the investment may feel less urgent. However, if your goal is to lower everyday electricity bills, maximize the value of a solar system, or take advantage of strong state and utility incentives in your area, a battery system can still be a worthwhile long-term investment.
How to Find Home Battery Incentives in Your Area
The most reliable ways to find battery-related incentives in your area are to use the DSIRE database or search directly on your local utility company’s website.
DSIRE: The Most Comprehensive U.S. Incentive Database
DSIRE stands for Database of State Incentives for Renewables & Efficiency. It is funded by the U.S. Department of Energy and operated by the N.C. Clean Energy Technology Center at North Carolina State University. The database has been tracking renewable energy incentives since 1995 and is currently one of the most authoritative sources for clean energy incentive information in the United States.
By visiting the DSIRE website and selecting your state, you can find state-level rebates, utility incentives, local programs, and even additional installer incentives. The information is organized in one place, and because DSIRE is regularly updated, it is usually much more reliable than searching through scattered second-hand sources online.
What if a policy was just announced and DSIRE hasn’t updated yet?
New legislation passed by state governments or newly launched utility programs may take some time before appearing in DSIRE. In that situation, there are two approaches:
First, search your utility company name + “battery rebate 2026.”
For example, SMUD in Sacramento offers battery storage incentives, and California utilities such as Ava Community Energy have also launched battery-related programs. Information about these programs is often published directly on utility websites before it appears in broader databases, so checking your utility provider’s website can sometimes be faster than waiting for DSIRE updates.
Second, keep an eye on new policies being considered at the state level.
Washington State’s SB 6008 is a typical example. If passed, the bill would provide significant battery rebates for eligible households, including higher incentives for low-income families, with participation in utility flexibility programs as a requirement. These types of proposals are usually available through state legislature websites or local solar industry associations, such as WASEIA.
The information in this article is based on publicly available federal and state policies as of July 2026 and is provided for informational purposes only. It does not constitute tax or legal advice. Tax credits, incentives, and rebate programs may be modified, extended, or discontinued at any time. Eligibility should be determined based on the latest official guidance and documentation from the federal IRS and relevant state agencies.
Before making any purchase or installation decisions, we recommend consulting a certified tax professional or a licensed local installer to confirm how these policies apply to your specific situation.
FAQ
1. What appliances qualify for the energy tax credit?
As of 2026, most residential clean energy equipment，including solar panels, battery storage systems, heat pumps, energy-efficient windows and doors, and insulation materials is generally no longer eligible for the former federal residential tax credits, as both Section 25D and Section 25C are no longer available.
However, many states, utility companies, and manufacturers still offer rebates and incentive programs. Before making a purchase, it’s a good idea to check the latest incentives available in your area.
2. Does Powerwall qualify for tax credits?
If you purchase and own a new Tesla Powerwall as a homeowner in 2026, it generally no longer qualifies for the 30% federal Residential Clean Energy Credit under Section 25D.
However, if the system is installed through a third-party ownership model, such as a lease or Power Purchase Agreement (PPA), it may still indirectly benefit from the Section 48E tax credit. In addition, some states and utility companies continue to offer rebate programs that apply to Powerwall installations.
