Solar and EV Tax Credits 2025 California: What You Need to Know Now

Hi friends,

Today’s I want to talk to you about significant solar and EV tax credits 2025 changes under Trump’s tax bill: the phase-out of the residential solar credit and the end of the electric vehicle (EV) tax credit. These changes are disappointing, especially for those of us who have seen real benefits from these credits over the years. If you are considering solar or planning to purchase an electric vehicle, this is one you do not want to miss and you have a very short time to still take advantage of it.

The End of the Residential Solar Credit

Trump’s tax bill eliminates the popular 30% federal tax credit for residential solar installations after December 31, 2025. This credit has been a key driver for rooftop solar adoption, and losing it may make solar less accessible for homeowners in the future.

• If you install solar panels by the end of 2025, you will still qualify for the 30% credit.

• After that, it is gone unless new legislation brings it back.

• The bill also removes credits for leased solar systems, which impacts financing options for many homeowners.

This one hits home. I have solar on my house, and with utility rates climbing, it has really helped our family’s budget. This change feels short-sighted to me, especially when we are trying to promote sustainability.

Commercial Solar Projects

The law also accelerates the phase-out of tax credits for commercial solar installations. To qualify, projects must begin construction within 60 days of the bill’s enactment and must be completed by the end of 2028.

If you are in Santa Rosa or Sebastopol or anywhere in Sonoma County and thinking about solar, run a quick projection with a pro. Book a tax preparation review or schedule tax consulting to plan timing and cash flow. For the rules, see the IRS Form 5695 instructions.

EV Credits Are Also Going Away!

Trump’s tax bill also eliminates the $7,500 tax credit for new electric vehicles and the $4,000 credit for used EVs, both ending after September 30, 2025.

• These credits apply only if you have enough tax liability to use them.

• They are non-refundable, which means if you do not owe at least $7,500 in taxes, the EV credit will not help you.

• If you are planning to buy an EV and qualify for the credit, you will need to finalize that purchase before the September 30 deadline. For details, see the IRS Form 8936 instructions.

What This Means for You

If solar has been on your radar, or you have been thinking about getting an electric vehicle, the clock is ticking. These are two of the most impactful tax incentives we have had for energy-conscious consumers, and they are going away fast.

We will continue to break down more parts of Trump’s tax bill in future blog posts, including a look at the new credit for auto loan interest. That one may not be a game changer, but we will take a look.

If you have questions about timing your purchases or how these changes affect your 2025 taxes in Sonoma County, give us a call or leave a comment below. We are always happy to help you plan smart and act while you still have time. You can contact us to set up a call or book tax consulting if you want strategy help.

Warmly,

Melissa Ochoa

Enrolled Agent & Owner, Apple Blossom Tax Service

Sebastopol, California