US Incentive Changes Raise Home Electrification Costs from 2026

US Incentive Changes Raise Home Electrification Costs from 2026

USA: The removal of United States federal tax credits for residential solar panels, battery storage systems and heat pumps from the end of 2025 is expected to increase the cost of home electrification from 2026. While the change does not raise the upfront price of equipment, it eliminates the ability for homeowners with tax liability to offset costs through incentives. A typical residential solar and battery installation previously qualified for tax credits of around USD 10,000 (EUR 9,200). Tax incentives will continue to apply to leased solar systems until 2027, with benefits passed on through lower monthly payments. Industry participants are also introducing lease-to-own and prepaid lease models, allowing homeowners to gain eventual ownership while installers apply tax benefits as upfront discounts.

Additional cost pressures may emerge from tariffs and domestic manufacturing requirements affecting imported solar panels, batteries and heat pumps. Most residential energy storage systems and a significant share of heat pumps rely on imported components, particularly from Asia, which are subject to trade duties. In parallel, the USD 2,000 (EUR 1,840) federal tax credit for qualifying heat pumps has ended, though industry representatives note that only a limited range of higher-efficiency models previously met eligibility criteria. Market observers expect price impacts to be moderate, with demand supported by rising electricity costs, increased adoption of electric vehicles, and household upgrades from fossil fuel appliances to electric alternatives.

Source: Bloomberg