The Best Way To Pay For Solar in 2026

December 10, 2025

A New Era Of Solar Financing Begins

The solar industry has seen some major changes over the last few years. Some federal incentives are changing while others are being phased out much quicker than originally planned. In response to all these adjustments, the solar industry has been forced to adapt at record speed.

For years, most homeowners paid for solar through traditional loans that relied on the 30% federal tax credit to make the savings work. But as incentive rules changed, the total cost of direct ownership has quickly jumped by roughly 30%. This means a solar installation that would previously provide 50% monthly savings would now only save 20% compared to their average monthly electric bill.

Although homeowners may not be able to directly claim a federal tax credit, that might not be a bad thing. Many homeowners were ineligible to receive the full 30% tax credit because they didn’t have enough tax liability. But a new financing model has emerged that gives homeowners the full benefit of receiving government support without needing to qualify for complicated tax credits. It’s becoming the go-to option for 2026.

Why Traditional Solar Loans No Longer Make Sense

In the past, most homeowners who purchased solar systems took out a solar loan and claimed the tax credit themselves. That worked as long as they had enough tax liability to receive the full 30% credit.

Here’s where things often went wrong:

If someone was granted a $15,000 tax credit but they only paid $5,000 in federal taxes over a calendar year, it would take them several years to claim their tax credit because you can only claim as much as you have paid in federal income taxes. In the scenario above, someone with an annual tax liability of $5,000 would need 3 years of claiming their tax credit to receive the full benefit.

Not having enough tax liability wasn’t the only issue. The way older solar loans were structured often gave homeowners just 12 to 18 months to claim their tax credit and apply it toward the loan balance. If they missed that window, the loan would automatically recalculate and add back the unclaimed credit, causing their monthly payment to increase substantially.

This created a system where solar worked best for higher-income families and where lower-income families who could really benefit from lowering their electric bills would be turned away because they didn’t have enough tax liability / income to qualify to receive the credits in time.

The New Hybrid Ownership Model (Transfer of Ownership): How It Works

While most of the solar industry reverted back to leasing and power purchase agreements (PPAs), a handful of innovative companies are pioneering a new payment model that allows homeowners to leverage the federal tax credits without receiving them directly.

Here’s how it works:

Instead of the homeowner claiming the tax credit, the financing partner does it on their behalf. The financing company or partner entity owns the system on paper for the first several years and claims the federal investment tax credit under Section 48E of the U.S. tax code.
You only finance 70% of the total system cost during this initial period and make a low monthly payment similar to the old financing model. Just no complicated tax.
At year six, full system ownership automatically transfers to you.
Once ownership transfers, you become the legal owner of the system and continue receiving the full value of your solar production and net metering benefits for the life of the system.

This approach is referred to as a Transfer of Ownership (TOO) model. It gives homeowners the same financial benefits as traditional ownership, including long-term savings and home value increases without the headache of qualifying for a tax credit or hoping for it to pay out.

Why This Model Works Better In 2026

This hybrid ownership structure is being hailed as a game-changer for homeowners because it solves three key problems that traditional solar loans can’t.

1. You still receive the full tax credit benefit.
Even though you’re not the one claiming it, the financing company applies the 30% federal tax credit to reduce the total system cost. You’re effectively getting the same savings, just structured differently.

2. You only finance 70% of the project.
Because the tax incentive portion is factored out upfront, your payments are based on a smaller balance. This lowers your monthly cost immediately.

3. You still own your system.
After year six, full ownership of the system legally transfers to you. You keep all the long-term financial benefits: free energy production and increased home value.

This model gives homeowners something that used to be impossible: the ability to leverage the federal tax credit without needing personal tax liability or a high upfront payment.

Ownership Without The Headache

Under this new structure, you don’t have to wait for tax season or navigate IRS paperwork to access your incentives. The financing partner handles everything behind the scenes, claiming the credit under Section 48E and applying the savings directly to your project cost.

Meanwhile, you benefit from a low, fixed payment that goes toward owning your system, just like a traditional solar loan. By the time full ownership transfers to you in year six, your system has already saved you thousands of dollars and will continue providing savings for decades.

Simply put, you get both short-term and long-term benefits of a solar upgrade without needing to jump through the hoops that come with tax credit qualification.

A Win For Homeowners Who Missed The 2025 Cutoff

The federal solar tax credit was originally planned to expire well after 2030, but legislation cut that short in July 2025 and moved the expiration date to December 31, 2025. Many homeowners feared they missed their chance to receive solar incentives. This new financing structure shows that’s not the case.

Even after the federal residential tax credit (Section 25D) expires, homeowners can still benefit from federal solar incentives through commercial investment credits (Section 48E).

It’s a creative yet fully compliant way for residential solar customers to access the same savings that large-scale solar projects have leveraged for years.

For most New York homeowners, this means:

No money down
Skipping the complexity of tax paperwork
Still ending up as the full system owner

The Future Of Solar Financing

This is what solar financing will look like moving forward — cleaner, simpler, and more flexible. It bridges the gap between leasing and ownership, making solar accessible to more households than ever before.

By the end of 2026, Empire Solar expects this model to become the industry standard for homeowners who want to take advantage of incentives before they change again and we are proud to be one of a select few solar installers offering this innovative payment model.

If you’re considering going solar in 2026, the smartest move you can make is to explore all available payment options and understand how each one affects your total savings over time. When comparing the cost of ownership to leasing and PPAs, owning your panels typically costs significantly less than leasing them from a third party.

Final Thoughts

The federal tax credit has always been a key driver of solar adoption, but its structure has evolved. Traditional loans have quickly lost their appeal as the cost of direct ownership increases, and homeowners who adopt this new Transfer of Ownership (TOO) product early will be in the best position to maximize their savings.

This new financing approach offers the same exact financial benefits of owning solar, without risking missed incentives or complex tax qualification. With this new program, you still pay nothing upfront, you secure a solar upgrade at a lower cost, and take full ownership once the initial term ends.

Empire Solar is proud to be among the first New York solar companies helping homeowners access this new program. It’s one more way we’re helping families take control of their energy costs and make solar simpler and more affordable than ever.