New House Bill Shakes Up Significant Solar Policy – Here's What's at Stake

If you've been considering going solar in Los Angeles or anywhere else in Southern California, this might be the wake-up call you need. The House of Representatives passed what the Republican party is calling the "One Big Beautiful Bill," and now the Senate Finance Committee has just released its draft version. While the Senate made some minor improvements to commercial solar timelines, both versions still propose major cuts to solar incentives for homeowners and businesses.

The good news is nothing's set in stone yet. But the proposed changes are real enough that anyone considering solar should understand what might be coming down the pipeline.

What Changes Are Proposed for Solar Incentives?

Let's break down what both the House and Senate versions propose, since they're slightly different, but both pose challenges for solar adopters.

The bills target three main areas: residential solar tax credits, commercial solar timelines, and restrictions on foreign-made components. The Senate version gives commercial projects a bit more breathing room, but the residential cuts remain just as severe.

When Does the 30% Solar Tax Credit End for Homeowners?

Right now, homeowners can claim a 30% federal tax credit when they install solar panels. It's been a sweet deal that's helped millions of families gain energy independence.

Both the House and Senate versions would eliminate that 30% credit completely. The House originally proposed a December 31, 2025 deadline, but the Senate draft would end it just 180 days after the bill becomes law – which could be even sooner than the House timeline. If Congress meets the July 4 target date for bill signing, the residential credit would end on December 31, 2025, though some predict this target may not be met, potentially resulting in a later termination date.

Here's the critical part: Your system has to be fully installed before the deadline to qualify. Starting the project won't be enough if it's not completed in time.

For a typical Los Angeles home installing a $30,000 solar system today, that's $10,000 in tax credits that could disappear. With Southern California's high electricity rates and abundant sunshine, thousands of local homeowners could lose substantial savings.

How Do the New Rules Affect Commercial Solar Projects?

The Senate version offers some relief for businesses compared to the House bill, but it's still a significant change from current rules.

House Version: New commercial projects would need to start construction within 60 days of the bill becoming law and be completed by December 31, 2028.

Senate Version: Projects can start construction through the end of 2025 for full credits, with a phase-down schedule:

• Full 30% credit if construction starts by end of 2025
• 18% credit if construction starts in 2026
• 6% credit if construction starts in 2027
• Unlike the House version, projects don't need to be completed by end of 2028

While the Senate timeline is more reasonable, it still represents a major shift. Companies that got their projects locked in before December 31, 2024, can still use the current Investment Tax Credit (ITC) rules under Section 48.

Small businesses in Los Angeles and throughout Southern California, where commercial solar adoption is rapidly growing, would need to move fast to secure current incentives. With the region's high commercial electricity rates, the financial impact of losing these credits could be significant.

The Senate version also restricts solar leasing companies from claiming the ITC starting 180 days after enactment, which could affect financing options for both residential and commercial customers.

What Are FEOC Rules and How Do They Affect Solar Components?

Starting in 2026, projects using certain materials or components from companies with ties to China would lose their eligibility for tax credits. These are called FEOC rules – which stands for "Foreign Entity of Concern."

Under the Department of Energy's guidance, a company is considered a FEOC if it's headquartered in China, Russia, Iran, or North Korea, or if those governments hold 25% or more of its ownership. The rules also apply if a FEOC effectively controls a company through licensing or contracts.

The Senate version also increases domestic content requirements for commercial projects:

• 45% domestic content from June 16, 2025, through end of year
• 50% domestic content for 2026
• 55% domestic content for 2027 and beyond

This creates a significant challenge since many solar panels, inverters, and other components currently come from Chinese manufacturers. Solar installers will need to completely restructure their supply chains to qualify for tax credits after 2026.

For homeowners and businesses planning solar installations, this could mean higher costs and longer lead times as the industry shifts to different suppliers.

What Solar Incentives Are Staying the Same?

Not everything's getting turned upside down. Some of the newer, more flexible parts of the tax credit system would stick around, including:

• Direct pay options for tax-exempt organizations
• Credit transferability for companies that can't use the full credit
• Bonus credits for domestically-made components
• Energy community bonus credits

The bonus credits for things like using American-made solar panels would also remain in place, potentially helping offset some of the other changes.

One notable exception to the cuts: Energy storage systems for commercial customers would remain eligible for the full 30% tax credit through 2032 under the Senate version, even as solar panels face reduced incentives.

Is There Any Good News for Commercial Solar Projects?

Buried in all these changes is something that could be a real win for businesses: 100% bonus depreciation is making a comeback for qualifying commercial solar projects.

What does that mean in plain English? Businesses could immediately deduct 100% of their solar project costs in the first year, rather than spreading those deductions out over several years. For a company looking at a big solar installation, that immediate tax benefit could be substantial.

What Happens Next with the Solar Incentive Bill?

The legislative process still has several steps before any changes become law. The Senate Finance Committee will vote on its draft, likely in late June or July 2025. If approved, the bill moves to the full Senate for a vote.

Many pro-solar senators who aren't on the Finance Committee could push for improvements when the bill reaches the full Senate.

Since the House and Senate versions differ, the two chambers would need to negotiate a compromise through a conference committee before sending a final bill to the President.

Solar Energy Industries Association (SEIA) is calling the Senate version only marginally better than the House bill. Industry groups such as SEIA and CALSA

Should You Install Solar Before the Potential Changes Take Effect?

Nobody has a crystal ball for what Congress will ultimately decide. But if you've been considering solar the smart money says don't wait to see how this all shakes out.

The incentives available today are real, substantial, and working in your favor right now. Why gamble on what might be available tomorrow when you can lock in today's benefits?

Solar technology keeps getting better and more affordable, but policy incentives can disappear overnight. The families and businesses that have already made the switch are probably sleeping a little better knowing they're not at the mercy of exploding electricity rates.

Take Action on Solar While Incentives Are Still Available

The bottom line? Solar incentives might be changing, but the opportunity to save money and reduce your environmental impact is still here today.

At Green Convergence, we've helped thousands of Southern California families and businesses navigate solar incentives and lock in savings before policy changes take effect. We understand the unique advantages of going solar in Los Angeles – from the excellent sun exposure to the high electricity rates that make solar savings even more substantial.

Our team stays on top of these regulatory shifts so you don't have to, and we'll make sure your project gets completed on time to capture every available incentive.

Are you curious if solar is a good fit for your home or business? Let's discuss your solar plans and run the numbers based on current incentives, while they're still available.

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