The Investment Tax Credit (ITC) recapture period is five years, beginning when the property is placed in service, requiring taxpayers to repay a portion of the credit if the asset is sold, its use changes, or business use drops significantly before then, with the recapture percentage decreasing by 20% each year (100% in Year 1, 80% in Year 2, etc.) until it reaches zero after the fifth year, notes the IRS Instructions for Form 3468 and The Tax Adviser.
Certain events deemed inconsistent with the policy underlying the credit may subject a claimed ITC to recapture under § 50 during the five-year period after credit eligible property is placed in service (the “Recapture Period”).
Officially defined under Section 25D of the U.S. tax code, the 30% residential solar tax credit officially expires on December 31, 2025, with no phase-down or extension. To qualify, homeowners must have their systems fully installed and operational before the solar tax credit 2025 deadline.
Section 16(4) defines the time limit for claiming ITC. The credit can be claimed only before November of the next financial year or the filing of the annual return, whichever is earlier.
The ITC claim deadline is 30th November following the end of the financial year, or the date of filing the annual return (GSTR-9), whichever is earlier. For FY 2024-25, the deadline to claim ITC is 30th November 2025.
For most registrants, ITCs must be claimed by the due date of the return for the last reporting period that ends within four years after the end of the reporting period in which the ITCs could have first been claimed.
For homeowners, the 30% federal solar tax credit (Residential Clean Energy Credit) ends after December 31, 2025, meaning systems installed in 2026 won't get this benefit, increasing upfront costs; however, commercial projects and third-party-owned residential systems (leases/PPAs) still qualify for a different, though phasing, credit (Section 48E) through 2027/2028, and state/local incentives remain crucial.
At the end of 2025, the individual tax provisions in the Tax Cuts and Jobs Act (TCJA) expire all at once. Without congressional action, most taxpayers will see a notable tax increase relative to current policy in 2026.
Big Beautiful Bill Ends Solar Tax Credits in 2026
Without it, solar panel installation costs could rise, discouraging many from adopting renewable energy. The removal of the ITC could slow the growth of residential solar adoption and impact homeowners who might otherwise benefit from solar energy.
Calculation of Recapture
When an asset is sold, the recapture amount is calculated as follows: Recapture Amount: Lesser of the proceeds of disposition or the remaining UCC of the asset class.
The maximum recapture tax is 6.25% of the original principal balance of the loan or 50% of the gain on the sale of your home whichever is less. You must first calculate the gain on the sale of your home (after the sale is complete) before you can calculate the tax owed.
The House of Representatives passed legislation on May 22, 2025, that would completely eliminate the Residential Clean Energy Credit after December 31, 2025 . Under this proposal, homeowners would have until the end of 2025 to install and place their solar systems in service to qualify for the full 30% tax credit.
You might be able to minimize the tax hit from depreciation recapture. Potential strategies include purchasing replacement property in a Section 1031 exchange, timing the sale of business property to when you're in a lower tax bracket, and investing in a Qualified Opportunity Fund.
Where the value of taxable supply (excluding exempt and zero-rated supplies) of a registered person exceeds ₹50 lakh in a month, ITC cannot be used to discharge more than 99% of output tax liability. This means, at least 1% of the GST payable must be paid in cash.
Expiring TCJA Provisions
The following TCJA provisions are set to expire after 2025. Near doubling of the standard deduction, repeal of personal exemptions, and lower value of several itemized deductions, including those for: State and local taxes (SALT) Mortgage interest.
The 2025 Federal Tax Debate
Much like the 2017 tax law, the new law favors the richest taxpayers. More than 70 percent of the net tax cuts will go to the richest fifth of Americans in 2026, only 10 percent will go to the middle fifth of Americans, and less than 1 percent will go to the poorest fifth.
As President Trump continues his second term, the future of America's solar incentives has taken a definitive turn. On July 4, 2025, the One Big Beautiful Bill (OBBB) was signed into law, officially ending the 25D federal solar tax credit for homeowners on December 31, 2025.
As the incentive landscape changes and eligibility becomes more complex, many people are asking the same question: “Is solar and energy storage still worth it without the full federal tax credit? The answer is yes. But, the way homeowners see value has shifted.
Generally, CRA can only audit someone up to four years after a tax return has been filed, although, in some cases, such as cases of suspected fraud or misrepresentation, CRA can go farther back and there is no time-limit for the re-assessment.
Rule 37 under GST Act prescribes the conditions for the reversal of input tax credit (ITC) on goods and/or services if full payment is not made within 180 days of the invoice's issue.