For most of the last decade, the US residential solar market ran on a federal tax credit. The 30% incentive was reliable enough that the industry built its sales model around it, and for a long time it was one of the clearest examples of what sustained federal support could do for adoption rates. That credit is now gone. Canada's federal posture on clean energy is moving in the opposite direction, and the gap between the two markets is widening in ways worth paying attention to.
What Changed in the US
The One Big Beautiful Bill Act, signed into law on July 4, 2025, ended the residential clean energy tax credit effective December 31, 2025, with no phase-out period. A homeowner who installed solar before the end of last year could still claim the 30% credit on their taxes. Anyone doing it now gets nothing at the federal level.
The market data is already reflecting that. BloombergNEF projects US residential solar additions will fall 15% in 2026 compared to 2025. That number follows a year in which policy uncertainty was already slowing construction decisions and pushing project timelines out. The residential segment of the US market is contracting, and federal incentive structure is a significant part of why.
Where Canada Stands
Canada's federal government has moved in the opposite direction through the same period. Budget 2025 maintained the existing clean energy investment tax credit framework and introduced the Clean Electricity Investment Tax Credit, which became law in March 2026. The commitment to a net-zero electricity standard by 2035 remains in place. The direction of federal policy in Canada has been consistent: more investment in clean electricity infrastructure, not less.
None of this is a direct counterpart to what the US lost. Canada never had a residential-specific federal solar credit structured the way the US 25D credit was. But the signal at the federal level matters regardless, because it shapes investment decisions, grid development, and the broader market conditions that residential installers operate inside. When federal policy is moving toward clean electricity rather than away from it, the environment for solar is different.
What a Contracting US Market Means
The US residential solar contraction is not happening in a vacuum. When a large market pulls back, it affects supply chains, equipment availability, and where manufacturers focus their attention. It also creates a contrast that makes stable, policy-supported markets look more attractive to the companies and investors that supply them.
Canada's residential solar market is smaller than the US market by a significant margin, but it is operating in a federal environment that has not reversed course. For installers working here, that distinction is real even if it doesn't show up as a line item on a proposal.
If you want to talk through what this means for your market, get in touch!