Why the 30% commercial solar tax credit is suddenly time‑sensitive
For years, businesses could plan solar projects around a long runway of federal incentives. The Inflation Reduction Act expanded the Investment Tax Credit (ITC) and was originally expected to keep the 30% rate in place through at least 2032.
That changed in 2025.
On July 4, 2025, the One Big Beautiful Bill Act (H.R. 1) (“OBBB”) was signed into law. Among many tax changes, it accelerates the phase‑out of clean energy tax credits, including the Section 48E Clean Electricity Investment Tax Credit that today covers most new commercial solar projects.
Quick refresher: how the federal solar ITC works for businesses
Today, most new commercial solar and solar‑plus‑storage projects use Section 48E – the Clean Electricity Investment Tax Credit.
At a high level:
- Base credit: 6% of eligible project costs (the “qualified investment”).
- Full 30% credit: Available when your project either:
- Is under 1 MW in size, or
- Meets prevailing wage and registered apprenticeship (PWA) requirements for construction and certain post‑construction work. IRS+1
- Bonus “adders” (stackable):
- +10% for qualifying domestic content (U.S.‑sourced steel, iron, and manufactured products)
- +10% for projects in designated energy communities (for example, certain former coal or industrial areas). US EPA+1
In practice, a well‑structured commercial solar project can offset 30–50% of installed costs through the ITC and bonus credits alone, before you add depreciation and state or utility incentives.
Important note: This article is for general information only and is not tax, accounting, or legal advice. Always coordinate with your tax advisor on how these incentives apply to your business.
What changed in 2025: compressed timelines and stricter rules
Under the original Inflation Reduction Act, the ITC wasn’t scheduled to start stepping down until 2033.
The One Big Beautiful Bill Act dramatically shortened that window for wind and solar projects under Sections 45Y and 48E:
- Wind and solar facilities must either:
- Begin construction within 12 months of enactment (by July 4, 2026), or
- Be placed in service by December 31, 2027,
to qualify for the Section 48E investment tax credit at all.
- Projects that meet the “begin construction” requirement before July 4, 2026 generally keep access to the original 30% credit and applicable adders, subject to standard continuity rules.
- New “Prohibited Foreign Entity” / FEOC supply‑chain rules restrict how much equipment can be sourced from certain foreign entities starting with projects that begin construction after 2025.
- The IRS and Treasury issued guidance and an executive order tightening proof of “begin construction,” shifting large projects away from easy 5% cost safe harbor to more demanding “physical work of a significant nature” tests.
At the same time, OBBB made 100% bonus depreciation permanent for many types of energy property acquired after January 19, 2025—even as the underlying recovery period for that property moved from 5 years to 20 years.
The net result: big tax benefits are still on the table, but the timeline to capture them is much shorter and the rules are more complex.
The critical dates for commercial solar projects (2025–2027)
Here are the milestone dates every CFO, facilities director, and sustainability lead should know.
1. Now through December 31, 2025 – Planning & pre‑development window
- Projects placed in service after Dec. 31, 2024 qualify under Section 48E (not legacy Section 48) and can still earn up to a 30% ITC plus adders, if they meet the new rules.
- OBBB and subsequent guidance are already tightening PWA, domestic content, and FEOC compliance expectations—especially for larger systems and portfolios.
This is the time to:
- Assess your portfolio for best solar/solar‑plus‑storage sites
- Run financial models reflecting the new ITC and depreciation rules
- Decide which 2026–2027 projects you want to safe harbor under the current credit regime
2. July 4, 2025 – OBBB signed, ITC clock officially starts
- OBBB is enacted, starting the 12‑month countdown for many solar and wind projects to meet “begin construction” requirements.
- New FEOC ownership and transferability rules begin to apply for tax years starting after this date.
3. July 4, 2026 – Final day to “begin construction” and lock in a longer runway
For most commercial solar projects, this is the big one:
- Begin construction by July 4, 2026 and you generally get:
- Eligibility for the full 30% ITC (if PWA requirements are met), and
- Up to four years to complete the project under continuity safe‑harbor rules.
- “Begin construction” can be shown by:
- Physical work of a significant nature (e.g., racking installation, foundations, key equipment manufacturing under binding contract), or
- In some cases for smaller systems, incurring at least 5% of project costs—though OBBB and later guidance have narrowed when this “5% safe harbor” works, especially for larger projects.
Projects that miss this date must be placed in service by December 31, 2027 to receive any ITC at all.
4. December 31, 2027 – ITC cliff for projects that haven’t safe‑harbored
- New wind and solar facilities that begin construction after July 4, 2026 and are not placed in service by Dec. 31, 2027 will generally not qualify for the Section 48E ITC.
- After 2027, absent future legislation, commercial solar projects coming online will see significantly reduced or no federal investment credit, with the policy focus shifting toward other technologies and conventional energy investments.
In other words: for most new commercial solar projects that haven’t already broken ground, 2025–2027 is the last, best window to capture the 30% credit.
Beyond the ITC: other incentives businesses can still stack
Even as the federal ITC timeline tightens, commercial projects can often combine multiple incentives for strong economics:
- 100% bonus depreciation
- Many solar and storage assets now qualify for immediate expensing, allowing you to deduct most or all of the remaining basis in year one—creating a powerful tax shield alongside the ITC.
- State and local incentives
- Property tax exemptions, sales/use tax relief, state‑level investment credits, and performance‑based incentives vary by location. The DSIRE database tracks hundreds of these programs nationwide.
- USDA REAP grants & rural incentives
- For agricultural producers and rural small businesses, USDA REAP can cover a significant share of project costs on top of the federal ITC (subject to program funding and eligibility).
- Utility rebates and demand‑response programs
- Some utilities still offer upfront incentives or ongoing payments for solar‑plus‑storage projects that help manage peak demand.
The challenge is that every one of these stacks has its own eligibility dates, application windows, and documentation requirements—and many are being revisited in light of OBBB.
Why commercial customers partner with Brightergy for tax‑credit‑driven solar
Brightergy’s team has been designing and delivering commercial and institutional solar projects for over a decade, through multiple policy shifts and incentive cycles.
We help you:
- Translate legislation into a project plan – We follow IRS and Treasury guidance as it’s released, and work side‑by‑side with your tax and legal advisors to interpret how it applies to your sites.
- Model the full financial stack – ITC, bonus credits, bonus depreciation, state incentives, and utility programs all in one clear pro‑forma.
- Design for compliance from day one – System sizing, equipment selection, labor plans, and construction sequencing built around PWA, domestic content, and FEOC rules—not bolted on at the end.
- Document “begin construction” and continuity – We structure contracts and project milestones to support safe‑harbor strategies and help keep your file audit‑ready.
- Deliver turnkey projects – From feasibility and engineering through procurement, construction, and monitoring, Brightergy manages the entire process so your internal team can stay focused on core operations.
Don’t leave the 30% credit on the table
If your organization has ever considered solar, the next 12–24 months may be the last window to capture the full 30% federal commercial solar tax credit under current law.
The longer you wait, the more you risk:
- Hitting the July 4, 2026 “begin construction” deadline without safe harbor
- Getting caught in late‑stage supply‑chain or interconnection delays that push you past 2027
- Losing access to tens or hundreds of thousands of dollars in incentives per project
👉 Take the first step today.
Schedule a 1:1 solar tax credit and incentives review with Brightergy and we’ll:
- Review your facilities and energy usage
- Map which sites can realistically hit the ITC deadlines
- Outline a phased project and safe‑harbor plan tailored to your business
- Coordinate with your CPA or tax counsel so everyone is working from the same playbook
