Currently, businesses can claim a 30% federal tax credit on commercial solar and/or energy storage projects. Under the One Big Beautiful Bill signed into law on July 4th, commercial solar projects that have already been planned, financed, and approved still qualify for the applicable tax credit, as long as they begin construction before June 2026 or are operational by the end of 2027. Projects may be “safe harbored” and may include materials that do not meet FEOC (Foreign Entity of Concern) requirements if construction begins by the end of 2025.
Other solar-related provisions in the OBBB:
- Residential solar leasing companies can receive the 30% Federal Tax Credit, or ITC (48E).
- Commercial solar projects that start construction less than 12 months after the bill’s enactment and are placed into service within four years can still claim the full ITC (48E) credit, as long as equipment meets FEOC requirements.
- Tax Credit for Energy Storage (batteries) has not been affected by the new law, but will be subject to FEOC rules.
With the changes to the solar tax credit laws and the introduction of President Trump’s executive order directing the Treasury Secretary to take steps to issue guidance and clarify “beginning construction” by August of 2025, we urge businesses to reach out as soon as possible to start the process of going solar as safe harbor rules are uncertain after 2026. By starting work on your solar installation before the end of the year, companies can better solidify their claim to the 30% commercial solar tax credit.
With the expected rising costs of energy rates and demand charges, plus 100% depreciation, many customers are finding that a solar investment, even without the federal tax credit, still makes economic sense. Locking in energy rates makes good business sense when forecasting business costs. Acting now and procuring equipment as soon as possible is also protection against additional possible tariffs.
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