Updated July 2025. The One Big Beautiful Bill wasn't so beautiful for solar, but you still have time to take advantage. The 30% to 50% federal income tax credit for solar project is here to stay for a few more years.
In order to qualify for the 30% tax credit, you have two options:
Projects that Safe Harbor by 12 months from enactment, still have 4 years from “start of construction” to be placed in service, so it is possible to safe harbor and then finish your project in June 2030. The current rules for safe harbor require at least a 5% of project costs to be incurred or you must start "physical work of a significant nature".
The Dec 31, 2027 deadline applies only to systems that “begin construction” after 12 months after enactment.
Storage projects have until the end of 2033 to start construction.
Only the owner of the solar project receives the credits and these flow through via K-1s to the shareholders.
You can CARRY BACK the tax credit 3 years.
This means that an owner of solar system placed in service in 2025 can go back to 2022 and amend their tax returns to receive a refund.
Depreciation: Solar projects qualify for 100% bonus depreciation and can be applied to new or used equipment. You may also elect 5-year MACRS and there are still opportunities to elect 40% or 60% bonus depreciation for projects placed in service in 2025.
There are add-on tax credit incentives for solar projects as follows:
Projects >1MW will require prevailing wages to be paid by the installer (but Solar CFO believes that the labor market for solar talent is very tight right now and that many installers are already paying the equivalent of prevailing wages).
You can CARRY BACK the tax credit 3 years or sell the credits to another party for cash.
You can sell your commercial solar credit for $0.80 to $0.95 cents on the dollar. The buyer of the credits will require indemnification from the seller that the tax credit is valid (there are insurance products available for this).
Here is a link to a great article about tax credit transferability from a leading law firm in the renewable energy space.
SOLAR CFO
CHAPEL HILL, NC
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