KEY HIGHLIGHTS OF the BIG BEAUTIFUL BILL

The 30% to 50% federal income tax credit for solar projects is here to stay through 2027

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:

Full credit for solar applies if construction begins before July 2026
System is placed in service by Dec 31, 2027

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:

Brown fields (+10%)
Low income communities. See if your project is eligible by searching the map here. (+10%).
Tribal Communities (+10%)
Projects serving qualified low income projects (+20%).
Energy communities with retired coal plants (+10%). See if your project is eligible by searching the map here.
Bonus for using American made solar equipment (+10%).
This means it is possible to receive up to 60 to 70% income tax credit!

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 now CARRYBACK the tax credit 3 years under new rules from the Inflation Reduction Act.

You can CARRY BACK the tax credit 3 years or sell the credits to another party for cash.

TAX CREDIT TRANSERABILITY

Can't use your 30% solar tax credit? Solar CFO can help you can sell it.

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).

The Inflation Reduction Act authorizes owners of solar projects to sell credits to others for cash, provided the credits originated in 2023 or later (Section 6418 of the US tax code).
The deadline to sell a tax credit is the year-end in which the seller becomes entitled to a tax credit or until the due date of tax returns for that year. For example, if your solar project is built in 2025, you could sell the credit until March 15, 2026 or whatever your due date is.
Sales proceeds from tax credits are NOT reported as income to the seller.
We are still waiting for guidance to see if buyers would pick up the difference between the amount paid and the value of the tax credit as income.
Tax credits can only be sold once, must be paid for in cash, cannot be carried from another year, and cannot be sold to a related party.
Sellers might need to buy insurance to backstop indemnities in the event that a tax credit is disallowed.
The IRA allows non-profits and other certain entities that directly own projects to apply to the IRS for direct cash payments.
Several points of clarification are expected from the Treasury, including whether tax credits transferred to another company can be sold, how to handle potential income from tax credit profits, and who is responsible for audit adjustments after tax credits have been sold.

Here is a link to a great article about tax credit transferability from a leading law firm in the renewable energy space.

KEY HIGHLIGHTS OF the BIG BEAUTIFUL BILL

The 30% to 50% federal income tax credit for solar projects is here to stay through 2027

TAX CREDIT TRANSERABILITY

Can't use your 30% solar tax credit? Solar CFO can help you can sell it.

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