For-profit businesses
Put solar to work.
Understand your tax credit.
Federal investment credits and ongoing certificate revenue for eligible system owners.
Choose your organization
Solar incentives.
Built around your ownership.
Use a credit
against federal taxes.
An eligible business that owns the system generally claims the investment credit for the year it is placed in service, using Form 3468 and applicable business-credit filings. Tax capacity and credit limitations affect when the benefit is realized; this is not an automatic IRS check at installation.
Ownership changes the benefit
With a third-party lease or PPA, the provider generally owns the equipment and claims the credit. Eligible credit transfers may be an alternative for qualifying owners, subject to registration and separate rules. Depreciation may add value, but depends on adjusted basis and tax circumstances.
Federal investment tax credit · ITC / FITC · Section 48E
Start at 30%
for a qualifying project.
The standard example here assumes an eligible system below 1 MW AC, which can qualify for the 30% rate through the small-project exception. Larger projects generally need prevailing-wage and apprenticeship compliance to reach 30%. The statutory base is 6%: 30% is not an unconditional minimum.
30%
Qualifying credit rate
Applied to eligible tax basis, subject to project, ownership, timing and supply-chain requirements.
+10 points
Domestic content bonus
Qualifying U.S. steel/iron and manufactured-product content, supported by documentation and certification. This raises a qualifying 30% credit to 40%.
+10 points
Energy community bonus
A qualifying location can raise 30% to 40%, or 40% to 50% when both bonuses apply. Verify the federal location tests; a Maryland ERC designation alone does not establish eligibility.
These 10-percentage-point bonuses assume qualification for the 30% rate. Projects at the 6% rate generally have 2-percentage-point bonuses instead. Low-income bonus allocations may offer another 10 or 20 points for eligible approved projects; those are separate, competitive and excluded from these examples.
Plan around the deadline
December 31, 2027.
Solar projects beginning construction after July 4, 2026 generally must be placed in service by December 31, 2027 to qualify for Section 48E. A signed contract or equipment deposit alone does not establish qualifying construction or placed-in-service status.
Projects that validly began construction on or before July 4, 2026 may follow different timing rules, with continuity requirements. Standalone storage has different termination rules. We review the construction record, utility schedule and commissioning plan before representing eligibility.
Illustrative eligible basis: $100,000
See what each
credit level means.
| Qualifying scenario | Federal credit | Cost after credit only |
|---|---|---|
| 30% rate | $30,000 | $70,000 |
| 30% + domestic content | $40,000 | $60,000 |
| 30% + energy community | $40,000 | $60,000 |
| 30% + both bonuses | $50,000 | $50,000 |
Assumes the full $100,000 is eligible basis, the owner qualifies, and every selected bonus is substantiated. This is a credit illustration, not an installation discount or immediate payment. Financing, grants, depreciation, fees and tax effects are excluded; other funding can change the calculation.
American-made matters
Document the equipment.
Protect the eligibility.
Domestic content: the bonus test
U.S. assembly or a brand’s nationality alone does not establish the bonus. Applicable steel/iron must meet U.S. manufacturing rules, and manufactured products must meet the required domestic cost percentage. For Section 48E construction beginning in 2026, that percentage is 50%; for 2027 and later, 55%. These percentages use the prescribed product-cost calculation, not the total installed price.
PFE / FEOC: the eligibility test
Prohibited foreign entity restrictions are separate from the American-made bonus. For construction beginning after December 31, 2025, material-assistance rules can disqualify a facility or storage system. Supplier certifications, component cost records and current IRS methods matter; a domestic-content label alone does not prove compliance.
We coordinate equipment documentation for project review. Final credit claims and supply-chain determinations should be confirmed by your tax adviser before procurement.
Depreciation · MACRS
Deduct the system cost.
Often in the first year.
A business that owns its solar system can also recover the cost through depreciation under MACRS, the federal system for depreciating business equipment. Together with the investment credit, depreciation is often the largest tax benefit of a commercial project.
100% bonus depreciation
Federal law reinstated the 100% special depreciation allowance for qualified property acquired and placed in service after January 19, 2025. An eligible owner can deduct the full depreciable basis in the year the system is placed in service, or elect a smaller allowance for the first tax year ending after that date.
Recovery period: what changed
Solar that begins construction after December 31, 2024 is no longer 5-year MACRS property; tax advisers generally treat it as 20-year property. Projects that began construction earlier keep 5-year treatment, and energy storage technology remains 5-year property. Bonus depreciation still applies to property with a recovery period of 20 years or less.
The credit reduces the depreciable basis
When you claim the investment credit, the depreciable basis is reduced by half the credit. On a $100,000 eligible basis with a 30% credit ($30,000), the depreciable basis is $85,000. With 100% bonus depreciation, that $85,000 can be deducted in the first year; at a 21% corporate rate, the deduction is worth about $17,850. Actual value depends on your tax rate, tax capacity and state conformity.
Depreciation applies to the owner of the system, so with a lease or PPA the provider generally claims it. State tax treatment can differ from federal rules. Confirm the recovery period, bonus election and basis with your tax adviser before you rely on these numbers.
Benefits can continue after installation
Federal credit first.
SREC income over time.
A qualifying project may also earn SRECs after claiming its federal investment credit. The system must meet the applicable market’s registration rules, and the owner must retain certificate rights. Grants, PPAs or leases may assign those rights elsewhere.
A separate annual example
50,000 kWh of eligible annual production = 50 SRECs. At an assumed $50 per SREC, that is $2,500 gross for that year, before fees and taxes. This is sample arithmetic—not a current market quote or guaranteed annual income. Prices and generation change.
Reviewed October 19, 2026. Examples illustrate federal credits, not a guaranteed award. Eligibility, recapture, tax basis, other funding and filing rules require project-specific review.
Sources & program verification
Reviewed October 19, 2026. Primary program sources and dated market information:
IRS Section 48E overviewIRS Form 3468 instructions: rates, bonuses and current lawIRS solar construction timing: Notice 2025-42IRS elective pay requirementsIRS domestic-content guidanceIRS elective-pay domestic-content exceptionsIRS PFE guidance: Notice 2026-15IRS Publication 946: How to depreciate property