The One Big Beautiful Bill Act (OBBBA) is phasing out the 30% federal solar tax credit for commercial projects sooner than originally planned, but it also introduced a 100% first-year bonus depreciation, which offers additional tax savings for qualifying systems. To claim both incentives, projects must meet specific deadlines. When combined, these benefits can significantly reduce the cost of a commercial solar system.
Here’s what you need to know if you’re considering a solar investment for your business and want to take full advantage of available government incentives.
Updates Impacting Commercial Solar Savings
30% Federal Tax Credit: Commercial solar projects are eligible for the ITC if construction begins before July 5, 2026, and the system is completed within four years. That means your system must be fully operational no later than four years after construction starts.
100% Bonus Depreciation: The OBBBA also reinstated a 100% first-year bonus depreciation under the Modified Accelerated Cost Recovery System (MACRS) for qualified property purchased between January 19, 2025, and the 2029 tax year. This can provide a substantial additional tax deduction for your solar investment.
When a business combines both incentives, the value of the bonus depreciation is reduced by half the amount of the tax credit. In practice, this means businesses can claim:
- 85% of the system cost through bonus depreciation
- 30% of the system cost through the ITC
How the Incentives Add Up
Here’s a real-world example:
- Gross system cost: $1,000,000
- 30% tax credit: $300,000
- 100% bonus depreciation (first year): $850,000
- Corporate tax rate (21%): $850,000 × 21% = $178,500 depreciation tax savings
The depreciation deduction lowers taxable income, reducing the overall tax bill.
The combined incentive amount is $478,500 — that’s nearly 47% of the total project cost covered.
If your project qualifies for the 10% domestic content bonus, the ITC increases to 40%, meaning well over half of the project cost could be covered through incentives.
The Takeaway
Businesses have about two years left to stack these major incentives. While the ITC is phasing out, the combination with bonus depreciation makes commercial solar even more affordable for businesses if projects are planned carefully to maximize savings.
To get started on your project, contact ENS Electric today to schedule a free site visit with one of our advisors!