If you’ve been following solar energy news lately, you’ve probably seen plenty of headlines about the federal solar tax credit “expiring soon.” That’s led to understandable confusion among business owners — many of whom are now wondering if they need to rush to install a commercial solar system before the end of 2025.
Here’s the good news: while residential tax credits are set to expire at the end of 2025 due to the “One Big Beautiful Bill” Act (OBBB), the commercial solar tax credit is not going away just yet. Thanks to the Inflation Reduction Act (IRA) of 2022, businesses still have time — and plenty of reasons — to go solar before the decade is over.
Keep reading to learn about where things stand now and what could change in the future.
The Current Law Protects Commercial Solar Through 2028
The residential solar tax credit will officially end on January 1, 2026, following the passage of the “One Big Beautiful Bill” Act — which rolled back the clean energy incentives created under the Inflation Reduction Act. That means homeowners can no longer claim the federal tax credit for new solar installations completed after December 31, 2025.
However, commercial solar projects are still covered under a different section of the tax code — and that credit remains in place.
The Investment Tax Credit (ITC) under Section 48 of the Internal Revenue Code allows eligible businesses to deduct 30% of qualifying solar installation costs from their federal taxes. This includes panels, inverters, racking, and battery storage installed with the system.
Under the Inflation Reduction Act, that 30% rate is still guaranteed for commercial projects that begin construction before January 1, 2028. After that, the program transitions into the new Section 48E Clean Electricity Investment Credit, which continues to reward clean power generation but uses updated emissions-based criteria.
In other words:
- Homeowners who have yet to start solar projects have likely missed the federal deadline.
- Businesses still have a window of opportunity — through 2027 — to secure the 30% tax credit before it changes.
What Changed With the “One Big Beautiful Bill”
When the “One Big Beautiful Bill” Act passed, it officially put an end date on the residential solar tax credit and introduced uncertainty about the future of other renewable energy incentives. While the commercial tax credit has survived for now, the bill marked a significant shift in how federal policy supports solar adoption.
For commercial property owners, this means two things:
- The 30% commercial ITC is still available — but its long-term future is no longer guaranteed.
- Acting now is the safest move if you want to lock in the existing rate and avoid potential rollbacks.
If future amendments or related legislation follow the same trajectory as the OBBB, the commercial ITC could be next in line for reduction or repeal. By beginning your project soon, you ensure eligibility under today’s rules — before any further changes take effect.
What the Commercial Solar Tax Credit Covers
For commercial and industrial solar systems, the federal tax credit still covers 30% of eligible project costs if certain labor and domestic content requirements are met. That includes:
- Solar panels and inverters
- Racking and mounting systems
- Energy storage (like batteries) installed with the solar system
- Design, permitting, and interconnection costs
If your project meets “begin construction” rules before the 2028 deadline, you can lock in eligibility for the 30% credit — even if the project finishes later. This flexibility gives companies room to plan, budget, and implement commercial solar without rushing to beat an end-of-year cutoff.
Why It Still Pays to Act Now
Just because the credit isn’t disappearing next year doesn’t mean businesses should wait.
Here’s why moving forward sooner still makes sense:
- Utility costs keep rising. Commercial energy rates have gone up steadily for years, and every month spent waiting is another month of higher bills.
- Incentives can change. While the federal credit lasts through 2027, state and local programs could change with new budgets or policy shifts.
- Demand for installers is high. Many reputable solar companies (KC Solar included) are already booking well into next year. Waiting could push your project timeline — and your savings — further out.
- Depreciation benefits. Businesses can still combine the ITC with accelerated depreciation (MACRS), improving overall ROI even more.
Solar continues to be one of the best long-term investments a business can make in its own financial stability, regardless of tax deadlines.
Common Misconceptions About the Commercial Solar Tax Credit
There’s a lot of noise out there about which incentives are ending and when. Let’s clear up a few myths we’ve been hearing lately:
Myth 1: The commercial solar tax credit ends in 2025.
Truth: The current 30% ITC under Section 48 remains available through at least 2027.
Myth 2: You need to have your project finished before the deadline.
Truth: As long as your project begins construction before January 1, 2028, you can qualify — even if it’s completed later.
Myth 3: The incentive only applies to solar farms or huge facilities.
Truth: Small and midsized commercial systems also qualify — including rooftop solar, carports, and ground mounts at local businesses.
Take Control of Your Energy Future
The landscape for solar incentives continues to shift, and staying informed is key. SEIA (Solar Energy Industries Association) and other industry leaders are pushing to maintain strong federal support for renewable energy — especially for commercial systems that can help stabilize the grid and reduce overall emissions.
Even as residential credits sunset, the commercial sector is still positioned to thrive. The challenge now isn’t whether solar is supported by policy — it’s making sure business owners know what’s still available and how to take advantage of it before future changes take effect.
If your business has been considering solar, now’s the time to get the facts straight and start planning. The federal incentive is still here — but the longer you wait, the more you leave on the table in energy savings.
FAQ About Commercial Solar Tax Credits
When does the commercial solar tax credit expire for businesses?
The federal commercial solar tax credit—known as the Section 48 Investment Tax Credit (ITC)—remains at 30% for commercial solar projects that begin construction before January 1, 2028. After that, it transitions to a new clean-energy-based structure under Section 48E.
What does “begin construction” mean for the commercial solar ITC?
For the purposes of the commercial solar ITC, “beginning construction” typically means starting significant physical work on site or making a binding financial commitment to purchase materials or equipment. Projects don’t need to be fully completed before 2028 to qualify.
Can small businesses qualify for the commercial solar tax credit?
Yes! The solar tax credit for small businesses applies to a wide range of commercial systems, from local retail shops and office buildings to farms, schools, and nonprofits. Even modest rooftop solar arrays can qualify for the 30% incentive.
What happens to commercial solar incentives after 2028?
After 2028, the ITC transitions to the Clean Electricity Investment Tax Credit (Section 48E), which rewards clean energy generation based on emissions standards. Eligible commercial solar installations will still have access to incentives, though details may change depending on federal policy updates.
Does KC Solar install commercial solar systems?
Absolutely. KC Solar provides commercial solar installation for businesses of all sizes, including warehouses, schools, office buildings, and nonprofits. Our team helps you design an energy-efficient system, secure available solar incentives for businesses, and lower your long-term operating costs.
KC Solar Are Your Local Commercial Solar Experts
From your first quote to the final panel, we’re here to deliver honest advice, expert service, and top-quality results. If you’re ready to explore commercial solar panel installation or the solar tax credit for businesses, our team is here to help.
We are a local company made up of KC natives with KC pride — in our city, and in our work. Which means we’ll always give you the best of ourselves.
And be sure to download our Free Solar Panel Buying Guide for more information.
We look forward to serving you!
